Creating Accounts and Subaccounts in QuickBooks

 

 Different types of accounts represent dramatically different financial animals. The good news is that every type of account in QuickBooks shares most of the same fields, so one procedure is all you have to learn to create accounts. If you look closely at the chart of accounts list in Figure 3-1, you’ll notice that accounts fall into two main categories: those with balances and those without. If

you’re really on your toes, you might also notice that accounts with balances are the ones that appear on the Balance Sheet report. Accounts without balances appear on the Profit & Loss report.

Viewing Account Names and Numbers

Perhaps it’s the nature of accounting, but financial professionals put great store in account numbers. You can earn the eternal gratitude of your bookkeeper or accountant by assigning and displaying account numbers in QuickBooks. To turn on account numbers, choose Edit➝Preferences. On the left side of the Preferences dialog box, click the Accounting icon, and then on the right side, click the Company Preferences tab. Finally, turn on the “Use account numbers” checkbox.

With this setting turned on, account numbers appear in the Chart of Accounts window, account drop-down lists, and account fields. In addition, the Add New Account and Edit Account dialog boxes display the Number box, so you can add or modify an account’s number.   â•‰â•‰Creating Accounts and Subaccounts

 Note: Turning off the “Use account numbers” checkbox doesn’t remove account numbers you’ve already added, it simply hides them in the spots mentioned above. You can see them again by simply turning the checkbox back on. However, you can’t add account numbers to any accounts you create while the checkbox is turned off. If you create an account anyway, you can edit it to add the account number.

UP TO

When you use subaccounts, QuickBooks displays both the parent account’s name and the subaccount’s name in the Account fields found throughout the program, which often makes it impossible to tell which account a transaction uses. If you use account numbers and want to see only the lowest-level subaccount in Account fields, turn on the “Show lowest subaccount only” checkbox, which is on the same tab as the “Use account numbers” checkbox.   •‰â•‰Creating Accounts and Subaccou

QuickBooks combines the names of the parent account and the subaccount into one long name in Account fields and drop-down lists. In many instances, only the top-level account is visible unless you scroll within the Account field. Bottom: When you turn on the “Show lowest subaccount only” checkbox, the Account field shows the subaccount number and name, which is exactly what you need to identify the assigned account.

Creating an Account

After you’ve had your business for a while, you won’t add new accounts very often. However, you might need a new account if you start up a new line of income, take on a mortgage for your new office building, or want a new expense account for the emu infertility insurance you took out for your bird farm. Creating accounts in Quick- Books is simple, which is a refreshing change from many accounting tasks.

Before you can create an account, you have to open the Chart of Accounts window. Because the chart of accounts is central to accounting, QuickBooks gives you several ways to open this window:

• The easiest way is by pressing Ctrl+A (which you can do from anywhere in the program).

• At the top right of the Home page, in the Company panel, click Chart of Accounts.

 • In the menu bar, choose Lists➝Chart of Accounts.

The Chart of Accounts window works much like other list windows. For example, you can sort the account list by different columns or drag accounts in the list to a different location.

Tip: You can create accounts on the fly by clicking <Add New> in any Account drop-down list. Suppose you create a new service item (in the Item List window, press Ctrl+N) and want a new income account to track revenue for that service. In the New Item dialog box, scroll to the top of the Account drop-down list and choose <Add New>. Fill in the info and then click Save & Close. QuickBooks fills in the Account box with the new account, and you can finish creating your item.

Once you’ve opened the Chart of Accounts window, here’s how to create an account:

1. Press Ctrl+N to open the Add New Account: Choose Account Type window. Alternatively, on the menu bar at the bottom of the Chart of Accounts window, you can click Account➝New. Or, right-click anywhere in the Chart of Accounts window, and then choose New from the shortcut menu. No matter which method you use, QuickBooks opens the Add New Account dialog box.

2. Select the type of account you want to create, and then click Continue. The Add New Account window lists the most common kinds of accounts. If you don’t see the type you want—Other Current Liability, for example—select the Other Account Types option, and then choose from the drop-down menu.

When you select one of the options in the Add New Account window, a description with examples of that type of account appears on the right side of the window. If this description doesn’t help, click More or click “Help me choose the right account type” at the bottom of the window to read a Help topic that explains when to use this type of account.   •‰â•‰Creating Accounts and Subaccounts

 3. In the Add New Account window’s Number box , type the chart of accounts account number you want to use.

If you keep the Chart of Accounts window in view while you create new accounts, you can review the account numbers for similar types of accounts. That way, when you generate your new account number by incrementing an existing account number by 5 or 10, the new account snuggles in nicely with its compatriots in the chart of accounts.

4. In the Account Name box, type a name for the account.

Note: If you create an account and don’t see one of the fields mentioned here, it simply doesn’t apply to that account type.

 

The Bank account type includes every account field except for the Note field. It also includes one field that you won’t find on any other account type: If you want QuickBooks to remind you to order checks, in the “Remind me to order checks when I reach check number” field, type the check number you want to use as a trigger. If you want the program to open a browser window to an Intuit site where you can order supplies, turn on the “Order checks I can print from QuickBooks” checkbox and save the account. If you get checks from somewhere else, just reorder checks the way you normally do.     â•‰â•‰Creating Accounts and Subaccounts

5. If you want to turn an account into a subaccount, turn on the “Subaccount of ” checkbox. Then, in the drop-down list, choose the account that you want to act as the parent. Subaccounts are a good way to track your finances in more detail. In the chart of accounts, subaccounts are indented below their parent accounts to make the hierarchy easy to see. UP TO SPEED

 Adding Detail with Subaccounts

Say your company’s travel expenses are sky-high and you want to start tracking what you spend on different types of travel, such as airfare, lodging, and limousine services. Subaccounts make it easy to track details like these. Subaccounts are nothing more than partitions within a higherlevel account (called the parent account). When you post transactions to subaccounts only (not the parent account), your reports show the subtotals for the subaccounts and a grand total for the parent account, such as the Travel account (number 6336, say) and its subaccounts Airfare (6338), Lodging (6340), and Limousine (6342),

for example. Subaccounts also come in handy for assigning similar expenses to different lines on a tax form. For example, the IRS doesn’t treat all travel expenses the same: You can deduct only half of your meal and entertainment expenses, while other travel expenses are fully deductible. Meals and Entertainment are separate subaccounts from Travel for this very reason.

6. If you’ve turned on QuickBooks’ multiple currency preference, the Currency box appears below the “Subaccount of ” checkbox. If the currency for the account is different from the one listed there, choose the right currency in the drop-down list. If you do business in more than one currency, you can use multiple currencies in QuickBooks;

7. To add a description of the account, fill in the Description box.

For instance, you can define whether a bank account is linked to another account or give examples of the types of expenses that apply to a particular expense account. The Description field can hold only 256 characters, so be succinct.

8. If you see a field for an account number—such as Bank Acct. No., Credit Card Acct. No., or simply Account No.—type in the number for your real-world account at your financial institution (checking account, saving account, loan, and so on).

If the account type you chose in step 2 doesn’t include a field for an account number, you’ll see the Note field instead, which you can use to store any additional information you want to document about the account.   chapter 3: setting up a chart of accounts 53 ╉╉Creating Accounts and Subaccounts

 9. For a bank account, in the Routing Number box, type the routing number for your bank. A routing number is a nine-digit number in funny-looking digits that’s at the bottom of your checks.

10. To associate the account with a tax form and a specific line on that tax form, in the Tax-Line Mapping drop-down list, choose the entry for the appropriate tax form and tax line.

The Tax-Line Mapping field is set to <Unassigned> if you haven’t specified the tax form that your company files with the IRS.

If QuickBooks hasn’t assigned a tax line for you, you can scan the entries in the drop-down list for a likely match. If you don’t find an entry that seems right, or if QuickBooks tells you the one you chose isn’t compatible with the account type, your best bet is to call your accountant or the IRS. You can also get a hint for an appropriate tax line for the account you’re creating by examining one of QuickBooks’ sample files.

To remove a tax line from an account, in the drop-down list, choose <Unassigned>.

11. Click the Save & New button to save the current account and create another one. If you want to save the account you just created and close the Add New Account dialog box, then click Save & Close instead. Or click Cancel to discard the account in progress and close the Add New Account dialog box.

12. If the Set Up Online Services dialog box appears, click Yes if you want to set up a bank account for online services. When you click Yes, QuickBooks’ windows close while you go through the setup. (See Chapter 22 to learn about online services and QuickBooks.) If you want to set up the account for online banking later—or never—click No.  •‰Modifying Accounts FREQUENTLY ASKED