QuickBooks Online – Tips on Navigating the New Format


QuickBooks Online has been redesigned.  The change has been rolled out in stages for current users.  The new format (called Harmony) looks completely different than the old format (Classic).  Just like with any other program that undergoes a complete makeover you have to learn how to use it, where to find things.  The program still functions the same, you can still pay bills, write checks, invoice customers, receive payments, reconcile your bank account and run reports.  What has changed is where you go to perform these tasks.

Below are some tips that may help you in getting around in the new format:

On the left navigation bar are tabs for the major functions.  When you click on the Transactions tab there are several options.

 The Banking option will show you the bank accounts that are setup in QuickBooks.  This is where you will add or match the bank transactions to the register.

 The Sales option will show invoices and payments.  Here you will have more options such as printing or receiving a payment for an invoice.  You can filter the list by clicking on one of the colored tabs at the top of the page.

 The Expenses option is a list of different type of expense transactions.  Options are also available here.

 The Register option is a list of all the Balance Sheet accounts.  Highlight the register you want to view and click on Go to Register at the top right of the window.

 The Reports tab is where you find all the reports.  Reports can be customized and saved.

To create a transaction click the plus (+) arrow in the blue tab at the top of the page.  Click Show More (bottom right) to see a list of all transaction that can be performed for Customer, Vendors, Employees and Other.  Clicking an option will open the form where you will enter the information.   At the bottom of the form there are more options available.  The options will vary depending on the transaction type.

At the top right of your file is your company name.  Clicking on this will open up a choice of options to manage your file.  Managing your file includes your company preferences, chart of accounts, adding products and services, reconciling your bank or credit card accounts, etc.

Here are a couple of links to short U-tube videos by Michelle Long that may also help you.

Video One

Video Two

Hopefully you will find these tips useful. If you need additional assistance please don’t hesitate to contact me.

How to Fix a Balance in the Undeposited Funds Account in QuickBooks


My last article “What is the Undeposited Funds Account in QuickBooks?” explained exactly what this account is.  I’ll explain in this article how to fix a balance that should not be in the account.  It is okay to have a balance in the account.  The amount of the balance should equal the amounts of deposits that have not yet been deposited at the bank or recorded in your file.

If the balance is unusually large then you have a problem that needs fixed.  And it’s fairly easy to fix, but before telling you how to fix it, I’m going to tell you why you have this problem so you won’t repeat the steps that caused this problem.  When you receive a payment, the undeposited funds account is debited with that payment.  When you make a deposit (either from the icon on the home page or under the banking menu) the undeposited funds account is credited for the amount of the deposit.  If you skip this step, the undeposited account will not be credited and the amount keeps getting bigger and bigger.

But, you know you made all your deposits because you have reconciled your bank account.  And your account balanced, all deposits are accounted for.  But, how did you add the deposits?  Did you add them directly into the register?  Or did you bypass the pop up window that shows all the deposits and enter the deposit directly into the deposit window?  Although this will debit your bank account, which is what you want, it will not credit the undeposited funds account, which is what you also want.  The account that you probably picked when making the entry is an income account.  After all, it would make sense to increase your sales with a deposit.  However, this is incorrect.  Your sales have already been increased when you created the invoice or sales receipt.

Now your sales are overstated.  It looks like you made more sales than you actually did.  Time to fix this.  Click on the Record Deposits icon on your home page. (Notice the progression from Receive Payments & Create Sales Receipts on the flow chart).  A pop up window will open showing all payments that need to be deposited.  Mark the deposits that need fixed. DO NOT CROSS YEARS. Click OK.  On the next screen, make sure you are using the correct bank, enter the date for the transaction, in the From Account enter the income account the deposit is for, in the Amount column enter a negative dollar amount that is the same as the total of the deposits.  At the bottom of the window the deposit total will be zero.  Because the total is zero there is no effect on your bank account, but it does credit the undeposited funds account and debits the income account.

This is a fairly easy fix but can be more complicated depending on how many income accounts you have.  If you want the each income account to be correct you will have to research the deposits to see what income the payments were for.

The other complication may be the year(s) the deposits cover.  As I stated earlier, your income is overstated.  This correction to the undeposited funds account will reduce your income for prior years. If you have already had your taxes prepared for those prior years you will want to talk to your accountant or tax preparer.

One more piece of advice, make a backup before you do anything.  And please, don’t hesitate to contact me with any questions.

What is the Undeposited Funds Account in QuickBooks?


You have finally decided to join the 85% of small business owners who use QuickBooks for their accounting system.  You have installed it, created your company file and begun working in it.  It seems simple enough, your Home Page has a flow chart that shows you the order you need to perform tasks.  Your forms, like the invoice and check, are familiar looking.  Just fill in the form and QuickBooks takes care of posting everything to the correct accounts.  So much easier than pen and paper.

QuickBooks does a lot of behind the scenes work for you so you don’t have to worry.  Ah, but depending on how you have set up your file and the preferences (Edit > Preferences), you may find yourself worrying.  You have looked at your reports and something doesn’t quite seem right.  Your sales are too high and you have a balance in the Undeposited Funds account.

Now you may be wondering what that account is and why it has a balance.  This account is automatically created when you set up your company file.  You don’t have to use this account.  If you want to use it then go to Edit > Preferences > Payments.  Click on the Company Tab.  Mark the box next to Use Undeposited Funds as a default deposit to account.

This account functions as a holding account for the payments you have received.  When you receive payment for your goods or services (using either the Receive Payment or Sales Receipt form) a debit for that amount is posted to the Undeposited Funds account.  A credit is either posted to Accounts Receivable (if using the Receive Payment form) or to an income account (if using the Sales Receipt form).  This money has not yet been deposited to your account.  In other words, it has not been posted to your bank account.

To record the deposits, and clear out the Undeposited Funds account, use the Make Deposit form.  When you click on this a window will open on top of the deposit window.  It will list all the payments that have been received but not yet deposited.  You want to make a deposit that will equal the exact same amount that was deposited into your bank account.  For example, there are three payments showing, one for $100, another for $200 dollars and another for $50.  You have already taken the $100 and $200 to your bank.  The total amount of that deposit was $300.  You want the amount you record in QuickBooks to be a total of $300.  Mark those two deposits and click on Save.  Now your deposit window shows those two deposits with a total of $300.  Make sure you are using the correct bank account and enter the date of the deposit.  The Undeposited Funds account will be credited for $300 (leaving a balance of $50) and the bank account will be debited $300.

When you go to reconcile the account, instead of seeing two transactions, one for $100 and another for $200 you will see only the one deposit for $300.  This will also be the amount on the bank statement.  This makes reconciling the account so much easier.

Look for my next article that will explain how to fix a balance that should not be in the Undeposited Funds account.




Anyone Can Use QuickBooks


You’ve seen those commercials where the business owners have started their new business and needs to organize their finances.  They purchase QuickBooks, install it on their computer, run around with big grins on their faces swiping credit cards to receive payments from their customers and look at the reports that are generated on the screen.  It really does seem simple, so you went and purchased QuickBooks too.

If you are good with numbers then learning to use QuickBooks may not take too long.  But, if you are not good with numbers you may spend hours and hours setting your company up, your chart of accounts, your items (you did set up items, didn’t you?), employees, sales tax, customers, vendors, etc.  I could go on and on with a list of things that need to be set up in order to have a company file that will function correctly.

But, once you get everything set up, the rest is easy.  All you have to do is write checks, pay bills (they aren’t the same thing), create invoices or sales receipts (which one should you choose?), pay employees (don’t forget payroll taxes), receive payments and record deposits (be careful that you don’t do this twice), reconcile your bank statements and credit card accounts (yes, even the credit card accounts need to be reconciled).

Okay, you’ve done all this for the first month and you are ready to run reports.  You are so anxious to see how your business is doing.  You run a Balance Sheet and Profit and Loss.  Uh-oh, not quite what you expected see?  You have a balance in the Accounts Payable account.  But you paid all the bills you entered so why do you still have a balance?  Did you pay the bills in the Pay Bill screen or Write Check screen.  Makes a big difference in how the transactions are posted.

Do you have a balance in the Opening Balance Equity account?  That should always be zero.  What about Undeposited Funds?  This is a holding account until you make the transaction that records the deposits.  A balance could mean that the deposit just has not been recorded yet and will be recorded the following month.  If all deposits have been recorded to the checking account, the method they were recorded may have been incorrect leaving a balance in this account.  Is there a balance in your Payroll Liabilities but you have paid them?  Did you pay them by using the Write Check window instead of Pay Payroll Liabilities?

These are just a few of the many, many different reasons your reports may be incorrect.  Now you need to fix everything.  How do you do that?  By now you probably have figured out you can double click on the transaction and just change it.  But that may not fix it.  You can also void or delete (not recommended) it, but again, that may not fix it.  You could search through the Help, the Intuit Community Forum, or watch the training tutorials Intuit offers through the Help menu.  But, all this will take up more of your precious time.

As mentioned before you may or may not be good with numbers, or even working with software.  You are good at what you do, at operating your business, knowing the ins and outs of your industry.   What could you have been doing if using QuickBooks had been as easy as the commercial made it appear to be?  You could have been doing something productive for your business or spending time with your family and friends, not spending time on bookkeeping.

For information on the services I offer check out my Services page.


Recording Prepaid Inventory in QuickBooks


You have placed an order with your vendor for inventory.  Your vendor requires either payment in full or a deposit (partial payment) before shipping the inventory to you.  How do you record this transaction in QuickBooks?  You don’t want to Receive Inventory because you don’t want your inventory quantities to show inventory that you don’t have.  What you want to do is show that you have prepaid for inventory and show a credit for the vendor you purchased the inventory from.

Go to Write Checks on your Home Page.  Enter the vendor name, date, and the amount.  Under the Expense tab click on Prepaid Inventory.  You may need to set this account up in your Chart of Accounts.  If so, add this account as an Other Current Asset type of account.  Enter the amount you are paying.  Use the description field to make notes on what this is for.  Click Save and Close.

When your inventory has arrived, go to Receive Inventory > Receive Inventory With Bill.  Enter the Vendor name, the date and a zero ($0.00)* for the dollar amount.  On the Expense tab click on Prepaid Inventory and enter the amount that you paid for the order as a negative dollar amount.  Click on the Item tab and enter all the items in this order and the amount as a positive dollar amount.  The negative and positive added together will equal the zero dollar amount of the bill.   Click Save and Close.

You are through with this transaction.  The transactions for the Vendor in the Vendor Center will show the check that was written and the bill that was created.  The Vendor balance will be zero (0.00).  The inventory balance will have increased by the amount you paid and the inventory quantity will be increased by the quantity you entered.

*If you made a deposit for the inventory rather than paying it in full you would enter the amount you still owed on the bill.  Under the expense tab you will enter the amount you prepaid as a negative dollar amount.  Under the item tab you will enter the total amount of the inventory you received.  Both of these amounts added together will equal the amount of the bill.

If you have entered a purchase order before you write a check, choose “no” on the pop up message that you have outstanding purchase orders.  After you have received your order and go to Receive Inventory with Bill, in the Enter Bill window click on Select PO at the bottom left of the window.  Pick the PO that you are receiving inventory for.  Enter the rest of the information as described above.

Before writing this article I researched this topic and tested several different ways to record a prepayment of inventory.  I found this method to be the simplest.  Please feel free to comment, make suggestions or ask questions.