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Getting Started in QuickBooks Online

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You’ve decided to take the plunge and use QuickBooks for your business. Welcome! Our goal is to make running your business efficient and easy while giving you the tools you need to understand how your business is doing at all times. But you may be wondering, where do I start? This is the article for you!

A rule of thumb for your account is that actions taken in QuickBooks Online should reflect what’s happening in real life. This applies to everything: transactions, recording sales, making bank deposits, etc. While some tasks are done solely within QuickBooks, like sending invoices, much of what you will record are activities done outside of QuickBooks.

Whenever you process a credit card payment, pay your employees using QuickBooks Payroll, or take out a loan from the bank, make sure your accounting reflects each step of each process as closely as possible. That means matching names, dates, payment methods, and totals against recorded transactions on your actual bank statements. 

Follow me as I walk you through how to get started in your QuickBooks account.

Enter your Company Information

Gear Icon > Account and Settings > Company

Adding your company's information is an important first step because this information automatically populates on invoices and sales forms you send your customers, so accuracy is essential. In your Accounts and Settings menu, check the following: 

  • Company Name
  • Business Address (you can also add a PO Box as the “Customer Facing” address, as long as your legal business address is also in QuickBooks)
  • Email Address
  • Website
  • Phone Number

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To edit this information, click the Pencil Icon in the corner and click Save once completed. 

Next, ensure the designated company type and the tax form you plan to file at the end of the fiscal year are accurate.

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An Employer Identification Number (EIN) or Social Security Number is required. If you need help determining which of these you need for your business, reach out to your accountant or the IRS.

Designate your fiscal year start date

Gear Icon > Account and Settings > Advanced > Accounting

Tell QuickBooks when your business’ fiscal year begins and ends. For most businesses, January is the first month of the fiscal year, just like the start of the income tax year. You, as the business owner, should know your tax year schedule.

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While you're here, you can also set a date 12 months from your start date to “close the books” for the fiscal year. This feature prevents anyone from changing or editing your QuickBooks data as you prepare for tax filing, but you can set this later on.

Choose your accounting method: cash or accrual

Gear > Account and Settings > Advanced > Accounting

From this same menu, tell QuickBooks if your business will use the cash or accrual method for reporting income. Many new businesses choose cash method accounting. Cash method is arguably easier since you only track income and expenses as they are received and paid, but there are advantages to both methods. 

Hint: Click on any of the ? mark symbols to learn more about the term in your settings.

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To learn more about accounting methods, check our entry in the QuickBooks Encyclopedia. Once you start using one method, it’s difficult (but not impossible) to switch to another. If you’re unsure, consult with your accountant.

Select your accounting currency

Gear Icon > Account and Settings > Advanced > Currency

This is the last step on our journey through Settings. Multicurrency lets you track transactions in foreign currencies but only use this feature if you have bank accounts, customers, or vendors that don’t use your home currency. Make sure the selected home currency is the one you plan to use to accept payments from customers.

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Important: If you plan to use the Multicurrency feature, select your home currency first. Once you've enabled the Multicurrency feature, you cannot turn off or change your home currency.

Select your company logo

Gear Icon > Account and Setting> Company Name

Now that all of the administrative work is done, now you can start personalizing your QuickBooks experience. 

Your logo is your visual brand that shows up on all your invoices, estimates, and sales receipts you send to customers. Here are some tips on how to get your eye-catching logo uploaded successfully:

  • Square logos (or circular that fit within a square) render best – rectangular logos will stretch
  • Use a white background, so it blends in smoothly with the sales form
  • File format should be .gif, .bmp, .png, .jpg, .jpe, or .jpeg file
  • Must be smaller than 1MB
  • Use the standard RGB color space (RGB) with a bit depth (or color depth) of 24-bits or less

Set your default "Net Payment" invoice terms

Gear icon > Account and Settings > Sales > Sales Form content

We’re gearing up to send your first Invoice. Let’s make sure your customers know when they have to pay you. You can set your default net payment invoice terms in the Account and Settings menu – which you’ve probably noticed is where you make most general changes to your account.

If you want to get paid right away, select Due on receipt in the dropdown. Otherwise, select an appropriate time frame from the drop-down. If you click + Add New in the drop-down, you can create custom payment terms.

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The net payment terms you set in this menu will become the default, but you can always change the terms for individual Invoices directly on the form. Need a little more info on this? Take a look at How to Adjust Invoice Payments Terms in QuickBooks Online.

Set Up Sales Tax

Left Menu > Taxes tab

If you sell products, you need to collect sales tax (in most states). The first time you set up your account and click the Tax Tab, you’ll be guided through a setup module asking about where you sell your products. Before going any further, make sure you have your accounting method set (cash or accrual). 

For information on a manual setup, use this resource: Setting up Sales Tax in QuickBooks Online.

For Automated Sales Tax, check this out: Set up and use Automated Sales Tax in QuickBooks Online.

After you’re all set up, the Sales Tax Liability Report will help you see how much you owe.

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You can also apply those sales taxes to your invoices which is an easy step to make sure you are accurately accounting for them.

Learn about Receiving Payments and the "Undeposited Funds" Account

Check out The QuickBooks Encyclopedia to learn about important terms used in accounting. I also want to take the time to make a distinction between two frequently used terms: invoices and sales receipts. 

  • You use invoices when you sell a product or service and expect to get paid in the future. Once the invoice is paid and the money is received (through QuickBooks Payments or other means), you record the payment in QuickBooks.
  • You use sales receipts when you sell a product or service and are paid at the time of sale. Once you send the sales receipt, you’ve already received the payment. The payment will be recorded and accounted for in QuickBooks. This means you don't have to complete the receive payment step. 

Upon receiving an invoice payment, process the invoice by clicking +New and then Receive Payment. From there, you'll receive the payments against the invoice and deposit those payments into your Undeposited Funds account. This is the default “deposit to” account for the Receive Payments feature. Once you receive the payment into the Undeposited Funds account, you need to use the Bank Deposit function to record these payments to the correct account in QuickBooks. 

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Decide if you want to track inventory

Gear Icon > Account and Settings > Sales

We believe planning ahead is essential for your business. If you plan to track inventory quantities, now is a good time to enable Track quantity on hand. We cover the whole inventory setup process here

If you decide to start tracking it’s best to start using the Inventory feature from the beginning. Going back to re-edit your entire list of products, not to mention the related vendor and expense accounts, is a lot of work. Instead, save yourself the work and build your Products and Services list for inventory tracking. 

As always, we have a wealth of information to help you get everything entered easily and accurately:

Create an Invoice in QuickBooks Test Drive

+New > Invoices or Invoicing > Invoices tab

Working with real data and transactions for your business can be intimidating when you’re new to a product. We have the perfect solution! Use the QuickBooks Test Drive to familiarize yourself with the available Invoicing features. Feel free to utilize Test Drive frequently during your first few weeks with QuickBooks Online and use the provided practice data to learn the ins and outs. 

Note: Test Drive emulates QuickBooks Online Plus. 

Once you're in Test Drive, click on the +New icon. This menu is where you initiate the majority of transactions in QuickBooks.

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Check out each of the highlighted sections below and the types of data that go into each data field.

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You can always accept checks or cash for your invoices, but if you’re interested in QuickBooks Payments, read up on that here: Using QuickBooks Payments with QuickBooks Online.

To further your understanding of invoices in QuickBooks, look at these articles:

Why do we recommend Test Drive? Sample data gives you the perspective of what your QuickBooks will look like when it’s completely set up and running. This tool gives you the freedom to learn with confidence, knowing that changes made won't impact your account. 

Whether you choose to utilize some or all of the features in QuickBooks Online is up to you. It all depends on what information you want to track so you can make the smartest decisions for your business. Set aside some time to write down your accounting goals. Once you commit to them, you’ll also know what areas of QuickBooks Online you’ll want to focus on most.  

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