If you’re catching our “Setting Up Your QBO® Company” article series for the first time, start with Part One and Part Two. Those articles will help you decide if you should convert an existing QuickBooks file, or start from scratch.
Account and Settings (Preferences)
Company Settings should be adjusted so that QBO behaves the way you want it to. To do this, select Account and Settings from under the Gear in the upper right corner.
Access QBO Account and Settings from the Gear Icon.
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Company
- Make sure your Company name is correct.
- Add your EIN or SSN.
- Upload your logo.
- Select your company formation (are you a sole proprietorship, LLC, S-Corp, or something else?).
- Go through the Contact info and make sure your company name, address, phone numbers, and email addresses are all correct.
- Choose to receive promotional offers from Intuit or not.
Sales, Expenses, and Payments Settings
We will explore these in future articles about Customers and Vendors.
Advanced Settings
Note: The colored numbers in this illustration correspond to the numbered topics in the content below.
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(1) Accounting
First, set your Fiscal Year.
Next, select whether you are Cash or Accrual based. If you’re not sure, ask your accountant. A cash-based business doesn’t report income until the money is in hand. An accrual-based company counts its income when the Invoice is created at the time of service. All companies tracking Inventory must be accrual. Most small businesses in the US are cash-based.
If you want to prevent previous years’ transactions from being altered, after your taxes have been filed you should Close the Books. Every time a transaction is entered in the “closed” period, a warning box will appear asking if you really want to enter this transaction.
A Closing Exceptions report (Plus version) will generate a list of all transactions that have changed after the books have been closed. If you set a closing date for your books, QuickBooks Online can also ask if you want to set a password.
(2) Chart of Accounts
If you would like to use Account Numbers, such as large companies do, turn that on in this window.
(3) Use Class Tracking
If you have QuickBooks Online Plus, you can include a Class option and Location on all transactions. Classes are ideal for tracking multiple revenue streams. QuickBooks Online will prompt you to enter the Class on each transaction, or even each line.
Locations label each transaction with a single physical Location, Department, Division, Tenant, and more.
If you’re deciding which one to use, Locations work well on Balance Sheet accounts and Classes work well on Profit and Loss reports. Sometimes you need both!
More about Classes in future articles.
(4) Automation
Automations will either help you or confuse you. I like to turn on the first two and leave the second two off.
Pre-fill forms with previously entered content. When you enter the Payee, will automatically fill in the most recent account category and amount. All you have to do is change the amount if needed.
But if that will create more work because you’ll have to delete a number of rows that aren’t needed, then turn this option off.
Automatically apply credits. If a Customer has a Credit on file, and you create a new Invoice, this option will automatically apply the credit to the Invoice, to pay it down. This is great if it’s hard for you to remember to apply credits to open invoices…or it can be confusing because the amount the customer still owes will instantly change.
Automatically invoice unbilled activity. If you are marking Expenses as Billable to a Customer, this option Invoices them automatically. But I don’t want to charge a client until I’m ready, so I generally leave this off.
Automatically apply bill payments. If you have a Credit with a Vendor, and you create a new Bill, this option automatically applies the credit to your Bill, paying it down. This is great if it’s hard for you to remember to apply your account credits to open Bills…or it can be confusing because the amount you owe the Vendor will instantly change.
(5) Projects
QBO has a Project Center to track all the revenue and expenses for the work you do for Customers. It’s a step up from the Customer/Subjob relationship. It includes a Project-based P&L report, Billable Expenses, and a Transaction List.
(6) Time Tracking
The Plus version allows you to use Time Cards for Employees, which works nicely with Payroll. You can even make Timecard-only logins for your employees so they can enter their hours.
(7) Multicurrency
If your clients pay you with international currencies, this option will allow you to track the exchange rate on a daily basis. But only turn it on if you really need it – once it’s on, you can’t turn it off!
(8) Other preferences
You can change the Customer label to Clients, Tenants, Members, Donors, Patients, and more.
Be sure to change the Sign me out if inactive for to 3 hours so that you don’t have to log in repeatedly all day long!
Next Steps
Exciting times working with settings are still ahead! In our next article, I’ll share step by step instructions on setting up the users in your QBO file.
For a more in-depth discussion about setting up QBO, please take a look at my QuickBooks Online Fundamentals class.