As a business owner, you want to get the most out of each investment you make.
You’ve recently invested in a QuickBooks subscription, and you’ve started the process of setting up the software to meet your needs. To maximize the value of your subscription, consider getting help from an accountant.
Fortunately, the timing of this decision works in your favor. By finding an accountant now, you can save time and get your QuickBooks system working at peak efficiency.
Here are some common set up challenges that business owners face, and how an accountant can help.
Chart of Accounts Planning
A chart of accounts is the list of accounts you use to post transactions, along with each account number. These account balances are used to create some of the most important reports that you’ll need to monitor your business. They will be used to construct the balance sheet – a snapshot of what your company is worth as of a specific date. The balances are also used to build the income statement, so you can understand your profitability. QuickBooks software provides you with a variety of chart of account sets that you can use to start business operations right away. However, these can be tailored to your unique business.
An accountant can suggest changes to your chart of accounts to make it more useful for deriving insights about your specific business. Here are some examples:
- Inventory: If you’re a retailer, it’s critically important to maintain a sufficient level of inventory to fill customer orders. The question is, how many different inventory accounts are needed to properly monitor inventory levels? If you manage a sporting goods store and sell baseball bats, do you need an account for each brand of bat, or can you use a single account called “inventory- bats”? An accountant can help you with that decision.
- Fixed assets: These are tangible assets, such as vehicles, machinery, and computer equipment. As fixed assets are used in the business, the company posts depreciation expense, and each fixed asset may have a different rate of depreciation. Monitoring the total depreciation expense on each asset helps a business owner plan for each asset’s replacement. An accountant can help you set up each fixed asset in QuickBooks, so that depreciation is posted automatically each month.
- Unneeded Accounts: To use your chart of accounts effectively, you should eliminate accounts that you don’t use. A retailer does not need accounts that relate to manufacturing. Removing unneeded accounts makes it easier to scan your account listing and speeds up the accounting process. Your accountant, who understands your business, can help you remove unneeded accounts from your chart of accounts.
An experienced accountant can help you create a chart of accounts that is a perfect fit for your business. When you work with an expert, you can maintain a clean chart of accounts so you know that you have reliable information to quickly make the best decisions for your business
Posting Opening Balances
Once you finalize your chart of accounts, you need to post your opening balance sheet account balances into QuickBooks. The balance sheet lists your asset, liability, and equity balances as of a specific date.
Accounts in the balances sheet are permanent accounts, and the balances carry over from one month to the next. Your opening account balances are the starting point for your QuickBooks accounting. Every transaction after the starting date will impact your financial reporting, so it’s important to enter the data correctly.
If, for example, you want to start using QuickBooks on December 1st, you can post your balance sheet into QuickBooks, and start posting transactions as of that date. Many business owners post accounting transactions in Excel, and input data from Excel into QuickBooks when they purchase the software.
To start off on the right foot, have an accountant review the balance sheet accounts you use to post opening balances. You may, for example, have a fixed asset account that you’ve grouped with inventory accounts by mistake. If you move forward in QuickBooks without correcting the mistake, it will cause confusion.
An accountant’s review will reduce the need to move accounts balances after you start using QuickBooks.
Most Useful Reports
QuickBooks allows you to generate dozens of reports, and you can produce reports with the click of a button. Some reports are most useful to you, however, depending on the size of your business, your current financial condition, and your industry.
If managing cash flow, for example, is your biggest challenge, a report on cash collections and amounts due by customers is your most useful report.
Retailers can use QuickBooks to produce detailed reports on inventory levels, and these reports help the owner decide when to order more inventory. Finally, a manufacturer can use the software to track the dollar amount of materials and labor costs incurred on a particular production run, which helps management control costs.
Ask an accountant to help you figure out which reports are most useful for you.
A Faster Start
QuickBooks allows you to process accounting transactions more efficiently, and produce useful reports. To get the most out of your subscription, consider hiring an accountant while you’re getting started with the software. This decision will help you get off to a fast start and maximize the benefits of using QuickBooks.
Start collaborating with your accountant to set up your QuickBooks by logging in and inviting them to your books. If you don’t already have an accountant, you can start your search with the QuickBooks Find-a-ProAdvisor site to find a qualified professional that’s right for your business.