Download Bank Transactions Into QuickBooks


Does it seem like it takes forever to enter all your transactions into QuickBooks?  If you write checks directly from QuickBooks, those transactions are already in your register.  Also, when you receive payments from your customers, and make a deposit, those transaction are also in the register.  But, what about all the other activity that occurs that will change your bank balance? Your ATM withdrawal, your debit card purchases, automatic withdrawals for bill payments all need to be entered in your register before you can perform a bank reconciliation.

You can enter these transactions manually if you only have a few, but save yourself some time and use the Online Banking feature in QuickBooks to quickly add these to your register.  If you haven’t already done so, you will need to set up an account for Online services.  Go to Banking > Online Banking > Set Up An Account for Online Services.  Follow the prompts to set up your checking or credit card accounts.

Once your account is set up, you are ready to import your transactions into your QuickBooks file.  You can go to the Online Banking Center (Banking > Online Banking> Online Banking Center) and click on Receive Transactions.  This will connect you to your bank, enter your login information, find the statement you want to import and find the prompt to import as a .qbo file.  A pop up window will ask if you want to save the file or import the file.  You can import it directly into your QuickBooks, but I prefer to save the file to my computer.  After saving the file, go to File > Utilities > Import > Web Connect Files.  Browse to where you saved the file, click save.  You will receive a message that your transactions have been entered into QuickBooks.

If you have trouble downloading your transactions from the Online Banking Center, you can do what I do, login to your bank directly from your browser.  Then follow the steps above to import the transactions into QuickBooks.  After your transactions are imported you are ready to review them and add them to QuickBooks.  Click on the bank name in the Items Received box of the Online Banking Center.  If you are using the side-by-side mode, the transactions are on the left.

QuickBooks will attempt to match the imported transactions to existing register transactions.  At the top of the Downloaded Transactions box is a line that says Matched to Existing QuickBooks/Register transactions.  Click on show to see what these transactions are.  These will be transactions such as checks and deposits that you have already entered during the month.  They do not need to be added to QuickBooks, they are already in the register.

The next line shows the number of New Transactions Created Using Renaming Rules.  You will want to review these transactions.  A renaming rule is when QuickBooks gives a vendor that has a several similar names one name.  For example, McDonalds1234 and McDonalds1243 would both be renamed to McDonalds.  It is a good idea to check how QuickBooks has renamed your vendors.  You can click on the Renaming Rules link at the top right of the window to edit the rules.  When reviewing these transactions, also check that they have been assigned the correct account number.

The last line shows Unmatched Transactions.  These transactions will need to be added to the register.  Highlight the transaction, click on the Payee Field in the Record an Expense box on the right.  Enter the vendor name and account number.  If you need more details, such as class, job or other details, click on the Show Splits, memo, date, number… link below the account field.

If there are transactions in the Downloaded Transactions window that have already been entered in the register, you can delete them before you add the other transactions to QuickBooks.  Click on the Select Items To Delete button at the bottom of the window, mark the transactions you are deleting and mark delete.  This is not reversible, if you delete anything that has not already been added to QuickBooks, you will have to manually enter it.

Once you have checked all transactions, mark the Add to QuickBooks button in the window on the right.  This may seem like it will take a while, but in reality it will speed up your data entry time.  Each month as more renaming rules are created, there will be fewer unmatched transactions to enter.  And you will wonder why it took you so long to get on the bandwagon!

One last thing, before importing your transactions, MAKE A BACKUP!

Bartering and How to Enter in QuickBooks


In these days and times, when budgets are tight, you may find that you can trade your service with another business to save on your cash flow.  This is called bartering and it is becoming more popular.  However, the fair market value of the property or services being bartered is taxable income to both parties.

The IRS has issued four facts on bartering:

  1. Organized bartered exchanges A barter exchange functions primarily as the organizer of a marketplace where members buy and sell products and services among themselves.  Whether this activity operates out of a physical office or is internet-based, a barter exchange is generally required to issue Form 1099-B, Proceeds from Broker and Barter Exchange Transactions, annually to their clients or members and to the IRS.
  2. Barter income Barter dollars or trade dollars are identical to real dollars for tax reporting purposes.  If you conduct any direct barter – barter for another’s products or services – you must report the fair market value of the products or services you received on your tax return.
  3. Tax implications of bartering Income from bartering is taxable in the year it is performed.  Bartering may result in liabilities for income tax, self-employment tax, employment tax or excise tax.  Your barter activities may result in ordinary business income, capital gains or capital losses, or you may have a non deductible personal loss.
  4. How to report The rules for reporting barter transactions may vary depending on which form of bartering takes place.  Generally, you report this type of business income on Form 1040, Schedule C Profit or Loss from Business, or other business returns such as Form 1065 for Partnerships, Form 1120 for Corporations or form 1120-S for Small Business Corporations.”

So, now that we know what the IRS has to say, how do we record this in QuickBooks?  During my research on this I found a couple of different methods for recording barter transactions.  I’m going to giving the directions on the one I think is the best one to use.

Because you will be paying bills and invoicing and receiving payments from both a vendor and customer with the same name, you will have to distinguish them in QuickBooks since QuickBooks does not allow duplicate names in lists.  For vendors you could add -v after the name and for clients/customers you could add -c.

  1. Go to your chart of accounts and click on new.  Set up a new account called Bank and name the account Clearing Account (You can also call it Barter).  If you use account numbers enter an account number.  Click save and close.
  2. To record a barter transaction from the vendor go to the Vendor tab and Enter Bills and enter a bill for the vendor for the goods or service you are trading with from this vendor.  Click save and close.
  3. Next you will enter an invoice for this Vendor/Customer just as you would for any other customer.  Just don’t forget to use the Customer Name with the -c after it.  Click save and close
  4. Now you are ready to receive payment for the invoice.  Go to Receive Payment and enter the Customer Name, enter the amount, and mark the invoice to be paid.  In the Deposit to field click the drop down arrow and change from Use Undeposited Funds as a default deposit to account to Clearing Account (or Barter).  (If this file is not available to change you will need to go to Preferences > Payments and under the Company tab un-mark that box as the default).  Click save and close.
  5. To pay the bill, go the the Pay Bills and mark the Vendor and invoice you are going to pay.  At the bottom of the screen where is says Payment Account, click on the drop down arrow and change to Clearing Account (or Barter).  Click Pay Selected Bills.  On the next screen click done.

The clearing account can be reconciled just like any other bank account.  If the trades are equal in value the account will be zero.  If not, you may have to write a check or make a deposit to clear the account.


QuickBooks 2012 Adds Wizard For 1099 Filing Requirements


The 1099 reporting requirements for 2011 have been somewhat confusing.  Who gets a Form 1099-Misc and who gets a Form 1099-K?  The IRS repealed the ruling that required all businesses to send a Form 1099-Misc to all vendors to whom they had paid, regardless of whether it was for services or goods.  So you only have to send a Form 1099-Misc to vendors who have been paid $600 or more for services in 2011.

But, there is a catch, only part of the Final Regulations was repealed.  There are two forms now for reporting payments, the Form 1099-Misc and Form 1099-K.  Form 1099-Misc is used for cash and check payments only.  Form 1099-K is used for all other types of payments, i.e. credit card, debit card, PayPal, etc.  You, as the business owner filing your own Form 1099’s, or a bookkeeper filing for your clients, DO NOT have to file any Form 1099-Ks.  You only need to file Form 1099-Misc for cash and check payments only.

This will be easier than you had hoped for if you are using QuickBooks 2012 as they have added a Wizard for the 1099-Misc reporting requirements.  Laura Madeira has written detailed instructions on how to set up the Wizard which I have included here: 1099 Tax Form Blog For QB 2012.  Laura will also give anyone who signs up for her website at  a free document!

Hopefully this blog helps clear up some of the confusion you may have about the 1099 reporting requirements.  Should you need help in setting up the Wizard, a Certified QuickBooks ProAdvisor will be glad to help you.

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Understanding Items in QuickBooks


Items in QuickBooks can be confusing.  You may not know where to use them or why to use them, or even which item to use.  Most accounting programs don’t use items. The larger, more expensive programs are made up of several modules and you purchase only the modules you need.  

For example, you would purchase the general ledger module and then add on only the modules you needed, such as accounts receivable and accounts payable.  You would enter your data into these modules into batches and you would post these batches to the general ledger.  Quickbooks is a forms driven program and does not use modules, however the process is similar, it’s just that QuickBooks does the posting to the general ledger in the background.

When you enter a bill or an invoice and use the item tab, the items you are choosing have already been set up to post to a general ledger account number.  Some items are single sided items, which means they only post to one general ledger account and some items are two sided items, meaning they post to two general ledger accounts.  There is no need to post anything else to the general ledger account.

There are several different lists in QuickBooks, but this blog will cover the regular item list.  Which items do you need and why?

  • Service Item – Once you have setup an item as a service item it cannot be changed to another type of item.  Use this item for professional type of work or payment for professional service.  You will use an income account for this.  If you are going  to use this for both income and expense, mark the box that says “this item will be used in assemblies or is performed by a subcontractor or partner.”
  • Inventory Part – Use this item to setup your inventory item list.  For the expense account use your COS account and for income use one of  your income accounts.  You also need to enter your inventory account (balance sheet account), reorder point, and on hand amount.
  • Inventory Assembly – Use this for inventory items that have been assembled from other inventory items.  Your expense account is COS and use one of your income accounts for income.  In the Bill of Materials box fill in the inventory items that make up the Inventory Assembly.  You will also need to add your inventory account (balance sheet account), reorder point and on hand amount.
  • Non-inventory Part – You will use this item for products you purchase but are not going to keep track of as inventory such as office supplies.  It would be a single sided item in this case.  If you are going to charge your customer or use it in an assembly item then mark the box “This item is used in assemblies or purchased for a specific customer:job”.  You will then have to enter both the expense and income accounts.
  • Other Charge – Use for miscellaneous labor, material, part charges, delivery charges, set up fees, service fees, etc.  You can use this as either a single or double sided item.
  • Subtotal – Adding this to your forms will give you a total of the amounts above the subtotal row up to the previous subtotal row.
  • Group – Use this item to quickly enter several items at one time on your forms.  Give the group a name and in the box list the individual items and quantities to include in this group and save.
  • Discounts – Use this item to give your customer a discount on a product or service.  Do not use it for a prepayment.  You will use an income account for this item.
  • Payment – Use this to record payment at the time of the sale.  When entered on the invoice it will reduce the amount due.  There is no account to set up for this item.
  • Sales Tax Item – Use this item if you only pay one tax rate to one taxing authority.
  • Sales Tax Group – Use this item if you pay different rates to different taxing authorities for the same sale.  The customer will only see the total tax due.

Understanding how your items work in QuickBooks is critical in getting the correct reports from your data.  If you do not have the right account number associated with them, your reports will not be correct.  I hope I have helped you to understand items a little better, if not please don’t hesitate to contact me.

How to Choose an Accounting Program


Are you still keeping your books on ledger paper?  Do you reconcile your bank account on the back of your bank statement? Are all your receipts kept in a shoe box?  Do you groan when you get your bill from your accountant?  If you answered yes to these questions, then you probably do not have an accounting program.

How do you choose an accounting program for your business?  There are several good programs out there that may meet your needs.  Research the specifications for programs and ask other businesses what they are using and what they like and don’t like about the program they are using.

I am partial to QuickBooks and eighty-five percent of small businesses use QuickBooks as their accounting software, so I am going to write about some of it’s features.  First of all, there are several editions to choose from depending on the size of your business, number of users that will need access to the program, and the reports you will need to generate.

  • QuickBooks Pro – This is the simplest of the offerings, but still robust.  One user is included with the price, and two additional users can be purchased.  Several new features are available this year including batching of invoices, four new built-in reports, convenient access to customer or vendor’s balance or transaction history along with other features.  It also integrates with Payroll Services and Merchant Services, both of which are sold separately.
  • QuickBooks Premiere – This version can have up to five simultaneous users. This version has several different industries to choose from when setting up your company file.  Because it is so industy specific, reports can be generated that are also specific to your industry.  In addition to the features of QuickBooks Pro, QuickBooks Premiere forcasts sales and expenses.  A new feature for this year is tracking the balance sheet by class.
  • QuickBooks Enterprise – This version is for the mid-size company who is growing and needs more features than QuickBooks Premiere can offer.  It will allow up to 30 simultaneous users with different security settings for each user.  It will track inventory in multiple locations with Advanced Inventory (sold separately).  You can work in two company files at one time.  You can combine reports from multiple companies files and create professional financial statements.
  • Mac Desktop Solutions – This is a 3-user edition that integrates with Payroll for Mac and Merchant Services (both sold separately).  New features added this year are that job-related mileage can be tracked by mileage or job, export reports to Excel or Report, find transactions faster by sorting by account registers by date, type, number amount, and more, among other new features.

The editions listed above are all desktop editions of QuickBooks and should you need to access your file while away from your computer, you would need to use either the built-in remote access feature in QuickBooks or an online remote access such as Team Viewer or GoToMyPC.   You could also have your QuickBooks hosted from a number of hosting companies if you need to be working in your file at the same time as your off-site bookkeeper or accountant.

Once you have choosen the right product for your business your Certified QuickBooks ProAdvisor will help you set up your company file, enter all existing transactions and train you on how to use the features of your new accounting system.  If you are unsure on which product you need your Certified QuickBooks ProAdvisor will be glad to help you with that decision.