Last Updated: February 16, 2024, 1:55 pm by TRUiC Team

How to Set Up QuickBooks for Your Small Business

Ch3. 06

QuickBooks Online streamlines bookkeeping tasks for small business owners. Dive into the platform's features, plan selection, and initial setup to maximize its potential. 

This video is part of the free Small Business Startup Course designed to help walk you through the entire process of business formation from idea to launch. 

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Choosing the Right QuickBooks Online Plan

Selecting the right QuickBooks plan for your business needs is just the first step in getting started – you’ll also need to navigate the platform and how you and your accountant can work together to make the platform a useful tool for the both of you – from taxes to invoices.

How to Set Up QuickBooks for Your Small Business – Transcript

As the owner of a small business, you want to spend as much time as possible on activities that drive your business forward. And let's face it, bookkeeping is a needed task, but it just doesn't move the needle. That's why in this video, we're going to give you a tour of QuickBooks Online so you can spend less time focused on your business's ledger and more time on the important stuff. 

At TRUiC our mission is to offer all our resources and information for free - but we support our work by using affiliate links, meaning we earn a commission on many of the amazing deals we’ve negotiated for you. Full transparency, Quickbooks is one such affiliate partner. Link in description below.

Hey everybody, Will Scheren here from Small Business Startup Guide by TRUiC. This video is part of a larger course dedicated to helping small business owners cut through the noise and get to the essentials of starting and operating their business. If that sounds like it would be really useful to you, be sure to like and subscribe. 

QuickBooks Online is a popular cloud accounting software made by Intuit and is specifically designed for small businesses so they can keep all of their transactions in one place. In this video, we're going to help you pick the best QuickBooks Online plan for your business, give you a tour of QuickBooks Online and walk you through the initial setup, learn what to make sure your accountant sets up for you, and how to complete the tasks that your accountant will ask you to complete on a monthly basis. 

How to select the right QuickBooks online account for your business – to figure out the right QuickBooks Online plan for your business, we provided a link below this video for you to get the lowest pricing that we've been able to find on QuickBooks services. You can try these out for free or dive straight in with the discount link we provided below this video. Every level of service will charge you a monthly fee. 

Simple Start is the most inexpensive version of QuickBooks Online, and it works well for businesses that sell services or digital products. 

If you need to allow multiple users to have a username and login, you may want to upgrade to Essentials instead to get three users. You'll also be able to track employees' time, get bill payment support, and connect more sales channels to automatically sync with QuickBooks. 

QuickBooks OnlinePlus is the next level up, and it allows you to manage your inventory. So if you sell physical products, you'll likely want to start with this level. This level also lets you track your profit by project. 

QuickBooks OnlineAdvanced allows you up to 25 users, and you're able to customize access by role. You'll also get batch invoicing, automated workflows, and more robust analytics. 

After taking some time to review the plans, select the right one for your small business and move through their payment portal. Answer some initial questions about your business until you land on the QuickBooksOnline Dashboard. 

QuickBooks online walkthrough and initial setup – earlier in the course, we let you know that we strongly recommend that you get an accountant for your business. You're going to want your accountant to handle the majority of setting up your QuickBooks for you. But before you pass your new QuickBooks account to them, you should get acquainted with the dashboard and add your business information, connect your bank and credit card accounts to QuickBooks, and invite your accountant to have access to your QuickBooks account. 

Let's take a look at where everything is in QuickBooks. To the left is the nav bar with the new button right at the top. This is where most of the tasks you can complete in QuickBooks can be accessed. You can hide the nav bar by clicking on the hamburger menu icon to free up some space. 

In the main window of the dashboard is the “Business overview.” You can see summaries of your profit and loss, expenses, invoices, bank accounts, sales, and more. You can use the “privacy” button to hide this information if you need to keep it from prying eyes as well. 

In the top right corner, we have “My Experts,” “Help,” “Search,” the notification bell, “Settings,” and a link to your Intuit account. Let's start exploring QuickBooks with these buttons up here. 

The “Help” button brings up the QuickBooks Assistant bot, which can help with some of your basic questions. You can also use this to reach a human or have a look through frequently asked questions. 

When you click on the “Search” button, you'll see a list of all of your most recent transactions. You can also find your older ones here as well and make changes to them if you need to. 

The “Settings” button will be important to those of you who are setting up QuickBooks for the first time. This is where you go to set things up. This menu has been separated into “Your Company,” “Lists,” and “Tools.” 

Under “Your Company,” you can find your account and settings. This is where you can add a logo or change your company name. If you don't have a logo yet, we'll be covering how to select a logo for your business, and how to adjust the size of your logo in Photoshop, and other brand considerations as well, in the next section of the course. We've provided a link to a Photoshop document below this video that is already appropriately sized for a logo to be loaded into QuickBooks. Be aware that these changes do show up in your invoices that you send out on QuickBooks as well. 

You can also add your Employer Identification Number or your Social Security number for taxes. Additionally, you can pick a tax form based on your company type, choose an industry, add your business's contact information, email, customer-facing email, your phone number, and your address. 

The other tabs on the left allow you to manage your subscription, check your usage limits, customize your sales and expenses, and adjust advanced settings, like account numbers or multi-currency. 

Let's head back to the “Settings” tab. “Manage users” allows you to add people to your QuickBooks account and provide them with different levels of access. 

Next, you want to select “Custom form styles.” If you select the preloaded form style for your invoice, you can select from – and make revisions to – the preloaded invoice templates, revise where your logo is located on the invoice, select a main brand color and font to best match your brand (which we'll be covering in detail later in the course), and make revisions to the content on the invoice and the emails that are sent out notifying and reminding your customers to pay their invoices. 

Next in the “Settings” tab is your chart of accounts, which brings up a complete list of all the ledger entry categories that your business will track in your reporting. Managing this properly is extremely important and should be handled by your accountant. Be sure to discuss with your accountant any other accounts that they think that you should track other than what has been preloaded hereby QuickBooks. 

Under the “Lists” column, you can manage all of the products and services that you sell. These should be pulled in from the product list that you created in the planning section of the course. You may want to review this section with your accountant as well. Under “Lists,” you can also set up and check any recurring transactions that you would like to be scheduled to be paid each month. 

In the “Tools” menu, you can order business checks, import various types of data into QuickBooks, and reconcile your accounts, which we'll be covering later in this video. 

Now let's move our attention to the nav bar. The new button at the top is used to create things. In business, you'll create items in QuickBooks for customers, vendors, employees, and other stuff as well. 

For “Customers,” you can add a customer profile. If you sell expensive or uncommon products or services, your customer may ask you for an estimate that describes what you are going to provide them and how much you estimate it will cost them, you can create invoices to request a payment form from customers and note that a payment has been received when an invoice has been paid. You sell things to customers, and you buy things from vendors. 

There's two ways to record purchases: you can use expenses or bills. If you've already paid for a good or service, then you want to click “Expenses.” Maybe you filled up your car at the gas station. Enter the amount that you paid with, attach the receipt to keep things organized, and save and close. Alternatively, if you want to save time, you could snap your receipt on your phone instead using the QuickBooks app that will scan it straight into the system. 

“Bills” are for situations where you buy something and haven't made a payment yet. The form looks very similar to the “Expenses” one, but this time you need to enter the terms and a due date. That's the deadline that you'll need to make the payment by. Besides that, everything else is the same deal as an expense. Just fill out the details, attach a copy of the bill, and then hit save or save and schedule the payment. 

Under the “Employees” column, you can manage your payroll if you've added that and fill out your timesheets. 

In the “Other” column, you can document bank deposits, credit card payments, and transfers between accounts. Your accountant can create journal entries to rectify any issues that may be created in your account. You can see statements of customer balances here as well. 

Once you've taken a brief tour of QuickBooks and added your ID information, then you should connect your bank account and any credit card that your company uses to your QuickBooks account. To have QuickBooks automatically import your bank and credit card statements, simply navigate to the “Banking” tab in your dashboard, and click “Connect account,” and search for the name of your bank or credit card company. After selecting your financial institution, select any of the accounts that you have with them that you'd like QuickBooks to have access to, and select how far back you'd like QuickBooks to track your transactions with that institution. After connecting, you'll be able to see all of your bank and credit card transactions in QuickBooks. 

After adding your account information and syncing your banking and credit card accounts with QuickBooks, it's time to get your accountant involved. To add your accountant in QuickBooks, go to “Settings,” “Manage users,” click the “Accountants” tab, and then add your accountant’s email address and click “Invite.” Your accountant will receive an email that will help them navigate and log into your QuickBooks account. Then call your accountant and ensure that they received the email to view your QuickBooks information, and ask them how much time they'll need to review your account to be able to discuss how your business's bookkeeping will be handled. 

Once your accountant has reviewed your account, you can ask them anything that you'd like about your business's bookkeeping, but a few questions that you'll definitely want to have the answer to are: What accounts should we be keeping track of on the chart of accounts? What tasks will the accountant be completing monthly? What tasks will your business be responsible for completing monthly? What do you need to know about keeping your books in order if you collect accounts receivable, have accounts payable, or have a loan that you make payments on? And how will you import information from your business's commerce solution into QuickBooks?

QuickBooks and commerce solutions – a commerce solution is a set of software and technology tools that help businesses sell products and services. They can include a website, online storefront, shopping cart, payment processing system, inventory management tools, and more. If your business sells uniquely created, one-off products to your customers, you don't keep inventory on those products, you only process a few transactions a month, and your sales process requires a lot of communication between your business and your client, then your business's entire commerce solution may just consist of invoices that can be sent out from QuickBooks. An invoice is an itemized document that records the products or services delivered to a customer. It shows the total amount due and the preferred payment method. 

QuickBooks makes the invoicing process as simple as it can be. Just click the “New “button and then “Invoice.” Select or add a customer, select or add the products that you're selling to them, the quantity, and the rate, and save and send your invoice. Your customer will receive an email with a direct link to pay the invoice via any of the payment methods you selected. And QuickBooks will directly deposit the funds to your connected bank account. 

But if you're in the business of selling goods or services that require you to automate some of the components of your inventory management or sales and checkout processes, then you're going to need a more robust commerce solution. Not to worry – we're going to be showing you how to set that up later in the course. But as you're setting up QuickBooks, be sure to note with your accountant that you're going to need to import information from your commerce solution and ask them how to best manage that data. 

How to categorize and reconcile your transactions – while each business will have different tasks assigned to them by their accountant, there are two tasks that every business will need to complete: categorizing their transactions and reconciling their transactions against their bank statement. Let's take a look at how to do that in QuickBooks now. 

With your bank account connected to QuickBooks, QuickBooks will download your bank transactions into QuickBooks every day. To categorize these transactions, go to “Banking” and select “Banking.” You'll see a box for each bank or credit card that you've connected. Select any of the boxes to see the transactions for that account. 

However, these transactions aren't in QuickBooks yet. You still need to categorize them and add them. To do this, select the transaction to see more details. Vendor or customer information is optional, but it helps to see who paid you or who you paid. Select the category from your chart of accounts that best describes why you received or spent the money. If the transaction is a sale, categorize it as income. Select the income account that you use to track these kinds of transactions. You'll probably also have business expenses like rent or materials. Purchases are usually categorized as expenses, but if the purchase is something that you'll use over and over, you might categorize it as a fixed asset. You can also add a memo to any transaction. 

Over time QuickBooks will recognize transactions from the same vendors and customers and try to categorize them for you. However, you can still change the category. You can manually change the setting with this link. You can also split transactions into multiple categories if you need to. Select the categories and add the amount to each one. Just make sure that it adds up to the total amount of the transaction. Once everything looks okay, select “Add.” 

For some transactions, you'll see “Match” instead of “Add.” These are transactions such as a bill or invoice payment that you've already entered into QuickBooks. So instead of adding the transaction, it will match the record from the bank with what you've already entered. This prevents duplicates. All you need to do is review them if the transactions match, select “Match.” However, if QuickBooks is wrong and the match is not correct, don't worry – just select “Add” and add it to QuickBooks as a brand new transaction, or you can match it to another transaction you already entered by selecting “Find other records.” 

After categorizing each of the transactions every month, your company will want your QuickBooks transactions reconciled against your bank statement. Reconciling is the process of making sure that the records you've been keeping in QuickBooks match your bank and credit card statements. If you have your bank accounts connected to QuickBooks and have been categorizing your transactions as we just showed you how to do, this should be a simple process. 

Before you start, make sure that you have your bank and credit card statements close by. Once you're ready to reconcile, go to “Settings” and “Reconcile.” Choose the bank or credit card account that you want to reconcile, enter the ending balance and the ending date from the bank or credit card statement you received, and double-check that the beginning balance matches the statement that you're working with. If everything looks good, click “Start reconciling.” 

Now take your bank statement and compare that information to QuickBooks – especially the dates and amounts. Find items in your statements and find those items here. If they match, put a checkmark next to them. If you see an item on your reconcile list that's not in your statement, don't check it. With your bank account connected to QuickBooks, you'll see many transactions with a checkmark already next to them. These items were already reconciled when QuickBooks downloaded them and were matched in QuickBooks when you reviewed your transaction feed. No need to worry about these. 

Once all items from your statement have been verified in QuickBooks, you should have a zero balance letting you know that there is zero difference between what's in QuickBooks and what's on your bank statement. 

If there is a difference, you'll see the amount here, and you'll need to figure out why. Start by selecting “Edit,” and then verify that the beginning balance, ending balance, and ending date match the bank records that you're reconciling them against. If they match, check any transactions that you manually entered into QuickBooks and see if you can find an error. Select any item for more details, and if you need to make an edit, you can do so and then save. 

If you cannot find an error, you can still choose to finish and accept the difference. QuickBooks will create an entry that adjusts your books by the amount of the difference but definitely talk to your accountant before doing this. It's better to resolve the difference without performing this task. With the difference of zero, select “Finish now,” and then you're done. Review with your accountant how frequently they would like you to reconcile your books and how to reconcile them.

Reporting – with your books reconciled, you should now have accurate reporting within QuickBooks. To access your income statement, or profit and loss, cash flow statement, and balance sheet for your business. just click “Reports.” You can click on the star if you want to add something to your “Favorites.” 

The income statement or “Profit and Loss,” is where you monitor your financial performance. It gives you a summary of your revenues and expenses over a period of time. If you want to see your cash inflows and outflow over a period of time as well, then take a look at your cash flow statement. The “Balance Sheet” shows you how large your company is at any given time and how you paid for your assets. Reports like these are the key to understanding your business. 

So that covers the high-level functionality of QuickBooks and where everything is. We know there's a lot going on here and that that can be intimidating if you're just opening it up. But again, if you have a small business, we highly recommend getting an accountant. 

We discussed everything that you should consider about hiring an accountant earlier in the course. Your accountant should be happy to go over the complete setup of your QuickBooks account with you because if you manage it correctly, it will save them a ton of time. They'll be able to help you with more QuickBooks functionality specific to your business, like taxes, tracking mileage, and more. Ask them how they'd like you to set everything up and what they'd like you to do each month to ensure that your books stay in order so that you're able to track your business's progress towards your goals. 

One more giant functional component of QuickBooks that we haven't covered yet is its ability to help you manage and pay your employees. In the next several videos in the course, we'll be covering what you need to know about paying yourself, hiring employees, and paying them. 

This video is part of a step-by-step course that gives business owners all of the essential information for starting and operating their business. We provided a link below this video for you to get access to all of the free and discounted business tools we mentioned in this course. 

Be sure to like and subscribe to get more of this content. See you in the next video, and if you have any questions, let us know.