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Small Business Bookkeeping: 3 Steps to Success

Why track YOUR finances?  What are YOUR Reasons and Goals?  I want to know my bank balance, how much money I have in the bank.  I want to pay my bills on time, not late or missed.  I want to simplify and save time preparing my tax returns. I want to make a budget and follow it.  I want…What do YOU want?  Spend a short time to write down YOUR reasons and YOUR goals.

Which set-up is best for YOU?  Where and How to Start?  You want to design a simple, easy system that helps you reach YOUR goals.  Do you prefer using Paper or using a Computer?  A computer can SAVE TIME after initial setup and learning.  First month is a bear, but trust me, it’s worth it.  If you choose a computer, then which software program do you choose?  QuickBooks is my favorite, but you could use Quicken or other software.   Whether you use paper or computer, you start with lists of names: bank & credit card account names, categories of income and categories of expenses.  You will also have Customer and Jobs on a list and Vendors on another list.  If someone is both a Customer and a Vendor, be careful to keep them separate.  I suggest adding (Cust) and (Vend) after their names on the different lists.  Think about these ideas and talk with other business friends about what they use.  Then choose one and just do it.

Implement YOUR system & carry throughYou choose whether to enter your financial data daily, weekly or monthly.  This will depend on YOUR goals.  You need to do it at least monthly, probably when you get your bank and credit card statements.  You want to reconcile your statements within 30 days after you get them.  Banks make mistakes once every 3-5 years, but you want to catch that mistake ASAP which is WHY you reconcile.  After you reconcile, print your monthly Profit and Loss so you know how much you earned and spent.  This will help you make your business more profitable.  BACK UP YOUR DATA every time you enter data, unless you’re willing to re-enter the data again if it gets lost.

Conclusions.  You will see how easy it is to track your finances.  You will save valuable time & eliminate stress, especially preparing your tax returns next year.  You can focus better on your products and services to others.  You will have CONFIDENCE in your financial records.  Congratulations.  

©2011, Linda Qbq Russell, QBQueen.com

Credit Card Deposits

You can reconcile your bank statements more easily IF you group your credit card payments into deposits the same way the bank groups them together.

When you enter Sales Receipts or Receive Payments on Invoices, be sure to enter the correct Payment Date and Payment Method.  You need the correct date and payment method to make it EASY to group them like the bank does. 

Set up the following on your Payment Methods list:  AE (or Amex) for American Express, D for Discover, M for MasterCard, V for Visa, or MVD for MasterCard-Visa-Discover.  Group the MasterCard, Visa and Discover payments together as MVD because the bank groups them together that way.  Do NOT group all credit cards together into 1 Credit Card payment method.  If you group all CC payments together, you make it difficult to reconcile your bank statements.

Your bank groups MasterCard, Visa & Discover payments together into deposits, but groups Amex payments together separately from the other 3 cards. 

You want to group your undeposited funds together the same way the bank does.  Click on Banking, Make Deposit, click on all American Express payments with the same date, click OK, make sure the checking acct is correct, the date is correct, and overwrite “Deposit” with AE 1, AE 2, AE 3, etc. to reflect which card and how many payments are grouped together into this deposit.  Look to see all Amex payments are listed below, click Save & New.  Repeat above for all MasterCard, Visa & Discover payments on the same day.  Now group the next day and make deposits, continuing until all CC payments are grouped into deposits.

When you reconcile your bank statement, check that your deposits are matching the deposits on your bank statement.  If they do match, congratulations.  If they do not match, re-examine how the grouping in QuickBooks differs from the bank statement, and make the proper adjustments.  Look at your merchant statements, both paper and online, to help you figure out how your merchant service groups the payments into deposits.  Then, match your groups to those of your merchant services. 

Sometimes the merchant services company subtracts their merchant fees from each deposit.  I cover this in my onsite and online tutorials.  I will cover this in another blog post.

©2011, Linda Qbq Russell, QBQueen.com

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Cash and Check Deposits

You can reconcile your bank statements more easily IF you group your cash & check payments into deposits the same way the bank groups them together.

When you enter Sales Receipts or Receive Payments on Invoices, be sure to enter the correct Payment Date and whether it was paid by C(ash) or Ch(eck).

Some QuickBooks users don’t realize when they receive Payment(s) on their Customer Invoices using QB 2004 or earlier, the payments received may be: 1) deposited directly into a bank account OR 2) deposited into “Undeposited Funds,” like sitting in your desk drawer waiting for you to take to the bank.  QB 2005-06 automatically place all monies received into “Undeposited Funds.”  This is a good thing and the best way to handle it.

You want to group your undeposited funds together exactly the way you take them to the bank.  Click on Banking, Make Deposit, and checkmark each & every Cash & Check payment you are ready to deposit into the bank.  Click OK, make sure that the checking acct is correct, the date is correct, & overwrite the word “Deposit” with “Ck & the number of  payments included in this deposit.  Make sure all payments from Undeposited Funds are listed.  Click “Save & Close” or “Save & New” to enter another deposit.  You may print a “deposit summary” to attach to your deposit slip.   Click on Print (at the top of the deposit window).  Print the deposit summary on plain paper OR print the deposit slip if you have printable blank deposit slips.

Sometimes, you will NOT deposit the cash in the bank.  Create a bank account named Petty Cash.  Deposit any cash you receive that you don’t deposit into your bank account into your Petty Cash account.  If you put some of the cash in the bank and some into Petty Cash, you may need some help setting it up.

When you reconcile your next bank statement, make sure that your QB deposits match those on your bank statement.  If they do match, congratulations.  If they do not match, re-examine how the grouping in QuickBooks differs from the bank statement, and make the proper adjustments.

How the QuickBooks Queen Can Help You

The QBQ will help you:

  • Decide which version will best meet your needs.
  • Set up, track and reconcile your checking, savings and credit card accounts.
  • Fax or email invoices directly to clients from your computer.
  • Communicate with and prepare reports for your accountant.
  • Set up and modify your basic Chart of Accounts (COA).
  • Understand A/R information — customers, estimates, invoices and receiving payments.
  • Learn the “EASY” way to handle bounced checks from customers.
  • Eliminate “annoying” existing credits that throw off your A/R totals.
  • Respond to a sales tax audit from the State Board of Equalization.
  • Understand A/P vendor data, purchase orders, entering & paying bills and writing checks.
  • Customize the forms to look the way you want and need.
  • Learn how to send QB Reports to Excel. Learn how to reformat those reports to look the way that helps your business the most.
  • Memorize and schedule transactions that occur monthly, or on another regular basis, saving you from making repetitive entries.
  • Troubleshoot to find and correct errors for accurate reports.
  • Create budgets, reports, charts and a customized procedures manual.
  • Reconcile your bank and credit card statements monthly, bimonthly or quarterly.
  • Create custom reports and interpret their meaning for your business, so you can make your business more profitable.
  • and more…