A company file is where you store your
company’s records in QuickBooks, and it’s the first thing you need to work on
in the program. You can create a company file from scratch or convert records
previously kept in a small business accounting program or Quicken.
The easiest approach is to
use a file that someone else created.
If you have to create your
own company file, this chapter tells you how to use the Quick- Books EasyStep Interview to get started, and points you to
the other chapters that explain how to finish the job. If you already have a
company file, you’ll learn how to open it, update it to a new version of
QuickBooks, and modify basic company information.
Opening QuickBooks
Quickbook Home Page
Before You Create Your
Company File
If you’ve just started a
business and want to inaugurate your books with QuickBooks, your prep work will
be a snap. On the other hand, if you have existing books for your business, you
have a few small tasks to complete before you jump into QuickBooks’ setup.
Whether your books are
paper ledgers or electronic files in another program, gather your company
information before you open QuickBooks. That way, you can hunker down in front of
your computer and crank out a company file in record time. This section
explains what you need to create your company file in QuickBooks.
1 Start Date
To keep your entire
financial history at your fingertips, you need to put every transaction and
speck of financial information in your QuickBooks company file. But you have
better things to do than enter years’ worth of checks, invoices, and deposits, so
the comprehensive approach is practical only if you just recently started your company.
The more realistic approach
is to enter your financial state as of a specific date and, from then on, add
all new transactions in QuickBooks. The date you choose is called the start date, and you shouldn’t choose
it randomly. Here are your start date options and the ramifications of each
one:
• The last day of the previous fiscal year. The best choice is to fill in your records for the entire year.
Choose the last day of your company’s previous fiscal year as the company file
start date. That way, the account balances on your start date are like the
ending balances on a bank statement, and you’re ready to start bookkeeping fresh
on the first day of the fiscal year. Yes, you have to enter checks, credit card
charges, invoices, and other transactions that happened since the beginning of
the year, but that won’t take as much time as you think. And you’ll regain
those hours when tax time rolls around, as you nimbly generate the reports you
need to complete your tax returns.
If more than half of the year has already
passed, the best approach is to be patient and postpone your QuickBooks setup
until the next fiscal year.
Intuit releases new
versions of QuickBooks in October or November each year for just that reason.
But waiting until next year isn’t always an option, particularly if your old
accounting system vendor wants a truckload of cash for an upgrade. In cases
like that, go with the next start-date option.
Tip: For practice, you can set the start date
for your company file to the starting date from the bank statement closest to
your company start date. Then you can enter transactions for the month and try
reconciling your bank account to those transactions.
• The last day of the previous fiscal period. The next best start date is the last day of the previous fiscal
quarter (or fiscal month at the very least). Starting in the middle of a fiscal
year makes the entire year’s accounting more difficult. Since your company file
doesn’t contain a full year’s worth of detail, you’ll have to switch between
QuickBooks and your old filing cabinets to prepare your tax returns and look up
financial information. Starting just before a fiscal period mitigates this
hassle but doesn’t eliminate it.
2 Account Balances and Transactions
Unless you begin using
QuickBooks when you start your business, you need to know your account balances
as of your selected start date to get things rolling. For example, if your
checking account has $342 at the end of the year, that value goes into Quick- Books
during setup. You also need every transaction that’s happened since the start date—sales
you’ve made, expenses you’ve incurred, payroll and tax transactions, and so
on—to establish your asset, liability, equity, income, and expense accounts. So
dig that information out of your existing accounting system (or shoebox). Here
are the balances and transactions you need and where you can find them in your
records: ╉Before You Create Your
Company File
• Cash balances. For each bank account you
use in your business (checking, savings, money market, petty cash, and so on),
find the bank statements with statement dates as close to—but earlier than—the start date for
your Quick- Books file. Gather deposit slips and your checkbook register to
identify the transactions that haven’t yet cleared; you’ll need them to enter
transactions, unless you download transactions from your bank. If you have
petty cash lying around, count it and use that number to set up your petty cash
account
• Customer balances. If customers owe you
money, pull the paper copy of every unpaid invoice or statement out of your filing cabinet so you can give
Quick- Books what it needs to calculate your Accounts Receivable balance. If
you didn’t keep copies, ask your customers for copies of the invoices they
haven’t paid or simply create invoices in QuickBooks to match the payments you
receive.
• Vendor balances. If your company thinks
handing out cash before you have to is more painful than data entry, find the
bills you haven’t yet paid and get ready to enter them in QuickBooks so you can
generate your Accounts Payable balance. (To reduce the number of transactions
you have to enter, simply pay those outstanding bills and record the payments
in QuickBooks.)
• Asset values. When you own assets such
as buildings or equipment, the value of those assets depreciates over time. If
you’ve filed a tax return for your company, you can find asset values and
accumulated depreciation on your most recent tax return (yet another reason to
start using QuickBooks at the beginning of the year). If you haven’t filed a
tax return for your company yet, the asset value is typically the price you
paid for the asset.
• Liability balances. Find the current balances
you owe on any loans or mortgages.
• Inventory. For each product you
stock, you need to know how many items you had in stock as of the start date,
how much you paid for them, and what you expect to sell them for.
Tip: The basic QuickBooks editions like
QuickBooks Pro and QuickBooks Premier aren’t very good at working with
inventory that you assemble from components or raw materials.
• Payroll. Payroll services are a
great value for the money, which you’ll grow to appreciate as you collect the
info you need for payroll (including salaries and wages, tax deductions,
benefits, pensions, 401(k) deductions, and other stray payroll deductions you
might have). You also need to know who receives withholdings, such as tax
agencies or the company handling your 401(k) plan. Oh yeah—and you need payroll
details for each employee.
Tip: If you have outstanding payroll
withholdings such as employee payroll taxes, send in the payments so you don’t
have to enter those open transactions in QuickBooks.
• Skip Interview.
If you’re something of a QuickBooks expert,
this option lets you set up a company file without a safety net. It opens the
“Enter your company information” window, followed by a few screens of data
entry. If you need help during the process, you can always click the “Get
answers” link.
• Start Interview.
If you don’t fit into
either of the previous categories, this one’s for you. The following sections
take you through the process step by step, from start to finish. Keep in mind
that, if you leave the interview before QuickBooks creates your company file,
the program won’t save any of the information you entered. So make sure you
have at least 10 minutes to complete the first set of steps.
How To Create A Company File In Quickbooks
Step 1
Click on File à new company
Step 2
Step 3
After you click the Start
Interview button, the first setup screen asks you for the basic 411 about your
company, such as its legal name and tax ID. (If any of the fields confuse you,
try clicking the “Get answers” link in the upper-right corner.)
Click next when you’re done filling out the fields.
After you complete the
basics, the EasyStep Interview walks you through several screens of questions.
Here’s what QuickBooks’
EasyStep Interview wants to know before it creates your company file
. • Your industry. Choose carefully on the “Select your industry” screen. The list of
industries is robust, so chances are good you’ll find one that’s close to what your
company does. Based on your choice, QuickBooks adjusts its settings and the
chart of accounts it creates to match how your business operates. For example, the
program creates income and expense accounts for your type of business and
automatically turns on features like sales tax and inventory if your industry
typically uses them. If QuickBooks makes assumptions you don’t like, you can
select different options during the interview or alter your preferences and
accounts later. If you don’t see an obvious choice in the Industry list, scroll
to the bottom and choose either General Product-based Business or General
Service-based Business.
• The type of company. The tax form you use
depends on the type of business entity you have. The “How is your company organized?”
screen lists the most common types, from sole proprietorships and partnerships
to corporations and nonprofits. When you select an option on this screen, QuickBooks
assigns the corresponding tax form to your company file. After you finish the Interview,
you can see the tax form it selected by choosing Company➝Company Information, which brings up the Company Information
window. The Income Tax Form Used box at the bottom of this window lists the tax
form for your company type.
• The first month of your fiscal
year. When you start your company, you choose a
fiscal year. On the “Select the first month of your fiscal year” screen, Quick-
Books automatically sets the “My fiscal year starts in” box to January because so
many small businesses stick with the calendar year for simplicity. If you start
your fiscal year in another month, choose it from the drop-down list.
• The administrator password. The administrator can do absolutely anything in your company
file: set up other users, log in as other users, and access any area of the
company files. Surprisingly, setting an administrator password is optional.
QuickBooks lets you click Next and skip right past the “Set up your administrator
password” screen, but this is no time for shortcuts, as the box below explains.
Type the password you want to use in both the “Administrator password” and
“Retype password” boxes, and then keep the password in a safe but memorable
place. MEN
Creating Your Company File
After you set the
administrator password and click Next, the “Create your company file” screen
appears. If you’re new to QuickBooks, click the “Where should I save my company
file?” link, which opens a QuickBooks Help window that explains the pros and
cons of storing files in different places. When you’re done reading it, or if
you’re a QuickBooks veteran, click Next to specify the filename and location.
QuickBooks opens the
“Filename for New Company” dialog box, which is really just a Save As dialog
box. Navigate to the folder where you want to store your company file.
QuickBooks automatically sets the “File name” box to the company name you entered,
and the “Save as type” box to “QuickBooks Files (*.QBW, *.QBA)”. Here are some
guidelines for the name:
• If you want to call the
file something other than the company name you entered earlier in the
Interview, simply type a new name in the “File name” box. For example, you may
want one that’s shorter or that better identifies the company’s records within.
• Consider storing your
company file in a folder with the rest of your company data so that it gets
backed up along with everything else. For example, you could create a Company
Files folder inside your My Documents folder—if you’re the only person who uses
QuickBooks. When you click Save in the “Filename for New Company” dialog box,
QuickBooks may take a minute or so to create the new file. In the meantime, a
message box with a progress bar appears. Go grab a coffee, because when the
company file is ready, the EasyStep Interview displays the “Customizing
QuickBooks for your business” screen. Click Next to dig in.
Customizing Your Company File
The next several screens in
the EasyStep Interview ask questions about your business to help QuickBooks
decide which features to turn on, what to include on your QuickBooks Home page,
and so on. The Interview displays “(recommended for your business)” next to the
options that are typical for a company in your industry, as you can see in
Figure 1-3. Here are some guidelines for answering the questions on the screens
that follow:
• The What do you sell? screen is where you tell
QuickBooks whether you offer services, products, or both. When you choose one
of these options, QuickBooks figures out which types of income accounts you
need. If you select “Products only” or “Both services and products”, another
screen later in the Interview asks whether you want to track inventory.
. • The Do you charge sales tax? screen has only Yes or No options. If you’re one of the
unfortunate souls who has to navigate the rocky shoals of sales tax, select Yes.
If you don’t charge sales tax, select No. For detailed instructions on dealing with
sales tax in QuickBooks
• On the Do you want to create estimates in QuickBooks?
screen, select Yes or No to
turn the estimate feature on or off. If you prepare quotes, bids, or estimates
for your customers and want to do so in QuickBooks, select Yes.
Note: If you use QuickBooks Premier, the
“Tracking customer orders in QuickBooks” screen asks whether you want to use
sales orders to track backorders or other orders that you plan to fill at a
later date. QuickBooks Pro doesn’t include this sales order feature.
• Using statements in QuickBooks is
where you tell the program whether you generate statements to send to your
customers. For example, your wine-of-the-month club might send monthly
statements to its members. Or, a consultant could send invoices for work
performed and then send a statement that summarizes the fees, payments, and
outstanding balance.
• On the Using invoices in QuickBooks screen,
select Yes to tell the program that you want to use invoices, which you
probably do because invoices are the most flexible sales forms
• The Using progress invoicing screen asks whether you
invoice customers based on the percentage you’ve completed on a job. To learn
why (and how) you might use this feature.
• Managing bills you owe asks whether you plan to
write checks to pay bills immediately (select No) or enter bills in QuickBooks
and then pay them later (select Yes).
Tip: It’s more work to enter bills in QuickBooks
than to just write checks, but there’s a benefit if you do: QuickBooks can
remind you when bills are due or qualify for timely payment discounts, and keep
track of the total you owe.
• Tracking inventory in QuickBooks is the screen where you tell QuickBooks whether you keep track of
the products you have in stock. This screen provides a few examples of when to
track or bypass inventory, and has more about
whether tracking inventory makes sense for your business. • If you bill by the hour,
Tracking time in QuickBooks is ideal. Select Yes to track the hours people work and create
invoices for their time.
• Do you have employees? is where you specify
whether you want to use Quick- Books’ payroll and 1099 features (select Yes).
If you use non-Intuit services to run payroll or generate contractors’ 1099s,
select No.
When you click Next on the
“Do you have employees?” screen, you see the “Using accounts in QuickBooks”
screen and the progress bar indicates that you’re almost done with the
Interview. With a few more steps, you’ll have your start date and most of the
accounts you want to use. Click Next to set up these final things:
• The Select a date to start tracking your finances screen summarizes what you learned about start dates. If you’ve
already decided which start date to use, select the “Use today’s date or the
first day of the quarter or month” option. You can then type or choose any date
you want in the box, such as the last day of the previous fiscal period. To start
at the beginning of this fiscal year (which QuickBooks can figure out using the
current calendar year and the starting month you selected), select the
“Beginning of this fiscal year: 01/01/11” option instead. (The year you see
listed depends on the current calendar year.)
• The Review income and expense accounts screen lists the accounts typically used by companies in your
industry. section.
╉╉Starting th
╉╉Starting th
QuickBooks places a checkmark
in front of the accounts that are typical for your industry. Click the checkmark
cell for an account to add one that the program didn’t select, or click a cell
with a checkmark to turn that account off. You can also drag your cursor over checkmark
cells to turn several accounts on or off.
When you click Next, you’ll
see a bright orange, but premature, “Congratulations!” You still have a few
more steps to complete before you can open your company file. Click “Go to
Setup” and read the next
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