How to Run a Vendor Expense Report in Quickbooks

When preparing your taxes for the previous year, you’ll need to break down your business’s expenses. Regardless of what type of business you manage, you’ll probably need to purchase products or services from vendors. The good news is that you can write off these purchases as business-related expenses on your taxes. First, however, you’ll need to run a vendor expense report to determine exactly how much you spent with each vendor.

Steps to Running a Vendor Expense Report in Quickbooks Desktop

If you use Quickbooks for your business’s accounting needs, you can run a vendor expense report in just a few easy steps. Start by logging in Quickbooks Desktop — not the cloud-based version of Intuit’s accounting software — and then click the “Reports” button at the top of the screen. From here, choose “Vendors & Payables,” followed by “Unpaid Bills Detail.”

At this point, you should see a list of all your business’s unpaid bills. Of course, this isn’t particularly helpful if you’re trying to determine how much money you spent for each of your business’s vendors. Therefore, you’ll need to select the “Customize Report” button on the unpaid bills screen, followed by choosing the “filters” tab. You can then set the filter parameters to “Paid Status.” When finished, select click the button labeled “Closed,” followed by “OK.”

With the filter parameters set to “Paid Status,” you should see a list of all the bills your business paid. If you have dozens or hundreds of paid bills listed, you may want to set a transaction date range to narrow down the results.

What About Quickbooks Online?

Quickbooks Online uses a different framework than Quickbooks Desktop. As the name suggests, it’s the cloud-based version of Intuit’s accounting software.

To run a vendor expense report in Quickbooks Online, you’ll need to choose the “Expenses by Supplier Summary Report” option. Keep in mind, this only shows how much money you or your business spent with its vendors.

As a business owner, you’ll inevitably spend money with your vendors to perform your business’s operations. Products and services are essential to all businesses, but it’s important that you track them for tax purposes. By tracking your vendor payments, you can lower your tax burden come April. Thankfully, Quickbooks makes it easy to view vendor expenses. Whether you use Quickbooks Desktop or Quickbooks Online, you can run a report that shows all your business’s vendor payments.

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Managerial Accounting vs Financial Accounting

When researching common accounting activities, you may come across managerial accounting and financial accounting. They are two common types of accounting activities conducted by businesses. While similar, though, managerial accounting and financial accounting aren’t the same. As a business owner, you should learn the differences between these two accounting activities so that you can keep your financial records in perfect order.

What Is Managerial Accounting?

The term “managerial accounting” refers to all internal financial activities used to record and track a business’s transactions. It’s generally used to improve a business’s operations and, therefore, increase its profits. Budgeting, for instance, is a common managerial accounting activity. Businesses must look at their past expenses to estimate how much money they’ll spend on similar products and services in the future. Using this information, as well as income data, businesses can create a budget that’s aligned with their objectives.

As explained by Chron, managerial accounting focuses on processes as opposed to financial-based metrics like cash flow. Businesses use this data to make managerial decisions that affect their bottom line.

What Is Financial Accounting?

In comparison, the term “financial accounting” refers to all external financial activities used to record and track a business’s transactions. Also known as cost accounting, it’s a more broad type of accounting that covers all recording activities, specifically those involving income and expenses.

Financial accounting activities are specified in the Generally Accepted Accounting Principles (GAAP). This universal framework contains processes used for financial accounting, including their respective standards and rules that professional accountants should follow.

The key thing to remember is that managerial accounting is used internally within a business, whereas financial accounting is used for individuals or entities outside of a business. With financial accounting, internal workers, such as accountants, often prepare reports. But they prepare those reports for individuals or entities outside of their business, which is in stark contrast to managerial accounting.

Common types of financial reports created during financial accounting include income statements, balance sheets and equity statements.

In Conclusion

Managerial accounting and financial accounting are used by businesses to keep track of their financial records. The difference is that managerial accounting focuses on improving managerial operations, whereas financial accounting focuses consists of more traditional accounting activities like tracking income and expenses as well as creating balance sheets and equity statements.

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Why Is My Accounts Receivables (AR) Balance Negative?

Have you discovered a negative accounts receivables (AR) balance when reviewing your business’s finances? Not to be confused with accounts payables (AP), AR refers to money owed to your business. Normally, it consists of a positive balance, meaning customers or clients owe your business money. But what if your business has a negative AR balance?

A Negative AR Balance Means Your Business Owes Money

With a negative AR balance, your business essentially owes money. Maybe your business owes money to a customer, or perhaps it owes money to a vendor. Regardless, the negative balance indicates a financial liability.

Negative AR balances are typically the result of an overpayment. If you send a customer an invoice for $100 but he or she accidentally pays $150, for example, it will result in an AR balance of negative $50. Your business will then have to pay the respective customer $50.

How to Handle a Negative AR Balance

Now that you know what causes negative AR balances, you might be wondering how to handle them. Assuming the negative AR balance is the result of an overpayment, you can fix it in one of two ways: One way is to leave the customer’s original payment and simply carry his or her credit to the following invoice. Another way to handle a negative AR balance is to issue a refund for the overpayment.

In Quickbooks, you can record overpayments by selecting (+) button from the home screen, followed by “Receive Payment.” In the next window, choose the customer who made the overpayment. Next, find the invoice associated with the overpayment in the “Outstanding Transactions” area. After locating the invoice, click the adjacent box so that it creates a check mark in it. Finally, enter the amount of the customer’s payment — the total amount, including the overpayment — in the “Amount Received” field.

In Conclusion

AR balances are typically positive because they denote money owed to your business. There are times, however, when you may encounter a negative AR balance. As mentioned above, a negative AR balance denotes money owed by your business. It typically occurs when a customer, client or vendor accidentally overpays.

Encountering a negative AR balance can be confusing. The good news is that you can easily handle it using Quickbooks. Just remember to either carry the customer’s overpayment credit over to the next invoice or issue the customer a refund.

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What Are Capital Expenditures in Accounting?

Many entrepreneurs assume that capital expenditures are the same as expenses. While they can be classified as expenses, this doesn’t apply to all of them. Whether you run a small, medium or large business, you should familiarize yourself with the definition of capital expenditures. In this post, we’re going to break down this otherwise common accounting term, revealing it’s meaning and importance for business owners such as yourself.

Overview of Capital Expenditures

Also known as a capital expense, a capital expenditure is money spent towards a product or service for the purpose of improving a business’s long-term fixed assets. It’s not uncommon for businesses to reinvest their earnings back into their operations. When a business spends money on a product or service that extends the usable life of one of its long-term fixed assets, the purpose is considered a capital expenditure.

There are also operating expenses, which are located on the opposite spectrum as capital expenditures. While capital expenditures consist of business-related expenses — specifically those used to improve a fixed asset — operating expenses consist of money paid to acquire or inherit an asset’s operation. The main difference between the two is that capital expenditures are used to improve or extend the life of a fixed asset, whereas operating expenses are ongoing expenses associated with short-term assets.

Examples of Capital Expenditures

Now that you know the basic definition of capital expenditures, let’s take a closer look at some examples of them. Purchasing a fixed asset is a common example of a capital expenditure. If a product or service is designed to facilitate your business’s operations, it’s considered a fixed asset and, thus, a capital expenditure.

Upgrading a current asset used by your business could be considered a capital expenditure as well. A construction company, for example, may upgrade the model of a bulldozer or excavator. Depending on the model, construction companies may spend tens of thousands of dollars on bulldozer upgrades such as this, with each of these transactions being a capital expenditure.

Making repairs to a current asset owned and used by your business can also be considered a capital expenditure. If an asset, such as a machine, is damaged to the point where it adversely affects your business’s operations, you may want to repair it. If you spend money to repair an asset such as this, it’s considered a capital expenditure.

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How to Edit Recurring Payments in Quickbooks

Does your business bill its customers on a yearly or monthly basis? If so, you can set up recurring payments in Quickbooks. With recurring payments, customers will automatically be charged on their billing date.

You can easily set up recurring payments in Quickbooks by accessing Customers > Credit Card Processing Activities > Set Up Recurring Payments > Set Up Recurring Payments. But What if you need to edit one or more recurring payments? Even if you’ve already set up a recurring payment in Quickbooks, you can still change it. Quickbooks makes it easy to edit recurring payments. Here’s how you do it.

Steps to Edit a Recurring Payment

To edit a recurring payment in Quickbooks, you’ll need to first pull up the customer’s information. From the home screen, choose “Customers,” at which point you can locate the customer’s name. After pulling up the customer’s information, identify the section with the information that you want to change. You can then click the “Edit” button in this section to change the appropriate field or fields.

In Quickbooks, you can change information such as the customer’s name, phone number, the billing start date, the billing frequency, billing day of the month, billing end date, credit card number, credit card expiration date and more. Regardless, to change any of this information, you’ll need to locate the area in which it’s contained, followed by clicking the “Edit” button.

It’s important to note that Quickbooks only allows users to change yearly and monthly billing frequencies for recurring payments. You can choose an alternative billing, such as billing customers on a specific day of the month, but you can’t change the frequency if it’s not currently yearly or monthly.

In Conclusion

Setting up recurring payments is convenient for both businesses and their customers. With recurring payments, you won’t have to worry about manually collecting payments from customers. At the same time, customers won’t have to worry about paying their bill on or by the due date. Recurring payments automatically charge customers, making it a mutually beneficial way to sell products and services.

And if you use Quickbooks, you can easily set up, as well as edit, recurring payments for your business’s customers. Intuit’s popular accounting software fully supports recurring payments. If you need to set up or edit a recurring payment, refer back to this post for assistance.

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How Quickbooks Can Help Your Small Business Succeed

Quickbooks has become the definitive accounting solution among small business owners. It’s versatile, user friendly, and because it’s backed by Intuit, you can rest assured knowing that it works. Unless you’ve used it, though, you might be wondering how, exactly, Quickbooks can help your small business succeed.

Automatic Expense Recording

With Quickbooks, you don’t have to worry about manually recording all your small business’s expenses. You can take advantage of the software’s automatic expense recording feature. Basically, this involves synchronizing your business-related credit and debit cards to your Quickbooks account. Once sync, Quickbooks will automatically download all transactions from the respective cards, thereby eliminating the need to manually record all your small business’s expenses.

Payroll Management

Along with automatic expense recording, Quickbooks offers integrated payroll management. You can create and schedule paychecks for your business’s employees from within the Quickbooks software. When payday rolls around, your business’s employees will receive their paychecks.

Invoice Generation

You can even use Quickbooks to generate invoices for your small business’s customers or clients. Quickbooks features a built-in invoice generation tool that’s fully customizable. Using it, you can quickly create custom invoices for your small business’s customers or clients.

Inventory Management

If you run a retail business, you’ll be pleased to hear that Quickbooks supports inventory management. As a retailer, inventory management can make or break your small business’s success. If you fail to keep track of your store’s inventory, you may end up with a surplus of products that are difficult to sell. Quickbooks can help you manage your store’s inventory, however.

Desktop and Online Versions Available

You can choose from either the desktop or online version of Quickbooks. Known as Quickbooks Desktop and Quickbooks Online, respectively, they both allow you to easily keep track of all your small business’s revenue and expenses. Quickbooks Desktop, however, is more versatile in terms of features, whereas Quickbooks Online uses cloud technology to ensure a higher level of accessibility. Regardless, you can choose from either the desktop or online version of Quickbooks.

Improves Efficiency

Because of all these features, as well as other features, Quickbooks can improve the efficiency at which your small business operates. You’ll spend less time managing your business’s finances, and as a result, you can focus on tasks directly associated with your small business’s operations.

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How to Edit Paychecks in Quickbooks

Does your business have one or more employees on payroll? If so, you’ll need to compensate them for their labor. Intuit’s popular accounting software, Quickbooks, features a built-in payroll system. Using Quickbooks, you can easily create and send paychecks to your business’s employees. With that said, you may need to edit paychecks before sending them.

Editing Paychecks That Haven’t Been Submitted to Intuit

Assuming you haven’t submitted a paycheck to Intuit yet, you can edit it simply by clicking the “Back” button. Quickbooks’s Payroll Full Service allows you to make changes to your employees’ paychecks before you submit them to Intuit. Just click the “Back” button on the paycheck screen, at which point you can edit the fields.

Editing Paychecks That Have Already Been Submitted to Intuit

If you already submitted a paycheck to Intuit, you can still edit it — you’ll just need to perform a few additional steps. For Payroll Full Service, select “Workers” under the left-hand navigation menu and choose “Employees.” Next, find the employee’s name for whom you are creating the paycheck and click “Paycheck list.” You can then proceed to delete the paycheck, after which you recreate a new paycheck with the correct information.

The Basics of Creating Paychecks in Quickbooks Desktop

Creating paychecks in Quickbooks Desktop is a quick and easy process. Not to be confused with Quickbooks Online, Quickbooks Desktop lives up to its namesake by featuring a localized installation, meaning it’s installed and executed on your computer’s storage drive rather than over the internet.

To create a paycheck in Quickbooks Desktop, pull up the employee for whom you want to create it. Next, access the “Pay Employees tab.” From here, you can click “Create Paychecks” to open the paycheck creation window, followed by starting a scheduled payroll or an unscheduled payroll. After double-checking to ensure the information is correct, you can save and close the window to finish the process.

You can also edit paycheck numbers in Quickbooks. This is done by going back to the main home screen and clicking Banking > Use Register. Next, select the account associated with the paycheck. After opening the paycheck, you should see “Check Number” field, which you can edit to change the paycheck number.

In Conclusion

As your business grows, you may need to hire employees to accommodate its newfound success. Employees are the lifeblood that fuel a successful business’s operations. With that said, it’s important to stay on top of your business’s payroll when hiring and managing employees.

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Tax Audits: 6 Ways to Lower Your Risk

With April right around the corner, you might be wondering how to lower your risk of being audited by the Internal Revenue Service (IRS). Statistics show the IRS audits about 0.5% of all federal tax returns in any given year. The good news is that you can lower your risk of being audited by following these six tips.

#1) File a Return

You can’t outrun Uncle Sam. If you don’t file a tax return — and you had income that was reported to the IRS for that year — you’ll raise a red flag with the IRS. Upon discovering that you didn’t file a tax return, the IRS may audit you. Therefore, you should always file a tax return to minimize your risk of being audited.

#2) Double-Check Your Income and Expenses

Before filing your tax return, double-check all your income and expenses to ensure the information is correct. If the income reported to the IRS doesn’t match the income on your tax return, the agency may audit you.

#3) Form an LLC or Corp

If you currently operate as an independent contractor or a sole proprietorship, consider forming either a limited liability company (LLC) or a corporation. Research shows independent contractors and sole proprietorships have the highest audit rate. By forming an LLC or a corporation, you can lower your risk of being audited.

#4) Choose the Right Tax Preparer

Don’t underestimate the importance of choosing the right tax preparer. There are thousands of tax preparation businesses in the United States that specialize in preparing, as well as filing, tax returns. Unfortunately, though, not all of them are credible or legitimate. If you choose a questionable tax preparer such as this, they may make mistakes with your return that results in an audit from the IRS.

#5) File Online

You might be surprised to learn that filing your tax return online can lower your risk of being audited. According to Intuit, roughly one in five mail-filed returns have an error, compared to just 0.5% with e-filed returns. The IRS’s e-filing system has safeguards in place to protect against common filing errors. If the system detects an error, it will notify you — or the preparer who’s filing your return — so that you can fix it.

#6) Complete All Required Fields

While this may sound like common sense, it’s worth mentioning that you should complete all required fields on your tax return. Leaving just one field blank is often enough to trigger an audit.

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