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Intro

In this video, we will walk through the basics of getting started with Microsoft QuickBooks, including how to set up a new company file using the Easy Step Interview. I'll show you how to enter important company information, choose your business type, configure essential preferences such as sales tax and reporting methods, and set up accounts for income, expenses, assets, liabilities, and equity. We will also look at adding customers, vendors, bank accounts, and sample inventory items, making this a great overview for anyone new to QuickBooks or looking to review the company setup process.

Transcript

Welcome to my Online Learning Partner and our QuickBooks 1 Live Online Seminar. I am Richard Rost. I will be your instructor for today's class.

If you have any questions, you can email me. My email address is [email protected]. If you're taking the seminar during a live session, you can ask your questions in the chat room and I will do my best to answer them. If not, feel free to email me. My email address is on the screen again: [email protected].

Welcome to our QuickBooks seminar for today.

To begin today's class, I already know some of the basic concepts. We're going to walk through setting up a sample company first in this class. In the next two sessions, we're going to go through and do some additional advanced features, such as entering invoices and more. Today, we're going to start pretty basic. We're going to go through setting up a sample company so that you have a company file to work with in the next couple of classes.

Now, before we begin, I have to give everyone my standard disclaimer that I am not an accountant. I have been using QuickBooks for about 10 years now. I've been teaching QuickBooks for probably half of that time. When I'm not teaching in the classroom, I'm building databases and accounting systems. So I've got a pretty good knowledge of accounting and accounting practices, but I am not an accountant. I can't give you accounting advice. Please consult an accountant or an attorney for that.

In class, I am still using QuickBooks 2001. There aren't that many significant enhancements from 2001 to 2002, so I personally haven't felt the need to upgrade yet. The interface is very similar and you shouldn't have any problems if you're using 2002 following along with this, or even if you're using some of the older versions. In fact, our class handbook that's currently on the website was written for QuickBooks 99. It's still valid, as most of the screens are the same, and you shouldn't have any problems following along.

I'm going to go ahead and start QuickBooks Pro. When you start QuickBooks Pro, you might see some kind of an intro screen, or you might see this No Company Open screen, or you might see an introductory screen saying this is your first time running QuickBooks. What would you like to do?

Essentially, what we're going to do first is create a new company file. All of your information in QuickBooks is stored in something called the company file. Everything you do is going to be stored in this one file.

If you have a menu open, you can go ahead and pick the appropriate action. If not, we're going to click on File and then New Company. When we do, the Easy Step Interview will come up. The Easy Step Interview is to walk you through setting up your company.

If you've already set up your company file and you've been working with it for a while, you may want to take notes of the things we're doing here because sometimes people set up company files and they don't quite understand all the terminology. We're going to go through and set up the company file correctly. Based on what you see here, you may or may not want to recreate your company file. It depends. Some things can be fixed; others cannot.

QuickBooks is a good program, provided you know what you're doing when you set it up properly. Sometimes problems can arise down the line.

Across the top, we have some tabs: Welcome, Company Info, Preferences, and so on. Over on the right and at the bottom of the screen, you'll see navigation buttons. Let me tell you what, I'll hit the Next button. Usually, I'm only on one screen and I can see all the information. Then, in the next step, I'm going to do this at the very end. Here's a progress bar. You can see how far along you are with the setup step. Finally, over in the bottom right-hand corner, there's a Leave button. If you decide you want to leave the interview and basically finish it, then you click on that. A lot of these are just reading some information, then hitting Next.

Now, with future versions of QuickBooks, Intuit is always trying to advertise their services, but that's OK. Let's start off by hitting the Next button. It says, Welcome to the Easy Step Interview. I'm not going to read through all these screens. Some of the information is there if you want to run through this example after class. You can read through it on your own if you want to.

For those of you who are joining us for the first time, if this is your first seminar, what I recommend you do is just sit back and watch the live broadcast and try to enjoy it. Don't try to follow along with the live broadcast. After class is over, I will post a copy of this class. We're recording it right now. I'll post it up on our website, and I will email everyone the address where to go to watch it again. If you want to watch it through a second time, that's when I suggest you go through and follow along with it on your computer, because you can pause the recording.

You are watching our QuickBooks 1 Live Online Seminar. If you have any questions, please ask them in the chat or send an email to [email protected].

Welcome to the Easy Step Interview.

If you're converting to a different version of QuickBooks, there are separate instructions in the instruction manual on how to import or upgrade that data. I'm not going to cover that today. Go ahead and hit Next at the bottom.

Setting up a new company. It was designed to help you start up a new QuickBooks company. Now, you can hit the Skip Interview button if you want to, and that will bypass the interview. I strongly suggest even if you are an expert QuickBooks user that you run through the Easy Step Interview. There are a lot of things that it sets up nicely for you that I would naturally want to do by hand, because some of the things that are set up without the interview are a little time-consuming.

Let's click on Next.

Now that you're getting around, there are the Next, Previous, and Leave buttons, just as I mentioned a minute ago. Next.

Sections and topics. Sections are across the top, topics down the side. We've already talked about that. Next.

Feel free to change your answers. You can always go back and change your answers in the interview. Now, this is not necessarily true. Sometimes, where there is a Back button, you can't go back. Try to get it right the first time if you can. This is an important decision, and it's not the easiest thing to reverse. Sometimes when you put something in, you can't go back and change it until we're done with the interview. So try to get everything correct before you hit the Next button.

All right, welcome completed. We'll hit Next.

All right, company information. In this section, they're going to ask you serious questions about your company. We're going to set up a fictitious company. Try to have all the information for your business at hand before you begin this process. It's easier to try and gather together all of your invoices, payables, receivables, payroll information. Get it all together first before you start this process. It's better to have it all at hand than it is to have to stop the interview, go find something, then you get distracted, the phone rings, and someone comes in. Try to get as much of this stuff together as you can before running through the interview.

All right, next.

First, they're going to ask you for a company name. We're going to set up a DBA in class as opposed to a corporation or a partnership, just because speaking from experience, this is what most of my clients' business types are. So we're going to go with a sole proprietorship. We'll set up a company name of XYZ Computers. Of course, you can type in whatever you want here.

Now, the legal name on the bottom is for if you are a corporation. You can put down XYZ Computers Inc., or if you need to have it on legal documents, you can put down here Joe P. Smith, DBA: XYZ Computers, or whatever you need to have on your legal documents, tax statements, and so on.

Next.

Company information. Let's put in some information here: 123 Main Street is our address. Address 2 line if you need it, such as a P.O. Box. Let's go Buffalo.

Now, the dropdown box for state, if you select Buffalo, New York, for example, you can hit N, but it puts you in North Carolina. If you hit Alt + Down Arrow, it drops down that box, and you can scroll through it or use the mouse. For efficiency, I like to show you keyboard tricks.

All right, zip code 14220. US, phone number, fax number, email: [email protected], website if you have it.

Let's hit Next.

Pretty basic stuff so far.

Federal tax ID number: this is the number you use on your federal income tax returns. If you have one, this is where it would go. If not, let's see if we can just go along without it.

Okay.

Fiscal year. Usually these start in January.

Now I'm going to hit Next.

Income tax form. Which income tax form do you use? Again, this will depend upon what type of business you are. I am going to pick Form 1040, Sole Proprietor, but of course, if you're a corporation or an S-corp, pick one of those.

Next.

Now, the type of business. There's a list here of all the different types of businesses: accounting firms, construction, insurance agencies, legal, manufacturers. Try to find the business type that matches yours most closely. If you want to follow along with me for the example company, I am going to pick Retail Business because retail has, from what I've discovered, most of the options available to it out of any of the other types. For example, if I pick Service Business, it's not going to bother me too much about carrying inventory. Some options, depending on the type of business you pick, may not be available. You can turn those things on manually, but it's easier to do it this way. I'm going to pick retail. If you're not sure what type of business you are, I usually suggest retail.

Next.

Set up your business. Look for the green arrow. That's nice because there are a lot of options. We're going to skip this.

Okay, we're ready to create your company file now. Let's hit Next again.

Now, it's asking for a file name. XYZComputers.qbw (QuickBooks for Windows file extension). I strongly suggest that you save this file in your My Documents folder because QuickBooks tries to save it in the QuickBooks Pro folder. When I go to back up my data, and of course everyone backs up their data every night, I want all my data in My Documents so it's easier to remember. Normally, I'd go to My Documents folder. For class purposes, I'm going to leave this in the QuickBooks Pro folder. But for your real company, I strongly suggest you put it in your My Documents folder.

I'll make a note here, For Online Seminar, so I remember for the next class that this is the file we use. As you can see, I've got some other sample businesses. These are installed by QuickBooks.

You are watching our QuickBooks 1 Live Online Seminar. If you have any questions, please ask them in the chat room or send an email to [email protected].

Thank you very much for your time.

QuickBooks has chosen the following accounts for retail. I suggest you stick with them. Here we have sales, discounts, expense accounts, and so on. We'll go through changing accounts manually, if needed.

Let's pick Yes here.

Go to Next.

Accessing your company. How many people, besides yourself, will have access to your QuickBooks company? In other words, how many other users will you have? Someone else to process invoices or payroll for you? For now, let's leave it at zero. We're just going to go through setting up the company for single user. I will show you in class three how you can set up multiple users and give them certain access to specific parts of the system.

Next, company info completed. Next again.

Preferences.

Let's hit Next again.

Do you collect sales tax from your customers? I'm going to select Yes for my retail business.

Next.

Now, single or multiple tax rates. This can be tricky. Do you collect a single tax rate paid to a single agency, or do you collect multiple tax rates or have multiple tax agencies? Even though you may only do business locally, as I do, for the longest time we only did business here in Western New York. We would only have to pay a single tax rate to a single tax agency. However, in my business location, we are in Erie County, which has an 8% sales tax. Niagara County, just to the north of us, has a 7% sales tax. So I would have to pick multiple tax rates because I have both 7% and 8% sales tax and those are different, so you need to account for that.

Unless you always collect the same tax rate and pay it to the same tax agency, pick single. Otherwise, pick multiple. If you're not sure, pick multiple.

All right, let's hit Next.

You are watching our QuickBooks 1 Live Online Seminar. If you have any questions, please ask them in the chat room or send an email to [email protected].

Let's hit Next. We'll set up our sales tax agencies afterwards.

Your invoice format. Here you can see some sample invoices: product, professional, service, or custom. For my retail business, I'm going to pick Product. I'm preparing my computer sales company. There's a product-type invoice, professional for lawyers or service businesses, but we'll go with product. I'll show you in class three how to customize the invoice too.

All right, Next.

Using QuickBooks for payroll. Do you want to use the payroll feature? Yes, we'll do this in class three. For now, I want you to pick No so it doesn't bother us with payroll yet. We'll cover payroll later.

Next.

Do you prepare a written or verbal estimate for your customers? In other words, do you make up a quotation and then make the quotation into an invoice? I'm going to say Yes. If you're not sure, say Yes.

Progress invoicing. Do you ever issue more than one invoice for one estimate? For example, if you estimate a job to install a computer network and the client pays for it in pieces, that's called progress invoicing. For now, let's say No. We'll talk about progress invoicing in class three if there is time.

Next.

Time tracking. Would you like to track the time that you or your employees spend on each job? This is for job costing. We'll cover this in class three. For now, I'm going to say No to keep it easy.

Tracking segments of your business with classes. Classes are like departments in a department store. For example, at Walmart, there are apparel, sports, housewares, etc. If you want to track different segments of the business, maybe for a computer company you might have hardware sales, website service, computer training. You could get specific financial reports for those different classes. They're helpful but almost triple the data entry required. We'll talk more about classes in class three, but for now, say No.

Two ways to handle bills and payments. You can either enter checks directly as your bills come in or you can enter all your bills in and put the payments in later. For example, if you get a stack of bills like phone, electric, gas bills, you can cut a check for each as you process them or you can enter all the bills and then pay them in a batch once a week or twice a month. I like the second option as it gives you more flexibility. I'm going to choose the second option.

Next.

Reminders list. The reminders list pops up when you start up QuickBooks and tells you things you have to do, invoices to pay, checks to print. You can have it pop up at startup, on demand, or rarely. I set mine to pop up at startup.

Next.

The big one: Accrual or cash-based reporting. If you don't know the difference, I'll just briefly explain. Cash-based businesses put transactions on their books when the transaction takes place - when the cash changes hands. Accrual-based is based on the invoice date or the date of bills. Within an accrual-based business, expenses go on your books when you are issued an invoice, not when you pay the bill. Same for income. If you invoice someone on May 1st and they pay you on July 15th, it goes on your books as of May 1st.

Most businesses now use accrual-based reporting. Again, ask your accountant for advice. You must specify this when you set up your company, and you cannot change this yourself - you need IRS approval to switch accounting methods. I'm going to pick accrual-based because most businesses use that nowadays.

Next.

Preferences completed. Next again.

You are watching our QuickBooks 1 Live Online Seminar. If you have any questions, please ask them in the chat room or send an email to [email protected].

Understanding your start date. The start date is the earliest date that your balances will be correct and the date you will start entering transactions. What does that mean? I'll hit Next.

Here's a chart. The start date is the earliest date that you want to enter data for. For example, if you have an existing business with all your records on paper and your business started January 2000, and it's now May 2002, you can set a start date at January 1, 2002, or May 1, 2002. Everything after the start date, you have to type all the details into your system. If you pick an earlier start date, you have to enter every order, bill, and check written since then. The benefit of an earlier date is you can get detailed reports from QuickBooks, but it means more data entry.

If you start with a later start date, say May 1st, you'll only have summary information up to that point. You'll need your balance statements, bank account balances, and just type in the starting balances.

So, choose based on how much historical data you want in QuickBooks. Weigh your options.

I'm going to hit Next.

Now, I'm going to set my start date as May 1st, 2002. Today is November 17, 2002.

Next.

General section completed. Next.

Income accounts. In this topic, you'll review the income accounts. You can add accounts if you wish. Let's hit Next.

Here are the income accounts they set up: Sales and Sales Discounts. If you want to add an income account, for example, if your computer store owns the building and receives rental income, you can add that separately. Let's create a new income account. Yes.

Next.

What's the income account name? Let's call it Rental Income. For the tax line, let's see - rent or lease of business property, rents received, Schedule E. If you can't find it, don't worry; your accountant can pick the right one for you.

Next.

Add another income account? Nope. Next.

Here are your income accounts. You can add as many as you want.

Expense accounts. In this topic, you'll review expense accounts and can add more if desired. You can also have sub-accounts. For example, under utilities, you could have gas, electric, and water.

I'm going to pick More Details to show the sub-account option. Sub-accounts let you break down expenses. For example, office expenses, utilities--then electric and gas as sub-accounts beneath them.

Next.

Here are the expense accounts they set up for you. If you want to add your own, as before: Yes. Next.

What do you want to call it? Let's say Computer Training. Let's make an expense account for computer training.

You are watching our QuickBooks 1 Live Online Seminar. If you have any questions, please ask them in the chat room or send an email to [email protected].

Add another expense account? No.

Expense accounts are set up. I'll show you later how to add and remove these manually too, from the Chart of Accounts.

Next.

Income details. In this topic, you'll answer a few questions about your income. Next.

Do you receive full payment at the time or before you provide a service or sell a product? Do you always get paid up front? If you're not sure, pick Sometimes. If you pick Always, then QuickBooks assumes you do not need to track accounts receivable.

We'll pick Sometimes. I have yet to see a business where they always get paid up front.

Next.

Statement charges. Some businesses bill regularly and need statement charges. Let's say No for now. I'll show you statement charges in class three.

Next a couple of times.

Items. In QuickBooks, an "item" is anything you sell--parts, services, other charges, labor, etc. Inventory parts are things you keep on the shelf; non-inventory parts are things you make from scratch or buy only for specific customers.

Some other terminology: A customer in QuickBooks is anybody who pays you money, including renters. Anybody you pay money to is a vendor, including the electric company and tax agencies.

Let's go to Next.

Do you want to set up any service items? Sure. Next.

Item name: let's call this Hourly Labor. Description: one hour of labor, includes travel time. Let's bill it at $78 an hour. Is it taxable? Yes.

In New York, PC services are taxable but computer training is not. The same is true with software: off-the-shelf software is taxable, but custom is not. Check your state's rules.

What income account should this go into? Sales.

You are watching our QuickBooks 1 Live Online Seminar. If you have any questions, please ask them in the chat room or send an email to [email protected].

Next.

Is this service ever performed by a subcontractor? Yes.

If Yes, that means you have to purchase this product or service from the subcontractor. Enter what will appear on your purchase orders: One hour of labor. Our cost: $45 an hour.

What expense account to put this in? Let's use Professional Fees. We'll set up separate accounts for this later.

Next.

You just set up a service item. Set up another one? No, you get the idea. I'll show you how to set these up manually later.

Non-inventory parts. These are things you don't keep in inventory: materials and products not tracked as inventory, purchased or resold to a customer, or that you don't normally buy. For example, if I buy a copy of WinFax just for a customer, that's a non-inventory part.

Set one up? Yes.

Item name: WinFax. Description: WinFax 10.0 software. Sell price: $159, taxable: Yes.

Income account: Sales.

Do you purchase this material or product for a specific customer? Yes.

Purchase description for your vendor: WinFax 10.0. Cost: $99.

Expense account: Supplies (should show cost of goods sold, but sometimes QuickBooks has a bug; I'll show you how to fix it later).

Next.

Set up another non-inventory part? No.

Would you like to set up another charge (like shipping, freight, postage, or photocopying)? Next.

Let's set up Delivery. Description: PC delivery. Charge: $50, taxable: Yes.

Income account: Sales. You might want to set up a separate shipping income account to track shipping revenue.

Is this an item for which you pay and then request reimbursement from your customer? Yes. Enter the purchase description: Delivery of PC. Cost: $20.

Expense account: Postage and Delivery.

Set up another one? No.

Now we're into inventory. Inventory represents things you purchase, hold in inventory, and then sell. Let's set up inventory items. Next.

Would you like to add an inventory part? Yes.

Item name: Pentium 4, 2GHz PC. Description: Pentium 4 processor, 2GHz, 512MB RAM, 80GB hard drive, etc. Sell price: $1,200, taxable: Yes.

Income account: Sales.

Purchase description: P4 PC, plus specs for your vendor. Cost: $900.

Reorder point: set to 2 to get reminded to restock. How many did you have on hand as of your start date? Very important! If your start date is May 1st, enter the quantity you had on that day. QuickBooks calculates total value from the cost and quantity.

Next.

Set up another inventory item. Let's add one more: 80GB hard drive. Part number: [your part number]. Sell price: $290. Income account: Sales. Purchase description: 80GB hard drive. Cost: $130. Reorder point: 5. On my start date, I had 15. Set up another one? No.

Inventory complete.

You are watching our QuickBooks 1 Live Online Seminar. If you have any questions, please ask them in the chat room or send an email to [email protected].

Next again.

Opening balances. For this section, you'll need to know which customers owed you money on your start date, vendors you owed money to, and balances of your balance sheet accounts.

Next.

Good things to have on hand: bank statements ending on or shortly before May 1st (your start date), value of all assets, liabilities, and credit cards, customer names and amounts owed to you, and vendors you owe money to. In QuickBooks, a customer is anybody who pays you for goods or services.

Next.

Do any customers owe you money on your start date? Yes.

Do you track jobs or projects for customers? In QuickBooks, jobs are separate projects for the same customer, or different locations, like several offices for General Motors. You could set up jobs to track different locations.

Let's say Yes to jobs.

Next.

Customer names: LMNOP Wholesale. Multiple jobs? No. They owe us $1,200. Add them. Add another? IBM, with multiple jobs. Next. Job name: Buffalo office, owed $2,000. Add another job for IBM? Yes. Rochester office, owed $1,500.

You are watching our QuickBooks 1 Live Online Seminar. If you have any questions, please ask them in the chat room or send an email to [email protected].

Add another job for IBM? No. Add another customer? No.

Customers are completed. Enter everyone who owed you money at your start date. If you missed someone, that's OK; I'll show you how to handle it later.

Next.

Opening balances from vendors. Anybody you receive a bill from is a vendor. Next.

Any vendors you owe money to? Yes. Vendor name: Computer Parts World. Owe them $1,350. Add another: Niagara Mohawk (utility company), owe $1,900.

Next.

Add another vendor? No.

Go through and put all your vendors in.

Next.

Opening balances for some of your accounts (balance sheet). Next.

Credit card accounts. Want to set up a credit card account? Note: Do not set up an account for a personal credit card that you occasionally use for your business.

Would you like to set one up? Yes.

Credit card name: Key Bank MasterCard. Next.

Statement date: get the statement ending right before your start date, say 4/25/02. Balance: $700.

Next.

That's how you enter credit card accounts. We'll go into more detail later. Set up another one? No.

Line of credit. Similar process, but we'll say No for now.

Loans and notes payable. These are liabilities; enter the name, amount, and more details. We'll discuss these later.

Bank accounts. Let's do a couple of bank accounts.

Do you want to set up a bank account? Yes.

Name: Key Bank Checking. Statement ending date: 4/15/02. Balance: $18,000.

Add another? Yes. Key Business Savings. Statement date: 4/28. If you omit the year, it defaults to the current year. Balance: $34,000.

I like to run my QuickBooks sample business with money in the bank - makes me feel better. If I run it in the red, I get depressed.

Add another? No.

Go through and set up all your bank accounts.

Next.

Introduction to assets. Asset accounts are used for money you have loaned, furniture and fixtures, property, investments, computers, office equipment, etc.

QuickBooks automatically sets up asset accounts for accounts receivable and inventory value, so you don't need to do those.

Set up an asset account? Yes.

Name: Office Furniture. Account type: fixed asset, other current asset, or other asset. Fixed asset for office furniture.

Next.

Do you want to track depreciation for your furniture? Yes. Original cost: $5,000. Depreciation as of your start date: $1,000.

Next.

You just added an asset account.

Add another asset account? Yes. Computers, fixed asset, skip depreciation, value as of 5/1: $6,000.

Would you like to add any more asset accounts? No.

Introduction to equity accounts. Equity represents the difference between what you owe and what you have. It shows the health of your business - the money left over after all debts, from investments or profits. Equity is reduced when owners take an owner's draw.

Next.

Here's your list of equity accounts. QuickBooks gives you a list.

Next.

Accounts are completed.

This concludes today's QuickBooks 1 Seminar.

Again, if you have any questions, feel free to email me: [email protected]. If you're attending the live session, I'll be in the chat room for five to ten more minutes. If you have any questions, you can ask them there. If not, we'll see you in QuickBooks 2 class.

Quiz

Q1. What is the first major task covered in the seminar when starting with QuickBooks?
A. Entering invoices for customers
B. Setting up a sample company file
C. Importing data from Excel
D. Reconciling bank statements

Q2. According to the instructor, what is the primary purpose of the Easy Step Interview in QuickBooks?
A. To create reports for accountants
B. To walk users through setting up a company
C. To process payroll for employees
D. To back up company data

Q3. What does the instructor recommend you do before beginning the Easy Step Interview?
A. Upgrade your QuickBooks software to the latest version
B. Gather all your business information and documents
C. Set up a payroll account
D. Import data from a previous version

Q4. Which business structure does the instructor use as an example when setting up the company in class?
A. Corporation
B. S-corp
C. Sole proprietorship/DBA
D. Partnership

Q5. Where does the instructor recommend saving your QuickBooks company file?
A. Directly on a USB drive
B. In the Program Files directory
C. In your My Documents folder
D. On the desktop

Q6. What is the significance of selecting the correct fiscal year start in the company setup?
A. It determines when sales tax is due
B. It sets when you can first enter transactions and balances
C. It cannot be changed after setup
D. It only affects payroll processing

Q7. Why does the instructor recommend running through the Easy Step Interview, even for QuickBooks experts?
A. It is required by Intuit
B. It automatically sets up options that would be tedious to set manually
C. It upgrades your company file
D. It creates tax reports automatically

Q8. If you have different sales tax rates for different regions, what should you select when asked about sales tax agencies?
A. Single tax rate
B. No sales tax
C. Multiple tax rates
D. Ignore the question

Q9. Which invoice type does the instructor select for the sample retail company?
A. Custom
B. Professional
C. Product
D. Service

Q10. What accounting method does the instructor recommend for most businesses?
A. Cash-based
B. Hybrid
C. Accrual-based
D. Modified cash

Q11. What is a 'class' in QuickBooks, according to the seminar?
A. A type of business license
B. A way to track different segments or departments of a business
C. A user profile
D. A payroll category

Q12. When setting up income and expense accounts, what is one benefit of using sub-accounts?
A. Automatic invoice creation
B. Breaking down expenses into detailed categories
C. Linking accounts to credit cards
D. Speeding up payroll processing

Q13. What is the definition of an 'item' in QuickBooks?
A. A document generated for vendors
B. Anything you sell, buy, or charge for, including products and services
C. A line in your bank reconciliation
D. A type of report

Q14. In QuickBooks, who is considered a 'customer'?
A. Anyone you pay money to
B. Any government agency
C. Anyone who pays your business
D. Only individuals who buy inventory items

Q15. What does the instructor say about entering historical balances when choosing a start date for your company file?
A. You must always use January 1st of the current year
B. An earlier start date means more data entry for historical info
C. You cannot enter any balances when starting a new file
D. Start date has no effect on data entry

Q16. For tracking money a business owes to others on the start date, what QuickBooks feature is used?
A. Accounts Receivable
B. Reports Center
C. Entering vendor opening balances
D. Sales Tax Payable

Q17. How does the instructor suggest entering opening balances for customers who owe you money?
A. As expense transactions
B. As customer jobs with amounts due
C. As sales tax entries
D. Enter under payroll

Q18. According to the instructor, what should not be set up as a business credit card account in QuickBooks?
A. Any corporate card
B. Personal credit card used occasionally for business
C. Payroll cards
D. Cards with zero balance

Q19. What is the purpose of equity accounts as explained in the seminar?
A. To track sales tax paid
B. To show the difference between what you owe and what you have
C. To keep a list of vendors
D. To record payroll deductions

Q20. What does QuickBooks automatically set up as asset accounts for you?
A. Payroll deductions and cash accounts
B. Inventory value and accounts receivable
C. Utility bills and wages
D. Sales and discounts

Answers: 1-B; 2-B; 3-B; 4-C; 5-C; 6-B; 7-B; 8-C; 9-C; 10-C; 11-B; 12-B; 13-B; 14-C; 15-B; 16-C; 17-B; 18-B; 19-B; 20-B

DISCLAIMER: Quiz questions are AI generated. If you find any that are wrong, don't make sense, or aren't related to the video topic at hand, then please post a comment and let me know. Thanks.

Summary

In today's QuickBooks video from the Online Learning Partner Learning Zone, I'll be guiding you through the process of setting up a sample company in QuickBooks. My name is Richard Rost, and I'll be your instructor for this class.

If you have questions during the seminar, you can email me at [email protected]. For those participating in a live session, you're welcome to post your questions in the chat room, and I'll do my best to address them as we go.

We're starting with the basics today: creating a sample company file. This will give you a hands-on example to follow along with both now and in future classes, where we'll explore more advanced topics like entering invoices and managing other business transactions.

Before we begin, I need to give a standard disclaimer. Although I have a decade of experience using QuickBooks and have spent many years teaching classes about it, I am not a licensed accountant. My work has involved building databases and accounting systems for businesses, so I am knowledgeable about these topics, but for any specific accounting or legal advice, you'll want to consult a qualified professional.

For this class, I am using QuickBooks 2001, and while there have been some updates in newer versions like 2002, the interface and basic functionality remain very similar. Most screens and features are shared across several recent versions, including QuickBooks 99, for which our class handbook was written. You shouldn't have much trouble following along regardless of which version you are using.

To begin, we'll launch QuickBooks Pro. Upon starting, you'll likely see either an intro screen, a "No Company Open" screen, or a prompt for first-time setup. The key step is to create a new company file, which is where all your business's information will be stored. All work in QuickBooks centers around this company file.

The setup process uses what QuickBooks calls the Easy Step Interview. This tool helps you step through all required company setup options. If you have already created a company file before, it may still be helpful to pay attention to these steps. Sometimes, settings established during initial setup are difficult to change later, so it's important to make the right selections from the start.

The Easy Step Interview is laid out with tabs across the top for navigation, and you'll see progress indicators and navigation buttons. This process typically involves reviewing information on each page and progressing through by selecting Next.

One thing to note, especially with more recent versions, is that Intuit may display advertisements for extra services. You can simply move through those as you continue with the setup process.

If this is your first experience with a seminar like this, I'd recommend watching the demonstration first, rather than attempting to follow along in real-time. After the class, I'll post a recording to the website, and I'll send out instructions on where to find it. That way, you can replay and pause the tutorial as you work on your own file.

For those upgrading from a previous version of QuickBooks, there are specific import instructions in the user manual. Today's session will focus strictly on creating a new company file. Even if you're a QuickBooks expert, I recommend going through the Easy Step Interview rather than skipping it. The interview helps automate setup that would be tedious if done manually.

Throughout the interview, you'll see options to move forward or back as needed. While you generally can return to previous screens, some entries can't be changed easily once you go past certain points, so try to get things right the first time rather than relying on going back.

The first important section is company information. Gather essential details like your business address, tax ID, and other data before you start; this will make the process smoother. I'll be setting up an example business as a sole proprietorship, since that's the most common entity type among the clients I've worked with. For demonstration purposes, I'm using XYZ Computers as the sample company name.

When filling out your company information, include street addresses, phone numbers, email, and optional website links. There are useful keyboard shortcuts, like using Alt with arrow keys, to speed up data entry in lists and dropdowns.

Next, enter your company's federal tax ID number if you have one. Then specify your business's fiscal year–most businesses use January through December.

You will also be asked which tax form your business files. I'll select Form 1040 for a sole proprietor, but corporations or S-corps should choose the appropriate option for their situation.

A menu of business types is next. You'll see categories like accounting, construction, retail, services, and more. For the example, I'll choose Retail since that option gives access to the widest range of features, and it's often a good choice even if you're uncertain.

You'll then be asked where you want to save the company data file. The default is the QuickBooks folder, but I recommend your My Documents folder to make backups easier to manage. For this demonstration, I'll name the file "XYZComputers.qbw" and make a note that it's for our seminar.

Next, QuickBooks provides a list of default accounts based on your business type. It's a good idea to stick with these selections initially, as they cover common needs like sales and expenses. Later in the process or in future lessons, I'll show you how to adjust these accounts.

You'll indicate how many people will need access to your company file. For now, I'll leave this as just one user, but in another class, I'll cover how to handle multi-user setups with different access permissions.

Now it's time to configure company preferences. For example, if you collect sales tax from customers, select Yes. If your business deals with multiple tax agencies or rates, as is common when operating in more than one county or jurisdiction, select Multiple. Otherwise, choose Single if you only have one rate to manage.

When choosing your invoice format, you'll see samples for product, professional, and service businesses, as well as the option to customize. I'll use the product invoice format since this fits the computer sales scenario. We'll cover customization in another session.

Next, you will decide whether to enable payroll features. For this class, I'll keep payroll turned off for simplicity. We'll revisit this topic in a later class.

QuickBooks will also ask about providing written or verbal estimates to customers. For most businesses, it's useful to enable this feature.

When the topic of progress invoicing comes up–that is, sending multiple invoices against a single estimate–I'll leave it off for this session. We'll talk more about it in a future class.

Time tracking is another feature you can enable if you want to record the hours that you or your employees spend on specific projects. I'll leave this off for now, but this is helpful for more advanced job costing.

Classes are a powerful feature in QuickBooks that allow you to track different segments of your business, such as differentiating revenue and expenses between hardware sales, consulting, or training. Setting up classes increases your data entry workload, so I recommend leaving this off unless your company has a clear need for detailed departmental reporting.

When managing bills and payments, you can opt to enter checks as soon as you receive bills or log all bills first and pay in batches later. I prefer the latter, as it gives more control and better overview.

The reminder list feature will notify you of pending tasks when you start QuickBooks. I find it helpful to have reminders display at startup.

You will also need to select your accounting method: accrual or cash. In accrual accounting, transactions are recorded based on when they occur rather than when cash changes hands, which is now the standard for most businesses. Once set in QuickBooks, this cannot easily be changed and requires IRS approval, so choose carefully and, if in doubt, consult your accountant.

Another critical setting is your company's start date in QuickBooks. This is the date from which you'll enter financial details and balances. The earlier the start date, the more historical data you'll need to enter, but you'll have more comprehensive reports. If you select a more recent start date, like May 1st, you'll only enter starting balances and transactions after that point.

Next, you will enter and review your income and expense accounts. You can add new accounts if, for example, you receive rental income or have specific types of expenses not already listed. Sub-accounts allow for even more detail, such as breaking down utility expenses into electric, gas, and water. You can always adjust your chart of accounts later.

QuickBooks then asks questions about how you receive payments. If you aren't always paid upfront, select Sometimes so QuickBooks will track accounts receivable for you.

The term "item" in QuickBooks refers to anything you sell, such as products, services, or other charges. You'll set up sample service items, like "Hourly Labor," which allows you to specify a billable rate, whether it's taxable, and the associated income or expense accounts. You can also account for subcontracted services and specify both the cost and sale price.

For non-inventory parts–items you buy as needed for specific jobs but don't keep in stock–enter details like purchase cost and sales price, and select which accounts these items relate to.

When adding inventory items, you'll specify names, descriptions, prices, costs, and reorder points. It's important that you record how many of each item were on-hand as of your chosen start date, as this ensures accurate accounting for inventory assets.

QuickBooks will prompt you to gather opening balances, such as which customers owe you money (accounts receivable), which vendors you owe (accounts payable), and the balances in your various accounts as of the start date. It's a good idea to have bank statements and other financial documents handy so these totals are accurate.

When entering customers and jobs, you can specify amounts owed per customer and even separate multiple jobs for the same client.

For vendors, list all businesses or individuals to whom you owed money at the start date, such as suppliers or utility companies.

The setup process continues with the option to create credit card and line of credit accounts, and to specify starting balances as of your start date. The same applies for loans and notes payable.

You should also enter any bank accounts, recording their balances as of the statement date just prior to your QuickBooks start date.

Next, you can establish asset accounts for items like office furniture, computers, and other fixed assets, including entering original cost and any depreciation if applicable.

QuickBooks introduces equity accounts to highlight the difference between assets and liabilities, representing the ownership interest in the company. This section provides default suggestions, which you can review and adjust if needed.

This wraps up our QuickBooks 1 seminar. If you have further questions, you can always reach me by email at [email protected]. If you're attending live, I'll be available in the chat room for a few more minutes. I hope to see you in the next class, where we'll continue building on what we started today.

You can find a complete video tutorial with step-by-step instructions covering all the topics discussed here on my website at the link below. Live long and prosper, my friends.

Topic List

Setting up a new company file in QuickBooks
Navigating the QuickBooks Easy Step Interview
Entering company legal and contact information
Selecting the appropriate income tax form
Choosing your business type in QuickBooks
Saving and naming your QuickBooks company file
Configuring access for multiple users
Setting sales tax preferences and rates
Choosing invoice formats for your business
Deciding on payroll setup (initial selection)
Handling estimates and progress invoicing options
Choosing to enable or disable time tracking
Understanding and deciding on class tracking
Entering bills and managing payments in QuickBooks
Configuring reminder notifications at startup
Selecting accrual or cash-based accounting methods
Setting and understanding your QuickBooks start date
Reviewing and creating income accounts
Reviewing and creating expense accounts and sub-accounts
Answering income detail questions for accounts receivable
Understanding and setting up items in QuickBooks
Setting up service items with purchase and sales details
Setting up non-inventory parts with purchase info
Setting up other charges such as shipping or delivery
Adding inventory parts with quantity and info
Entering opening balances for customers (accounts receivable)
Organizing jobs or projects for customers
Entering opening balances for vendors (accounts payable)
Setting up credit card accounts and opening balances
Entering bank accounts with statement dates and balances
Setting up asset accounts and tracking depreciation
Overview of equity accounts in QuickBooks