Designing your accounting plan

Intuit built QuickBooks with diverse capabilities for diverse operations. Small businesses run in fan endless variety of endeavors, managed by a wide spectrum of people, whose common denominator is that they are not employed by another person. QuickBooks performs a broad set of functions, and you will find most that you need. No program is all things to all people. QuickBooks will do all or most of what you want, but you may find you want functions that it does not have. Success will be based on understanding QuickBooks capabilities and its limitations. Then you can build your accounting plan for the best use of its features. The table lists summary descriptions of the major working parts, each of which is the subject of a page or more of text in its respective chapter.

Feature	Capabilities	Side Effects
Balance Sheet Accounts	List assets, liabilities, and equity Summarized in balance sheet (statement of financial position.) Detailed in some transaction reports. Retained Earnings is included, but has special functions, explained in Accounting chapter.	Not available in P&L and other summarizing reports.
Income and Expense Accounts	Record dynamics of business. Transactions are summarized in P&L Report and in Custom Reports, which are modified P&L Reports.	Summarized for one year only. Results for prior years are in Retained Earnings.
Jobs	Jobs are subordinate to customers; usually mentioned as Customer:Job. New Job gets copy of current customer information, which stays as it is copied in, unless edited within job.	Similar to a separate customer. Payment applies to one job only, but if a payment is for multiple jobs, a workaround can be devised.
Estimates (QuickBooks Pro)	Quote a price to a customer, without recording and income Translate to one or more invoices Progress invoicing from estimates (beginning QuickBooksPro 5)	Only one (1) estimate per Customer:Job. Additional estimates require additional jobs.
Classes	Additional labels on income and expense transactions Useful in some reports for sorting and selection of transactions to be included. Building contractor could have expense accounts for framing, electrical, etc., and classes for different job sites.	Won't stick to transfers between balance sheet accounts. See below. Screen width may limit use, particularly in Preview Payroll. Turn on Use class tracking in Preferences
Items	Started as invoice line items Connects sales transaction to income account Declares action to customer Payables account uses items for purchases	Does not include Payroll Items
Payroll Items	Pay checks are generated as if the employee generated an invoice to the employer, using payroll items. Payroll items put in earnings, take out deductions, etc.	Not included among "Items" on reports
Inventory	Single asset account for keeping inventory Divided into items Every unit of an item is considered identical Average price tracked Income account for sales Cost of Goods Sold account	Only average pricing may be used. Condense Data does not delete old inventory transactions.
Balance Sheet Report (Statement of Financial Position)	Summarizes all of balance sheet accounts, as of a certain date. Earnings (or Current Earnings) are included, as are Prior Earnings (previous fiscal years.)
Profit and Loss Report (Income statement)	Summarizes all income and expense transactions for current (or designated) fiscal year. Custom Reports are essentially P&L reports, set up for modification.	Views only one year. Prior years are summarized in Retained Earnings. Figures in rows and columns
Transaction Reports	List transactions in detail Can include any accounts	Full detail, not summarized Figures in one basic column, with subtotals and totals offset
Transaction Detail Reports	List transactions in detail Can include any accounts
Cash Flow Reports		Not available in QuickBooks, but workarounds have been devised.
Time Accounting	In QuickBooks Pro Employee time records for paying employees or for billing customers Vendor time recording	QuickBooks Pro 4 and earlier can only record time worked, can't accumulate time. "Service Items" must be used to bill time.
Time Accumulation	QuickBooks Pro 5 Timer Separate from QuickBooks Pro Run in several computers, one per employee Easy to use Transfer data to QuickBooks Pro 5, for pay and billing Include income and expense accounts, through service items	Coordination between computers requires planning and organization Understand it or make a mess One computer accumulates time on only one activity at a time.

That is the whole book, in one table! There is no way it can say all that you need. Most users will skip most of the entries. One or two features will probably send you off to the relevant chapters, for details that will make a major difference to your business.

Classes are useful when income or expenses must be sliced in two different directions, such as by the type of expense and by product line. A farmer might might set up expense accounts for plowing, seed, chemicals, harvesting and more. Classes could be set up for wheat, alfafa, barley, or whatever. Then reports could detail costs by activity or by crop. Costs could also be summarized in a report with columns for expense accounts, and the various crops in rows.

Classes stick only to income or expense transactions. They do not apply to any transactions in balance sheet accounts. For example, classes will not work with inventory items. These are tracked by transactions in balance sheet asset accounts. When an item is sold, classes can be used on the related income and expense transactions.

There are the tools, complete with caution labels. You, and your accountant, can set up a plan to put QuickBooks ? to work, supporting the prosperity of your business.

Topic revision: r1 - 27 Sep 2008 - 11:23:40 - MikeBlockQuickBooksCPA

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