Here are some things you should know so that you can get off to a good start with QuickBooks Online.
Build a Solid Foundation
The Chart of Accounts and the Products and Services list are the basis of everything in QuickBooks Online. They control how most transactions are recorded and where they show up on reports. If you want meaningful reports, I recommend that you focus on customizing the Chart of Accounts and the Products and Services list.
The Chart of Accounts
The Chart of Accounts is the foundation of every small business accounting system. It is used to organize and categorize your business transactions. Each accounting transaction must be assigned to an account. All accounts together make up the “Chart of Accounts”.
QuickBooks Online makes it easy to set up a Chart of Accounts in just a few simple steps. When you first set up QuickBooks Online, your answers in the Startup Interview will help QuickBooks Online set up the Chart of Accounts for you, based on your industry and company. You can always customize at any time for your specific company needs.
The Product and Services List
The Products and Services list represents the list of products and/or services that you sell. You should set it up after you customize the Chart of Accounts. You will use items from the Products and Services list when you create customer invoices.
It’s All about the Bank and Credit Card Statements
Money in and money out transactions in QuickBooks Online should mirror your bank and credit card transactions. Ideally, you want to enter money in/money out transactions in QuickBooks Online that match your bank and credit card activity. This is a simple concept that will save you hours of time spent correcting entries.
Learn How to Work with Downloaded Banking Transactions
Most new users jump right into downloading banking and credit card transactions and end up making a big mess because they don’t know what to do.
Here are the 2 most important tips you should keep in mind:
Downloaded transactions do not replace bookkeeping – it’s only a tool to help you save data entry time – this is a common misconception among new QuickBooks Online users. They think that bookkeeping is only about downloading banking transactions. There is a lot more to doing proper bookkeeping for your business.
Each and every downloaded transaction should have the correct vendor/company name and the Category (an account from the chart of accounts) assigned to it.
The #1 mistake I see new QuickBooks Online users make is that they start accepting transactions into QuickBooks Online without verifying that each transactions has a name and category assigned.
If QuickBooks Online shows an expense as Uncategorized Expense or a deposit as Uncategorized income – it is only because QuickBooks Online doesn’t know how to categorize the transactions. That means that you need to assign the proper expense or income category before accepting the transaction into QuickBooks Online. Otherwise, your reports will show Uncategorized Income and Uncategorized Expense and you’ll have to spend a lot of extra time re-categorizing each transaction.
I know that working with QuickBooks Online can be overwhelming at first. You might consider having a QuickBooks Online Bookkeeper help you get started, develop and teach you a process that works for you and your company. Be patient with yourself and you’ll get there.