How to View Retained Earnings Account Information in Quickbooks
Retained earnings refer to the percentage of net income that has not been paid out as dividends, but rather “retained” by the company. When a company generates profits, it may split those profits to shareholders as dividends, or it may reinvest them into its operations. The latter option is useful for helping companies grow and expand. So, how do you view retained earnings information using the Quickbooks accounting software?
For Quickbooks Online — the cloud-based version of Intuit’s popular accounting software — you won’t find any information associated with a retained earnings account unless other entries have been made to the respective account. However, you can run a profit and loss report to find the net income or loss number.
To do this, you’ll need to log in to your Quickbooks Online account, select “Report” from the left-hand side menu and enter “Profit & Loss” in the “Go to report” field. From here, select the “Profit & Loss” report, followed by “All Dates” for the Transaction Date and “Run Report.” You can then click the “Net Income” amount to see a report of all transactions associated with the net profit or loss.
Intuit also recommends viewing the profit and loss report by year, as this allows you to see the amount transferred into your retained earnings account as it occurred naturally. This is done in a similar manner by logging in to your account and choosing Reports > Profit & Loss > Customize > Rows/Columns > Fiscal/Calendar Years > Run Report. Keep in mind that if the number displayed here differs from the number shown in your retained earnings account, only transactions affecting balance sheets can be entered for this account.
Finally, you can view a list of all these transactions that were created by users by running an account QuickReport. This is done by accessing the Gear icon > Chart of Accounts > Run Report. From here, set the transaction date to “All Dates” and select “Run Report.”
Keeping up with your retained earnings is important for several reasons. Statistics show the average small business in the United States holds approximately $96,000 debt. The good news is that you can pay off this debt with retained earnings. While investing retained earnings back into your business is always one option, another option to consider is using that money to pay off debt. Refer to the steps listed here to view information associated with your retained earnings account in Quickbooks Online.
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What is a Write-Off in Business Accounting?
In business accounting, you’ll probably come across the term “write-off.” Some people assume this is the reduction of taxable income — and that’s not necessarily wrong. If you run a taxi business, for instance, you can write-off things like vehicle expenses, gas and insurance on your income tax statements. This essentially lowers your net profit while subsequently reducing the total amount of taxes you are required to pay. However, there’s another type of write-off used in business accounting.
Write-Offs: The Basics
In addition to taxes, a write-off may also refer to the reduction of an asset’s value. It’s used to refer to an investment like a purchase of goods when the return on such investment is unlikely. The purchased goods’ return is removed from the business’s balance sheet, as it’s “written off.”
A common example of a business write-off is shrink in the retail industry. Shrink is defined as loss of inventory between acquisition and sale. Retail store,s for instance, often suffer from financial loss caused by theft. When a thief steals a product, the respective store must count that product as shrink — and this shrink can be written off from the store’s balance sheet.
Financial institutes may also perform write-offs when debt goes uncollected. If a person or business borrows a loan but fails to pay it back, the financial institute may count it as “bad debt” and subsequently remove it from their balance sheet. Regardless of the circumstance, write-offs are essential in protecting a business’s financial statements by ensuring that the balance sheet correctly reflects the business’s financial health.
Write-Off vs Write-Down
There are also write-downs, which differ from write-offs in several ways. A write-down is used to recognize the reduced value of an asset. If the value of an asset changes, the business must “write it down.” The difference between the asset’s original purchase price and its reduced value is recorded as goodwill. With that said, the terms write-offs and write-downs are often used interchangeably in business accounting. The key thing to remember is that a write-down is used when an asset’s value is depreciated but still contains some value, whereas a write-off is used when an asset’s value is decreased to zero. Hopefully, this gives you a better understanding of write-offs and write-downs in business accounting.
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How to Write Off an Unpaid Invoice in Quickbooks
Just because you send a customer an invoice doesn’t necessarily mean that he or she will pay it. Hopefully, this never happens to your business, but there are instances in which a customer won’t pay the invoice. Maybe the customer has fallen on financial hardship, or perhaps he or she is unhappy with the product or service they purchased. Regardless, it’s important for the business owner to properly record these unpaid invoices. So, how do you write off an unpaid invoice such as this using Quickbooks?
Before recording an unpaid invoice in Quickbooks, you should first attempt to collect the funds from the respective customer or client. If he or she doesn’t respond, send the invoice again, including a reminder that it’s past due. You don’t want to be pushy, but rather let the customer know that he or she needs to pay for their purchase. Only after you’ve exhausted all possible means of collection should you write off the unpaid invoice in Quickbooks.
To write off an unpaid invoice in Quickbooks, you need to add it as “bad debt.” This is done by creating a new expense account chart of accounts, giving it the name “Bad Debt” (or something similar). Next, go ahead and create a non-inventory item under Products and Services and select the bad debt expense account you just recently created on the item section. From here, you can create a credit memo for the customer, giving that customer the bad debt item along with the amount of the unpaid invoice. When you are finished, apply the credit memo to the invoice and click “Save.”
Of course, it’s important to write off bad debt; otherwise, you’ll end up paying income taxes on the invoice total. If the invoice was $100, for instance, your books will show that you earned $100 on the invoice — even if you never collected it from the customer. By writing off this invoice as bad debt, however, you can avoid this tax while ensuring your books are correct and up to date.
Hopefully, this gives you a better idea of how to handle unpaid invoices in Quickbooks. You may never encounter a situation in which you have to write off an unpaid invoice as bad debt. However, it’s best to err on the side of caution by familiarizing yourself with the process nonetheless. If a customer doesn’t pay an invoice, refer to the steps described here to write off the invoice as bad debt.
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How to Edit Your Invoice Template in Quickbooks
Quickbooks supports pre-made invoices that business owners can use to handle transactions. When a customer buys a product or service, you can send him or her an invoice directly from your Quickbooks interface. While Quickbooks has a default invoice that you can use, it’s recommended that you customize your invoice to reflect your business. Doing so allows you to add your company’s logo, colors, slogans, address and other key information. So, instead of receiving a nondescript and generic invoice, customers will receive a fully customized invoice that includes all of your company’s brand elements.
If you’re interested in customizing your invoice, you can do so by logging in to your Quickbooks account and accessing the Gear menu > Settings > Custom Form Styles. Here, you should see an option to edit your invoice or create a new invoice. Assuming you want to customize a default invoice to use in future transactions, go ahead and click the “Edit” button, which is found under the “Action” column.
After clicking the “Edit” button, you’ll be presented with a style navigator. These are basically pre-defined styles of templates that you can use in your invoice. Don’t worry, though, because you can still fully customize the style of your invoice according to your preference and specifications. Quickbooks has five styles from which to choose, so feel free to browse through them and select the one that represents your company best.
Once you’ve selected your invoice style, you should add your logo to the invoice. This is done by clicking the drop-down button in the “Logo” menu box, followed by “Upload. Keep in mind that your logo must be sized appropriately to fit inside the invoice. Thankfully, Quickbooks has a built-in image resizing tool that you can use to make it fit. After uploading and resizing your image, click and drag it to the area of your invoice where you want it to appear.
Of course, you can also change the color of your invoice. This is done by clicking the drop-down arrow in the “Color” menu box, at which point you can choose the colors you’d like to use in your invoice. Here’s a tip: click your mouse somewhere on your logo to automatically select the color used in the logo. This allows you to create a more cohesive invoice by ensuring all of the colors match and flow together.
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What is a Quickbooks Company File and How Do I Open It?
Intuit’s popular Quickbooks accounting software stores data in a single, convenient file. Known as the Quickbooks Company File, it contains all of the relevant data and information pertaining to the user’s account. Assuming you use Quickbooks, you’ll need to ensure the Company File is stored in a safe location. Failure to keep track of this file could cause problems later down the road. To learn more about the Quickbooks Company File and how to open it, keep reading.
The Quickbooks Company File uses the extension .QBW when the software is installed in a computer with Windows. Thankfully, it’s the only file that should feature this extension. So, if you ever lose or otherwise can’t find your Company File, you can search your company for all files containing the .QBW extension.
The easiest way to find your Quickbooks Company File is to log in to your Quickbooks and access File > Open or Restore Company File. From here, you can browse through the different folders of your computers, searching the specific drive on which it is stored. You can also use the “search” function to search for the file name or QBW extension, which should point you in the right direction. Once you’ve found your Company File, click to highlight it, followed by “Open” to open it. Depending on your settings, you may be prompted to enter the username and password associated with your Quickbooks account, after which Quickbooks will open your Company File.
But what if you want to move your Company File to a new computer? This is an all-too-common scenario, especially among users who run Quickbooks on multiple computers. The good news is that you can easily transfer your Company File in just a few easy steps. First, you’ll need to create a backup copy of your Company File on your old computer. Next, transfer this copy to an external storage device, such as a USB flash drive. You can then install the copy on your new computer, after which you should use the Restore feature to restore it on your new computer. When you are finished installing and restoring your Company File on the new computer, go back and uninstall Quickbooks Desktop from your old computer. Don’t worry, transferring your Company File to a new computer will not affect your Quickbooks license, assuming you follow these steps.
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How to Delete a Customer Payment in Quickbooks
Quickbooks allows business owners and accountants to record customer payments in just a few easy steps. After selling a product or service and collecting payment from the respective customer, you’ll need to record that payment in Quickbooks. This is typically done by logging in to your account, clicking the plus (+) menu on the left-hand side menu and choosing “Receive Payment” under the “Customers” section. Here, you can select the customer or enter a new name and information for the customer.
But what if you need to delete a customer payment in Quickbooks? There are times when business owners and accountants may need to delete such payments. For instance, if the customer changes the way in which they pay (e.g. net 30 to net 15), you may need to delete a past payment and send the customer a new invoice. Failure to do so could result in your books being thrown off. Thankfully, this is easily accomplished using Intuit’s Quickbooks accounting software.
To delete a customer payment, go ahead and log in to your Quickbooks account and access the “Customers” section. From here, you’ll see a list of all payments made by the customer whom you just selected. Scroll through these payments until you find the one you’d like to delete, at which point you should click to highlight the payment. Now, continue scrolling down to the bottom of the list, at which point you should see a “More” option. Click “More,” followed by “Delete.” After clicking “Delete,” the customer’s payment will be removed from your account.
However, you aren’t out of the woods just yet. You’ll still need to apply the new payment, assuming the customer has made a separate payment for the invoice. This is done by clicking the Create (+) button, followed by “Receive Payment.” Here, you can enter the customer’s name, bank details, check information, dollar amount of the payment and other associated information. You can also check the invoice to which you want the payment applied. If it’s for a past invoice, select the invoice to ensure the payment is recorded corrected.
Following this tutorial will allow you to quickly delete customer payments in Quickbooks. While it may sound like a lot of work, Quickbooks makes the process a breeze. Just remember to record any new payments the customer has made.
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What is Working Capital in Accounting?
Some business owners assume that working capital is the amount of money they have or revenue they generate, but this isn’t necessarily true. Working capital can best be described as the amount of money and assets a business has minus its debt and liabilities. To learn more about working capital and how it pertains to accounting, keep reading.
As explained above, working capital is the amount of assets a business has minus its liabilities. If a business has $100,00 of assets — cash, outstanding invoices, property, etc. — and $30,000 of debt, for instance, it’s working capital is $70,000. The $30,000 worth of debt is subtracted from the business’s $100,000 worth of assets; thus, leaving $70,000 of working capital.
Why Working Capital is Important
So, for what reasons do business owners need to keep track of their working capital? For starters, it allows business owners to see whether or not they can cover short-term liabilities, such as overhead and payroll. If a business has a low working capital, it may struggle to cover short-term expenses like these. On the other hand, a high working capital indicates the business is financial stable and can easily cover these expenses.
Furthermore, lenders often scrutinize a business’s cashflow and working capital when the business applies for a loan. While lenders use a variety of criteria to determine whether to approve or deny a business’s loan applicant, there’s a great deal of emphasis placed on working capital — and for good reason. If a business has a low or even negative working capital (see below), it may struggle to pay back the loan. This doesn’t necessarily mean the lender will reject the business’s loan application; however, they may charge higher interest rates and/or require the use of collateral.
Negative Working Capital
Let’s hope his doesn’t occur with your business, but there are times when a business’s liabilities may exceed its assets. Known as negative working capital, this indicates the business is struggling financially and may not be able to pay its short-term debt and liabilities. If a business’s debt and liabilities exceed its total assets, the business has negative working capital.
To recap, working capital is a measure of a company’s short-term financial health. It uses the formula of assets minus liabilities, revealing its working capital. Hopefully, this gives you a better understanding of working capital in accounting.
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When (and How) to Void Checks in Quickbooks Online
There are times when you’ll need to void a check that has already been written. Maybe you paid the vendor already, or perhaps it’s a payment for a different vendor. Regardless, you’ll want to ensure the check is “voided” in your accounting software. Assuming you use the cloud-based Quickbooks Online software, you can follow the steps listed below to record voiced checks.
First, you’ll need to enter the voided check in Quickbooks Online. This is done by logging in to your account and clicking the Plus Sign (+) > Checks, after which you’ll need to enter the information associated with the check, including bank account, check number, date on which the check was issued, dollar amount, etc. When you are finished, click the “More” option at the bottom and choose “Void.” Quickbooks Online will prompt you to confirm, at which point you should click “Yes” to proceed. After following these steps, Quickbooks Online will void the respective check as of the current date.
The steps listed above, however, should only be used to record a voided check in Quickbooks Online. If you want to void a check that has already been recorded, you’ll need to take a different approach. This involves logging in to your account and choosing Accounting > Chart of Accounts > View Register (for the bank account associated with the voided check) > highlight the check > Edit > More > Void. Quickbooks will also ask you to confirm your choice, at which point you should click “Yes.” Once complete, the voided check will post on the bank account selected as the default account for your Quickbooks Online.
Additionally, you can create a report of all voided check in your Quickbooks Online account. This report is accessed by clicking Reports > Accountant Reports > Transaction List by Date > Customize. Here, you can enter the date range for the report. Simply choose the “From” and “To” date ranges, which Quickbooks will use as the basis when running the report. Alternatively, you can select a specific date by selecting the “Transaction Date” drop-down menu. After selecting the date or date range for the report, click Filter > Memo > Void > Run Report. Quickbooks will then return a report of all voided checks associated with your account. Whenever you void a check, it’s a good idea to run a report to ensure Quickbooks has accounted for it properly.
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