QuickBooks is an accounting software program used to manage sales and expenses and keep track of daily business transactions. You can use it to invoice customers, pay bills, generate reports for planning and tax filing, and more. The QuickBooks product line includes several solutions that work great for anyone from a solopreneur to a mid-sized business.
Since there are several QuickBooks solutions, it’s important that you pick the right one. Before you commit, take QuickBooks for a spin by signing up for a free 30 day trial; the trial is a fully functional version of QuickBooks so you can test all of the bells and whistles; best of all no credit card is required.
What Small Businesses Use QuickBooks For
Small Business owners typically use QuickBooks to manage their invoices, pay their bills, and track their cash flows. They also use it to generate month- and year-end financial reports as well as prepare for quarterly or annual business taxes. It’s common for business owners to manage QuickBooks themselves or use an in-house or outsourced bookkeeper.
Here are some of the top ways small business owners use QuickBooks:
1. Manage Sales and Income
You can manage sales and income in QuickBooks by creating invoices to track sales by customer. Stay on top of what customers owe you (also known as your accounts receivable balance) by reviewing your Accounts Receivable Aging Report, which includes the details of both current and past due invoices. Below is a sample A/R Aging Report from QuickBooks.
2. Keep Track of Bills and Expenses
QuickBooks automatically keeps track of your bills and expenses by connecting your bank and credit card accounts to QuickBooks so all of your expenses are downloaded and categorized. If you need to track a check or cash transaction, you can record it directly on QuickBooks in just a few minutes.
QuickBooks will also help you pay your bills when they’re due. For example, you can ensure that you pay your bills on time by creating an Accounts Payable Report in under 2 minutes. This report will provide you with the details of your current and past due bills so that you can be sure to quickly address any issues. Below is a sample A/P Aging Report from QuickBooks.
3. Gain Key Reporting Insights
By managing all of your cash inflow and outflow activities in QuickBooks, you are able to access several reports that provide you with invaluable insight into your business. All of the reports are pre-built in QuickBooks and can be run in just a few clicks; reports are updated in real time as you enter and save transactions.
This can be beneficial if you need to provide financials to a potential investor or to your lender for a small business loan or line of credit. In addition to the Accounts Receivable Report and the Accounts Payable Report that we discussed previously, you can run the top 3 reports that you need in order to assess the overall health of your business:
Below, you will find a brief description of each of these report along with a snapshot of what it looks like in QuickBooks.
Profit and Loss Report
The profit and loss report can be run in just a couple of minutes. It will show you how profitable you are by summarizing your income minus your expenses. It shows you your bottom line net income (loss) for a specific time period, such as a week, a month, or a quarter. Below is a Profit and Loss Report for the period of January 1 – September 29, 2016 for a fictitious company, Paul’s Plumbing:
Balance Sheet Report
The balance sheet report shows the Assets, Liabilities, and Equity for a business at a particular point in time. In just a few clicks, you can create a balance sheet report in QuickBooks. Below, is a snapshot of a Balance Sheet report as of September 29, 2016 for a fictitious company, Paul’s Plumbing:
Statement of Cash Flows
You can quickly create a statement of cash flows in QuickBooks. This report will show you all of the activities that affect the operating, investing, and financing cash inflow and cash outflow for your business. Below is a snapshot of the statement of cash flows for the period January – September 2016 for a fictitious company, Paul’s Plumbing:
4. Run Payroll
Payroll is an area that you don’t want to skimp on by trying to do it manually. Mistakes made in calculating paychecks can result in steep penalties and unhappy employees. To help, QuickBooks has its own payroll function that can automatically calculate and run payroll as often as you need it.
The best part about using QuickBooks payroll is it is integrated with QuickBooks so your financial statements are always up-to-date as of the latest payroll run. The purchase of a QuickBooks payroll subscription is required so that you have access to the latest payroll tax tables to calculate employee and employer payroll taxes.
Some of the benefits of running payroll with QuickBooks are:
- Pay employees with a check or direct deposit
- Federal and state payroll taxes are calculated automatically
- QuickBooks fills in the payroll tax forms for you
- You can e-pay directly from QuickBooks
Here’s a video from QuickBooks on how a small business owner uses QuickBooks payroll to pay employees:
5. Inventory Tracking
If you need to keep track of the inventory you sell, such as on-hand amounts and unit costs, QuickBooks will automatically track and update this for you as you enter transactions. In QuickBooks, there are several reports available to manage inventory.
While keeping track of inventory is doable in an Excel spreadsheet, it can be very time-consuming. Below is a sample Inventory Valuation Summary Report from QuickBooks. This report shows a list of your inventory products, quantity on-hand, average cost, and their total value.
6. Simplify Taxes
If you’re still not convinced that you can simplify your taxes by using QuickBooks, just think about how much you dread tax season. Whether you have to consolidate several excel spreadsheets or organize a shoe box full of receipts, it can take you longer to get your tax professional what they need than it takes to prepare your tax return!
Here at Fit Small Business, we use QuickBooks Online to manage all of our business accounting and taxes. We have set up our tax professional with a user id and password to access our QuickBooks data and pull the information they need to file our tax returns. Since everything is tracked in QuickBooks, we do not spend a lot of time organizing receipts and bank statements. This also ensures that we have accounted for all income and expenses and as a result improves accuracy.
QuickBooks Features & Pricing
The QuickBooks product line includes QuickBooks Online, QuickBooks Desktop, QuickBooks Self-Employed and QuickBooks Mac. Each of these offers a variety of features at various price levels. To help you narrow down which one is right for you, check out the summarized table below.
QuickBooks Product Options for Small Businesses
QuickBooks Online is a cloud-based product that does not require software installation. It is available in 3 subscription levels (Simple Start, Essentials, Plus), and It is ideal for any service-based business that does not have complicated invoicing requirements. QBO allows you to access your data from any computer with an internet connection using your secure login.
QuickBooks Desktop comes in 3 versions (Pro, Premier, Enterprise). All 3 products require you to install software on your computer. QuickBooks Pro is ideal for most small businesses that do not manufacture products. QuickBooks Premier is ideal if your business falls into one of these industries: Manufacturing, Contractor, Retail or Nonprofit. QuickBooks Enterprise is for large enterprises.
QuickBooks Self-Employed is the ideal product for freelancers, realtors and Uber/Lyft drivers. Similar to QuickBooks Online (QBO), it is a cloud-based product that can be accessed from any computer with an internet connection and your secure login. It includes unique features that are not available in QBO and QuickBooks Desktop like the ability to separate business from personal expenses, track miles & transfer data to TurboTax.
QuickBooks Mac (QB Mac) is the only desktop product available for Mac users. If you don’t want to go with QBO and you have a Mac computer, then you have to go with QB Mac. This product is very similar to QuickBooks Pro and it is ideal for most small businesses that do not manufacture products. QB Little Square is a great blog that includes learning guides and video tutorials to help you get up to speed with QuickBooks Mac.
1. What’s the Difference Between Quicken and QuickBooks?
The primary difference between Quicken and QuickBooks is that Quicken is designed to keep track of your personal budget and spending. Only some people use it to keep track of business income and expenses and it does not have the capability to manage sales to your customers or track inventory.
2. Do I Have to be an Accountant or Bookkeeper to Use QuickBooks?
Absolutely not. One of the things I love about QuickBooks is that is was designed for the “non-accountant.” Its’ user-friendly interface and simple terminology are just a couple examples of this. We do, however, recommend that you invest the time to learn how to use the program with our FREE QuickBooks Online training tutorials.
3. How Do I Get a Crash Course in Bookkeeping?
While you don’t need a bookkeeping background, it can’t hurt for you to take a crash course, especially if you are not going to hire a bookkeeper anytime soon. Check out our small business bookkeeping guide to understand some bookkeeping basics.
How to Learn More About QuickBooks
If you want more than just the basics, get up to speed quickly by taking our FREE QuickBooks Online training tutorials. There are a total of 39 tutorials spanning 7 lessons, that will take you through each topic step by step:
- How to Setup QuickBooks
- Managing Sales and Income
- Managing Bills and Expenses
- Managing Banking Transactions
- Managing Business Credit Card Transactions
- How to manage Credit Card Sales
If you’re thinking about getting a subscription and are interested in a cloud-based solution, head over to QuickBooks Online Comparison; in this article, we cover the 3 online solutions available; subscription prices start as low as $15 per month. If you’re still on the fence about whether to go with Online or Desktop, check out QuickBooks Online vs. Desktop: Which Is Right for you.
We have discussed a number of QuickBooks options that fit the needs of most small business like you. Be sure to do your homework by reviewing the resources we have discussed to help you pick the right solution for your business.
Before you commit, take QuickBooks for a spin by signing up for a free 30-day trial; the trial is a fully functional version of QuickBooks so you can test all of the bells and whistles; best of all no credit card is required.