Tutorials

How to Add a New Expense Category in Quickbooks

Quickbooks supports the use of categories to organize transactions. Categories make it easier to track your business’s expenses. Rather than keeping all your expenses grouped together, for instance, you can split them up into relevant categories. Quickbooks doesn’t require the use categories, but leveraging this feature can make a world of difference in your financial accounting efforts. How do you add new expense categories in Quickbooks exactly?

Steps to Creating a New Expense Category

You can find the option to add new expense categories in your chart of accounts. To get started, log in to Quickbooks and click the “Accounting” menu, followed by “Chart of Accounts.” Next, click “New” in the top-right corner. You can then choose “Expense” or “Other Expense” under the “Account Type” option. When finished, select a detail type for the expense and enter a name for the new category. You’ll also see a field for number and description. To complete the process, click “Save and Close.”

Keep in mind, Quickbooks Self-Employed doesn’t support the creation of expense categories. If you use Quickbooks Self-Employed, you’ll have to choose from one of the software’s default categories.

How Expense Categories Work

Expense categories work by allowing you group similar transactions together. You can create categories for your business’s various products or services. Alternatively, you can create them for your business’s expenses. Categories are simply used for classification purposes. In Quickbooks, they allow you to group similar types of expenses together.

There’s really no wrong way to use expense categories as long it helps you track your business’s expenses. If you operate a retail store, for example, you may want to create an expense category for utilities and another expense category for inventory purchases. With these expense categories, you can quickly see how much money your business has spent on utilities and inventory over an extended period. Without expense categories, utilities and inventory would be grouped together, thereby making it difficult to distinguish between these two expenses.

In Conclusion

An expense category is a method by which you can group similar business-related expenses together in Quickbooks. Like other categories, Quickbooks doesn’t require them. Expense categories is an optional feature that won’t affect your business’s recorded transactions. Nonetheless, they can prove useful if your business has a lot of expenses, particularly different types of expenses.

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Quickbooks Now Supports Amazon Business Integration

Amazon offers a convenient all-in-one platform for purchasing products and services. It doesn’t just cater to consumers, however. Amazon sells products and services to businesses as well. If you use Amazon Business, you’ll be pleased to hear that it now integrates directly with Quickbooks.

Intuit Announces Amazon Business Integration for Quickbooks Online

In September 2020, Intuit announced that its Quickbooks Online accounting software will support Amazon Business transactions. When integrated, Quickbooks Online will automatically pull all your transactions from Amazon Business.

Small businesses are increasingly looking for ways to seamlessly manage their business, while reducing the time it takes to do so. This integration allows both small businesses, and the accountants who serve them, to better manage a business owners’ purchases and overall books,” said Intuit’s Rajneesh Gupta in a statement.

How to Set Up Amazon Business With Quickbooks Online

To set up Amazon Business with Quickbooks Online, log in to your Quickbooks account as admin and navigate to the Amazon Business Purchases app section. From here, click the option for “Get app now.” You will then be asked to log in to your Amazon Business account. Next, choose a start date for transaction imports. If you want to import all of your transactions from the current year, for example, set the start date to January 1. Click “Finish” to begin to the import.

After clicking “Finish,” Quickbooks Online will begin to import all of your Amazon transactions from the specified start date. Depending on how many transactions you have, it may take several minutes or longer. Keep in mind, Quickbooks will continue to check your Amazon account several times a day to see if you’ve made any additional transactions. If you buy a product on Amazon after setting up Amazon Business, Quickbooks will automatically update your records with the transaction.

Add Transactions

Once you’ve integrated Amazon Business with Quickbooks, you can add the transactions to your books. To do this, go to the “Banking” tab in Quickbooks and choose “App transactions,” followed by “For review.” You can then choose either “Add or Match” or “Review” for each listed transaction. The former option means the transaction is ready to be added to your books. The latter option places the selected transaction or transactions on hold so that you confirm them before adding them to your Chart of Accounts.

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The 4 Steps of the Accounting Cycle

Accounting is essential to running a successful business. If you don’t know how much money your business spends, as well as how much money it generates in sales revenue, you’ll struggle to create a profitable business. While there are different ways to approach accounting, one of the popular methods involves the four-step accounting cycle. In just four simple steps, you can keep track of your business’s financial information.

#1) Analyze Transactions

The first step of the accounting cycle is to analyze transactions. Transactions may consist of receipts and invoices. Receipts, of course, denote an expense, whereas invoices denote revenue generated. To begin with the accounting cycle, you must identify all of your business’s transactions for the given financial period.

#2) Record Transactions

After analyzing your business’s transactions, you’ll need to record them in the form of journal entries. Journal entries are a form of structured data about transactions. They typically include the date of a transaction, the dollar amount of a transaction, the account number associated with the transaction and a brief description. If you use Quickbooks, you can create journal entries for your business’s transactions using the accounting software.

#3) Add Journal Entries to General Ledger

The third step of the accounting cycle is to add the newly created journal entries to your business’s general ledger. The general ledger is a document that contains journal entries for transactions. Also known as the nominal ledger, it serves as the central hub for accounting processes. You can review your business’s general ledger to gain a better understanding of its financial health. Once you’ve identified your business’s transactions and recorded them in the form of journal entries, you should add those journal entries to your business’s general ledger.

#4) Run an Unadjusted Trial Balance Report

The fourth and final step of the accounting cycle is to run an unadjusted trial balance report. What is an unadjusted trial balance report exactly? It’s a summary of all the balances in your business’s general ledger. With an unadjusted trial balance report, you’ll see an overview of your business’s transactions displayed neatly in a single report.

The accounting cycle may seem confusing, but it’s actually rather simple. It consists of four basic steps: analyze transactions, record transactions, add journal entries to the general ledger and run an unadjusted trial balance report.

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Estimates vs Quotes in Quickbooks: What’s the Difference?

Quickbooks supports the creation of estimates and quotes. When selling products or services to your business’s customers, you may want to use one of these alternative pricing formats. Neither estimates nor quotes are fixed prices. Rather, they are used to help customers understand about how much money they can expect to pay for a product or service. To use them correctly, you’ll need to familiarize yourself with the differences between estimates and quotes.

What Is an Estimate?

An estimate is a generalized prediction of how much a product or service will cost. It’s typically used when a business, such as a service contractor, has limited information about a customer’s project. If a customer requests a service, and the price of that service can vary depending on factors that are unknown at the time, you may want to give him or her an estimate.

The actual price of a customer’s project can change after he or she receives an estimate. If you discover that the project requires more labor or materials, you may need to charge the customer more. If the cost of the project is less than what you originally estimated, you may want to change the customer less. Regardless, an estimate is simply a prediction of how much money a customer can expect to pay.

What Is a Quote?

A quote, on the other hand, is a more detailed prediction of how much a product or service will cost. Like estimates, quotes aren’t set in stone. They are used to help customers understand how much money they can expect to pay for a project. With that said, quotes are usually more accurate than estimates.

When businesses create a quote, they evaluate the specific needs of the customer. Estimates are often created without looking at the customer’s needs. A business may create an estimate by using data from its past customers. To create a quote, businesses look at the details of a customer’s project to create a more accurate prediction of the actual cost.

In addition to estimates and quotes, Quickbooks supports the creation of proposals. A proposal is a document that breaks down all the costs associated with a customer’s project. Proposals are the most accurate in terms of pricing. When given to a customer, the customer can either accept or reject the proposal. If accepted, the proposal becomes binding.

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What Are Categories in Quickbooks and How Do They Work?

Keeping track of all your business’s products can be difficult. Depending on the type of business you own and operate, it may offer hundreds or even thousands of products. As a result, sifting through them all can be tedious and tiresome. Fortunately, Quickbooks supports the use of categories to group similar products — as well as services, if applicable — together. By using categories, you’ll have an easier time tracking your business’s inventory and analyzing your business’s sales revenue.

Overview of Categories

Categories are a feature in Quickbooks that allows you to group similar products together. It’s not a requirement for using the popular accounting software. On the contrary, if your business sells a single product, there’s no need to use them. Nonetheless, businesses that sell many different types of products can benefit from the use of categories. With categories, you can organize your business’s categories so that they are easier to evaluate and analyze.

How to Create a Category

You can create a category in Quickbooks by logging in to your account and clicking the “Sales” menu, followed by “Products and Services.” Next, click the “More” drop-down menu and choose “Manage Categories.”  You should then see an option for “New category.” Clicking this link will allow you to create a new category with a custom name.

Because categories are used for grouping and organization purposes, you should give the new category a relevant name. If you’re creating a category for a specific store, for example, you may want to give it the same name as the respective store. Using a relevant name will help you identify the category more easily.

How to Create a Subcategory

You can also create lower-level categories under a top-level or “parent” category. Known as a subcategory, it’s supported by Quickbooks. To create a subcategory, pull up the main parent category by following the steps listed above. When you click “New category,” Quickbooks will ask you if it’s a subcategory. Clicking the box will place a checkmark that confirms the new category is, in fact, a subcategory.

Whether it’s a category or subcategory, you can add it to your business’s products. This is done by pulling up the product or service in Quickbooks and then clicking the “Edit” tab from the “Action” drop-down menu. When you click the “Category” menu, you’ll see a list of all your previously categories and subcategories, which you choose to organize the product.

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How to Create a Packing Slip in Quickbooks

Does your business ship products to its customers? Not all transactions are performed in person. While some businesses only sell their products locally and in person, others allow customers to order products online. In the latter scenario, you’ll typically need to create a packing slip for each order. Fortunately, Quickbooks features a simple tool for creating packing slips. For a step-by-step walkthrough on how to create a packing slip in Quickbooks, keep reading.

What Is a Packing Slip?

A packing slip is a piece of printed paper that contains information about a customer’s order. When you ship an order to a customer, you should include a packing slip in the box. The packing slip will reveal the type of products purchased, the number of units purchased, the price of the products, the customer’s address and other essential information about the customer’s order.

Steps to Create a Packing Slip

You can create a packing slip in Quickbooks by performing just a few simple steps. In Quickbooks Online, log in to your account and click the “Sales” tab under the main menu, followed by “Customers.” After finding and clicking the name of the customer for whom you are creating a packing slip, check the “Transaction List” tab for the invoice. The invoice should contain all of the information needed to create a packing slip. Once you’ve found the invoice, click the drop-down menu labeled “Batch actions” and select “Print packing slip.”

Quickbooks will then display a preview of the packing slip. In this preview, you’ll be able to see what the packing slip looks like before it’s printed. You can also make changes to the packing slip before printing it. Assuming the packing slip looks okay, you can proceed to print it. When you prepare the customer’s order for shipping, you can place the packing slip in the same box with his or her purchased products.

In Conclusion

Packing slips are important because they contain information about customers’ orders. Customers don’t always remember what they ordered. With a packing slip, though, they’ll have all the essential information on a piece of printed paper.

Quickbooks supports the creation of packing slips. If you use Quickbooks to create invoices, you can use the accounting software to create and print packing slips. Just find the invoice and selec “Batch actions,” followed by “Print packing slip.”

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How to Record an Owner’s Reimbursement in Quickbooks

Have you used your own money to cover one or more business-related expenses? You aren’t alone. Countless business owners tap into their personal funds. When using your personal funds for business-related expenses, though, you’ll typically need to record the transactions as an owner’s reimbursement.

Once you’ve used your own money to pay for a business-related expense, you should reimburse yourself for the transaction. Reimbursement means transferring money from your business’s bank account to one of your own personal bank accounts. Of course, you’ll need to then record the reimbursement in your Quickbooks account. Doing so will ensure that your Quickbooks account recognizes the reimbursement. You can record an owner’s reimbursement in just a few simple steps.

Create a Journal Entry

To get started, you’ll need to create a journal entry for the transaction. In Quickbooks Online, you can create new journal entries by clicking the (+) sign at the top of the page and choosing “Journal Entry.” From here, enter an expense account, after which you can debit the total amount of the transaction in the first field. You can then choose “Owner’s Equity,” followed by entering the same amount from the previous field. When finished, click “Save and close” to finish the journal entry.

Record the Reimbursement

After creating a journal entry, you can now record the reimbursement. This is done by clicking the (+) sign once more and selecting “Expense.” You should now see an option to select your bank account. For this option, choose the bank account from which you were reimbursed for the transaction. When you reimburse yourself for a business-related expense, you’ll use a bank account that’s connected to your business. You should choose this bank account when recorded an owner’s reimbursement.

Upon selecting “Expense” and choosing your bank account, you’ll need to choose “Owner’s Equity.” Next, enter the amount of the transaction. You can complete the process by selecting “Save and close.” The owner’s reimbursement should now be recorded in your Quickbooks account.

In Conclusion

An owner’s reimbursement is a transaction between your business bank account and your own personal bank account. When you use money from your personal bank account to pay for a business-related expense, you should reimburse yourself. This involves transferring money from your business’s bank account back into your personal bank account. If you use Quickbooks, you can record owner’s reimbursements such as this using the steps listed above.

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Need to Write Off Bad Debt? Here’s How You Do It

Bad debt is a common occurrence when running a business. If your business allows customers or clients to pay after their products have been delivered or their services have been completed, some of them may not pay. While you can’t force a customer or client to pay, you can write off the transaction as bad debt. Doing so will essentially lower your business’s taxable income, meaning you won’t have to pay taxes on the transaction. In Quickbooks, you can write off bad debt such as this by closing out the client’s or customer’s invoice.

Create an Expense Account

Before closing out the client’s or customer’s invoice, you should create an expense account. Creating an expense account allows you to track the bad debt. You can create an expense account in Quickbooks Desktop by accessing the “Lists” menu, followed by “Chart of Accounts.” Next, click the “Account” menu and choose “New.” From here, you can click “Expense,” followed by “Continue” to begin setting up the expense account. You’ll need to enter a name for the expense account, such as “Bad Debt,” after which you can click “Save and Close” to complete the process. When finished, you’ll have a new expense account to track the bad debt.

Close the Invoice

After creating an expense account, you can keep an eye on the bad debt to determine whether or not it’s paid. Assuming the customer or client doesn’t pay it, you should proceed to close out the invoice. Bad debt, of course, occurs when a customer or client doesn’t pay his or her invoice. You should always give them extra time to pay, but if the invoice has an outstanding balance that’s several months late, it’s probably time to close it out.

You can close out unpaid invoices associated with bad debt by accessing the “Customers” menu and choosing “Review Payments.” Next, enter the name of the customer or client to whom you sent the invoice in the “Received from” field. You’ll then need to enter $0.00 for the “Payment amount” field. Next, choose the option for “Discounts and credits.” You can then enter the total amount of the invoice in the “Amount of Discount” field.” To complete the process, select the “Save and Close” option. This will essentially write off the customer’s or client’s invoice as bad debt.

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How to Create a PDF Copy of Your Account Balances in Quickbooks

Account balances are essential financial information that you’ll need to record when running a business. No matter what type of business you operate, you’ll probably have income and expenses. Income is money earned by your business, whereas expenses are money paid by your business. Because account balances play such a critical role in accounting, though, it’s a good idea to create a backup of them. If you use Quickbooks, you can easily create a PDF copy of your account balances in just a few simple steps.

Steps to Create a PDF Copy of Account Balances

When using Quickbooks Desktop, you can create a PDF copy of your account balances by logging in to your account and clicking the “Reports” menu. From the “Reports” menu, you’ll see three different options: “Account balances,” “Customer balances” and “Vendor balances.” You can select any of these three options to create a PDF copy of the respective account balances.

If you want to create a PDF copy of your account balances,” click the “Account balances” option under the “Reports” menu and select “Company & Financial,” followed by “Balance Sheet Detail.” To create a PDF copy of your customer balances,” click “Customers & Receives,” followed by “Customer Balance Detail.” To create a PDF copy of your vendor balances,” click “Vendors & Payables, ” followed by “Vendor Balance Detail.”

After selecting your desired type of account, click the “Print” icon. Don’t worry, although this option allows you to print your account balances, you can also use it to create a PDF copy. If you want to print the account balances, you can select the “Print.” option, in which case the printer connected to your computer will create a paper document of the selected account balances. You can create a PDF copy of the account balances, however, by choosing “Save as PDF” instead.

Keep in mind that you’ll need a special program to view PDF files. Neither Microsoft Word nor any other standard text editor is capable of opening them. The good news is that there are several free-to-download PDF programs, the most popular of which is Adobe Acrobat Reader. Alternatively, there are PDF reader extensions that you can add to your web browser. Chrome and Firefox both support the use of PDF reader extensions. Regardless, you’ll need a program to open and view your account balance copies after saving them as a PDF.

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How to View the Transaction Journal in Quickbooks

Business-related transactions often consist of multiple debits and/or credits. When using Quickbooks, however, you can look at all the debits and/or credits associated with a transaction. Quickbooks features a Transaction Journal that’s designed specifically for this purpose. It provides more information about transactions that’s not available simply by viewing the transactions themselves.

What Is the Transaction Journal?

The Transaction Journal is a report in Quickbooks Desktop that contains detailed information about your business’s recorded transactions. According to Intuit, it was originally designed to help professional accountants with their daily accounting tasks. The Transaction Journal revolves around the dual-entry accounting method. Whether you’re a professional accountant or a business owner, though, you can take advantage of the Transaction Journal to gain a better understanding of your recorded transactions.

Using the Transactional Journal, you’ll have an easier time finding transactions that have an incorrect balance. You can also use the Transaction Journal to identify erroneous entries for your recorded accounts.

How to View the Transaction Journal

You can view the Transaction View in one of several ways. After accessing the transaction screen for an invoice, receipt or other transaction, click the “Reports” option under the transaction toolbar and choose “Transaction Journal.” From here, you’ll see all the debits and credits associated with the open transaction.

You can also view the Transaction Journal by clicking the “Reports” menu under the main “Reports” menu and choosing “Transaction Journal.”

Because it’s such a popular feature, Quickbooks has a keyboard shortcut available for the Transaction Journal. If you’re using a Windows PC, press the Ctrl+Y keys. If you’re using an Apple Mac, click the Cmd+T keys. Performing the appropriate keyboard shortcut will automatically launch the Transaction Journal.

Breaking Down the Transaction Journal

When viewing the Transaction Journal, you’ll notice several different options. There’s the “Accrual only” option, which is designed to show the total value of all posts associated with the transaction. There’s also the “Current form” option, which is designed to only show the transaction form without any additional information like dates. You can also choose the “Customizable” option when viewing the Transaction Journal,” which as you may have guessed, allows you to customize the Transaction Journal with various information. Other options available in the Transaction Journal include “Sort order,” “Non-posting” and “Source & targets.”

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