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QuickBooks Made Easy: A Step-by-Step Guide for Small Business Owners

by Tracey Hrica Jul 25, 2023 | Share

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As an accountant, I often found myself advising small business owners on how to strengthen their financial foundations. While discussing bookkeeping, I couldn’t help but draw parallels between managing finances and taking on a DIY home improvement project.

Picture this: You’ve just bought your dream fixer-upper—a quaint little cottage with enormous potential. You know that by putting in some sweat equity, you can turn it into a cozy haven. Yet, you feel a mix of excitement and trepidation, uncertain about where to start.

That’s precisely how many small business owners feel when they think about using QuickBooks to handle their bookkeeping. The software holds the promise of transforming their financial processes and offering valuable insights, but the initial uncertainty can be daunting.

Just like your home improvement project, it’s all about taking control and empowering yourself with the right tools and knowledge. 

As you dive in, you’ll start with the basics—laying the foundation. 

In QuickBooks terms, this means linking your bank account to the bank feed, customizing your invoices, and signing up for QuickBooks Payments.

Next, you’ll move on to the structure—building the framework. 

For QuickBooks, this involves reconciling your bank accounts, tracking your mileage, and using attachments to keep you organized. 

As you hammer away, you’ll see your financial landscape taking shape.

Now comes the fun part—putting on the finishing touches. 

Like adding a fresh coat of paint to your walls, QuickBooks allows you to customize your reports, giving you a clear picture of your business’s financial health. You’ll be amazed at how easy it becomes to track your profits and losses, just like admiring your beautifully completed living space.

Throughout this DIY financial journey, remember that it’s okay to ask for help. 

Just as you might consult with an experienced contractor for tips, don’t hesitate to reach out to a QuickBooks expert, like myself, or a fellow business owner for guidance. Sharing experiences and learning from others can make a significant difference in the success of your DIY bookkeeping project.

Since I became a QuickBooks ProAdvisor, I have seen countless small business owners overcome their initial hesitations with QuickBooks. By embracing it as their financial DIY tool, they’ve gained the confidence and control they needed to build thriving businesses.

So, don your metaphorical tool belts, and let’s conquer QuickBooks like a DIY home improvement project. 

In the following blog, I’ll guide you through each step to empower you to master your finances and transform your small business.

In this post, we will explore some key QuickBooks features: 

  1. Linking your bank account in QuickBooks Online
  2. Using the Bank Feed
  3. Reconciling your accounts
  4. Using the Pay Down Credit Card Feature
  5. Receipt Capture
  6. Customizing your Invoices
  7. QuickBooks Payment
  8. Customized Reports
  9. Mileage Tracker
  10. Using Attachments

Linking Bank Accounts in QuickBooks Online

Linking your bank accounts to QuickBooks Online is an essential feature for small business owners, as it allows you to keep track of your financial transactions, create accurate reports, and efficiently manage your cash flow all in one place. Here’s an overview of how linking your bank accounts to QuickBooks Online can benefit your small business:

Advantages of Bank Account Linking

  1. Automated Transaction Import: Automatically import transactions from your bank accounts, saving time and reducing the possibility of manual entry errors.
  2. Simplified Reconciliation: Easily match and categorize transactions, making the bank reconciliation process quicker, smoother, and more accurate.
  3. Real-time Financial Overview: Get up-to-date information about your business’s finances so you can efficiently manage cash flows and make informed financial decisions.
  4. Reduction in Data Entry Errors: Minimize the risk of mistakes that can stem from manual data entry by automatically importing transactions from your bank account.
  5. Streamlined Expense Tracking: Effortlessly categorize and track your expenses based on the bank transactions, helping you better understand your spending habits and control costs.

How to Link Bank Accounts in QuickBooks Online

  1. Sign in to your QuickBooks Online account.
  2. Navigate to the Banking menu on the left sidebar.
  3. Click Add account in the Banking tab.
  4. Search and select your bank from the list of banks displayed.
  5. Enter your bank login credentials when prompted, and click Continue.
  6. Select the accounts you’d like to link with QuickBooks Online and click Connect.
  7. Once completed, transactions will begin to download and appear in the Banking tab.

Remember, by linking your bank account to QuickBooks Online, you’re not only making your life easier, you’re taking control.

Using QuickBooks Online’s Bank Feed

Benefits of QuickBooks Online Bank Feeds for Small Business Owners

  1. Time saver:  Time is precious, particularly for small business owners who often wear many hats. Automating bank transaction downloads and intelligent matching and categorization can save heaps of time. Instead of manually entering every transaction, you can focus on other important aspects of running your business.
  2. Real-time financial tracking: The ability to see your financial transactions nearly instantly means you always have an up-to-date snapshot of your business’s financial situation. It’s like having a financial dashboard that updates as new data is available, enabling quick decisions based on real-time financial insights.
  3. Reduces errors: We’re all human, and mistakes can creep into manual data entry. By automating the process, your transactions are accurately entered, reducing the risk of manual errors.
  4. Streamlined reconciliation: The automated matching and categorization not only save time but ensure your books are correctly aligned with your bank statement. This makes the bank reconciliation process simpler and more efficient.

QuickBooks Online Bank Feeds offers small business owners a reliable, efficient, and safe tool to automate and streamline bookkeeping tasks. It’s all about helping you run your business as effectively as possible.

Step-by-step Guide for Matching and Categorization Within the QBO Bank Feed

  1. Login to QuickBooks Online: First, sign into your QuickBooks Online account.
  2. Head over to the Banking tab: Find and select the “Banking” menu on the left-hand side of the page.
  3. Review the ‘For Review’ tab:  In the Banking tab, you’ll now see a “For Review” tab. It’s here that the magic happens. The “For Review” tab lists all the downloaded transactions that have yet to be added to your books.
  4. Inspect your transactions:  You can now take a closer look at each transaction. QuickBooks will have automatically tried to match or categorize it for you. You’ll see a ‘Match’ or ‘Add’ sign on transactions. A ‘Match’ sign means QuickBooks has found a possible match in your books already, ‘Add’ means QuickBooks has only made a category suggestion based on previous entries, and it’s up to you to verify the categorization and add the transaction.
  5. Approve or amend: It’s now up to you to confirm if you’re happy with the proposed match or categorization. Just click on the transaction to review it in more detail. Here you can change the category suggestion or unlink a match, making sure it aligns with your understanding of the transaction.
  6. Confirm the changes: If you make any changes, don’t forget to click ‘Save and add’ to lock it all in. Or, if you’re happy with the match or categorization as is, then select ‘Add .’This will move the transaction from the ‘For Review’ tab to the ‘Categorized’ tab, confirming that it has now been added to your books.

Hopefully, this makes sense! Remember, with some practice, you’ll be a QuickBooks matching and categorizing superstar in no time.

Reconcile Your Bank and Credit Card Accounts

The reconcile feature in QuickBooks Online is an essential tool that helps you keep your accounts accurate by comparing them with your bank and credit card statements. 

Reconciliation is similar to balancing your personal checkbook and ensures that your financial records are up-to-date and accurate.

To reconcile an account in QuickBooks Online, you need to follow these steps:

  1. Review your opening balance: Make sure it matches the balance of your real-life bank account for the day you started tracking transactions in QuickBooks.
  2. Get your bank statement and go to Settings > Reconcile.
  3. Select the account you want to reconcile from the Account dropdown.
  4. Enter the information from your bank statement, including the ending balance and the statement ending date.

From there, you’ll see a list of all the transactions in the selected account during the statement period. 

You’ll need to compare the transactions in QuickBooks to your bank statement and check off the ones that match. 

Once you’ve matched all transactions, the difference between the beginning and ending balances should be zero. 

If there’s any discrepancy, you should investigate and correct it before completing the reconciliation process.

Mastering the Pay Down Credit Card Feature in QuickBooks Online

Many QuickBooks Online users are unsure how to record a credit card payment. Should you write a check or create a transfer? How should you categorize it?

Many users will mistakenly record the payment as an expense. 

When this happens, the payment doesn’t reduce the credit card liability account on the balance sheet as it is supposed to. 

It also incorrectly doubles up expenses on the Profit & Loss statement. 

To address this, QuickBooks Online has rolled out a feature allowing users to simplify the process of recording credit card payments – the Pay Down Credit Card feature. Here’s how it works:

Pay Down Credit Card Feature:

  1. Enables users to apply credit card payments within QuickBooks Online easily.
  2. Provides a more accurate reflection of business expenses.
  3. Simplifies reconciling credit card transactions.

How to Use the Pay Down Credit Card Feature:

  1. From the +New menu, select Pay down credit card in the Other column.
  2. Select the credit card account that you have paid.
  3. Enter the amount of the payment.
  4. Enter the payment date.
  5. Select the account that answers the prompt, “What did you use to make this payment?” You also have the option to record it as being paid by check.
  6. Add any memos or attachments if desired.
  7. Save the transaction.

By harnessing this feature, you ensure an accurate portrayal of your credit card payments in your books, streamlining your financial management.

QuickBooks Online Receipt Capture

Keeping track of receipts is a headache every small business owner faces. 

Managing receipts is always a challenge for entrepreneurs who are busy, on the road, or just not as organized as they would like to be. Receipts end up EVERYWHERE: your desk, your car, your home, your office….the trash.

QuickBooks Receipt Capture is a valuable tool that facilitates effortless capture and storage of receipts directly within the platform. Here’s why this feature is a game-changer:

Benefits of Receipt Capture:

  1. Extracts important information from receipts automatically.
  2. Reduces time and effort by eliminating manual data entry.
  3. Stores receipts within the platform for easy access and future reference.

Operating Receipt Capture:

  1. Launch the QuickBooks app on your mobile device.
  2. Tap Snap at the screen’s bottom to capture a receipt.
  3. Review the extracted information and make any necessary edits.
  4. Save the receipt to the appropriate expense category.
  5. Not using the mobile app? You can upload receipts or bills directly from your computers. You can drag and drop files or browse and locate them.

Receipt Capture ensures your receipts are organized and readily accessible, simplifying your overall expense management process.

Customize your invoices

Branding is so important for your business. When you customize your invoices, you can create beautiful, custom invoices in Quickbooks Online to create a seamless end-to-end experience for your customers!

Choosing a New Template

  1. Click the Gear icon in the top right-hand corner. Under the Your Company column, select Custom Form Styles.
  2. To edit the styles of all of your forms, edit the Standard template. If you’d prefer different styles for different forms, you can create a New Style using the button at the top right.
  3. When you click edit, you’ll see three tabs. Start under the design tab and choose a template that fits your brand.

Adding Your Brand

  1. Below the template options, you’ll see three tools to customize the template you’ve chosen with your logo, fonts, and colors.
  2. Upload a clear photo of your logo to include on your invoices.
  3. When choosing fonts and colors to customize your invoice template with, try to stay consistent with the fonts and color choices on your website or social media content.

Choose Your Content

  1. Next, you’re going to select the middle tab labeled “Content.”
  2. From here, you can choose which information fields you’d like to include on your custom invoice template.
  3. On this tab, you can rename common form fields to match how you run your business.

Getting Paid with QuickBooks Online Payments

QuickBooks enhances one significant aspect of your business – receiving payments. QuickBooks Payments ensures you get the money you need when you need it.

Key Benefits of Using Payments:

  1. Add a “Pay Now” button so customers can pay directly through the invoice.  
  2. Receive money the day after customers pay or choose instant deposits.  
  3. Send reminders, and get real-time alerts when invoices are viewed or paid.

Below is a step-by-step guide on how to set up and use QuickBooks Payments:

Step 1: Sign up for a QuickBooks Payments account

  1. Visit the QuickBooks Payments website.
  2. Compare the different plans and choose the best one for your business needs.
  3. Click “Sign up” or “Get started” and follow the on-screen instructions to create an account.

Step 2: Connect QuickBooks Payments to your QuickBooks account

  1. Open your QuickBooks software.
  2. Go to the “Edit” menu and select “Preferences.”
  3. In the “Preferences” window, choose “Payments” from the left-side menu.
  4. Click the “Company Preferences” tab.
  5. Click on the “Sign in” button and enter your QuickBooks Payments account credentials.
  6. Follow the on-screen instructions to link your accounts.

Step 3: Set up payment methods

  1. Go to the “Lists” menu and select “Customer & Vendor Profile Lists.”
  2. Choose “Payment Method List.”
  3. Click on the “Payment Method” button at the bottom of the window and select “New” to add a new payment method, or select “Edit” to modify an existing one.

Step 4: Record a customer payment

  1. Go to the “Customers” menu and select “Receive Payments.”
  2. Choose the appropriate customer from the “Received From” dropdown menu.
  3. Enter the payment amount and other necessary details.
  4. Select the payment method (e.g., credit card or ACH) from the dropdown menu.
  5. If required, enter additional information such as transaction ID or credit card details.
  6. Click the “Save & Close” button to record the payment.

Step 5: Process a customer payment using QuickBooks Payments

  1. Open the “Receive Payments” window (follow step 4.1 above).
  2. Select the appropriate invoice or bill to which the payment should be applied.
  3. Click the “Process Payment” button at the top of the window (only visible if QuickBooks Payments is connected).
  4. Complete required fields, such as credit card or bank account information for ACH payments.
  5. Click the “Submit” button to process the payment.

Step 6: Review and deposit customer payments

  1. Go to the “Banking” menu and select “Record Merchant Service Deposits.”
  2. Verify the list of payments to be deposited.
  3. Click “Deposit” to automatically record the aggregated deposits to your bank account.

Custom Report Creation

If you run the same report regularly, you can save customized reports by choosing your preferred filters, renaming the custom report, and saving it. The next time you want to run the report, all you should do is choose your new custom report from your list, and it will apply the filters you have saved.

Here’s how to create a custom report, along with tips for optimizing your reporting capabilities.

Steps to Create a Custom Report in QBO:

  1. Navigate to the Reports tab in QuickBooks Online.
  2. Select Customize next to the report you desire.
  3. Modify the filters and settings as per your requirements.
  4. Click Run Report to generate the custom report.
  5. Click Save Customization.

Enhancing Custom Reports:

  1. Use the date range filter to focus on specific time periods.
  2. Engage comparison features to examine changes over time.
  3. Export custom reports to Excel or PDF for further analysis and sharing.

By crafting tailored reports, you concentrate on your business’s crucial metrics, enabling more data-driven and confident decision-making.

Tracking your mileage with QuickBooks Online

If you use your car for both business and personal use, staying on top of tracking your mileage is crucial!

Mileage tracking can be tedious, but using QBO’s Mileage Tracker makes it easy.

Steps to setup Mileage Tracking:

  1. Download the QuickBooks Online Mobile App.
  2. Turn on your mobile device’s background location permissions for auto-tracking to work.
  3. Turn on the automatic mileage tracking feature in the QuickBooks Online mobile app.
  4. Open the QuickBooks mobile app.
  5. Select the menu ☰ icon and then Mileage.
  6. Select Auto-tracking.
  7. Turn on Auto-tracking

Next, add your vehicle information before you start tracking:

  1. Open the QuickBooks mobile app.
  2. Select the menu ☰ icon and then Mileage.
  3. Select Auto-tracking.
  4. Select Manage Vehicles.
  5. Select Add new vehicle.
  6. Enter the make, model, and ownership status.
  7. Select Optional info and fill out the remaining fields.
  8. Select Save.

When you start driving, grab your mobile device and open the QuickBooks Online mobile app

Keep the app open during the trip. It will detect & track the miles from start to finish.

Categorize your mileage:

  1. Open the QuickBooks mobile app.
  2. Select the menu ☰ icon and then Mileage.
  3. Select the Unreviewed tab.
  4. Find the trip. 
  5. Swipe left to categorize the trip as Business. Or swipe right to categorize it as Personal.
  6. Add a purpose for the trip.
  7. Select the vehicle you used.
  8. Select Save.

The Power of Attachments in QuickBooks Online

Did you know that QuickBooks Online lets you upload and save attachments to any transaction?

This makes referencing source documents SO much easier and more efficient.

After attaching, you can easily view the source document right from the transaction – OR you can go to the Attachment List to view all of your uploaded documents.

You can also upload a file directly to the Attachments list without pinning it to a transaction or profile.

Later, you can go back to the list, find your attachments’ details, and perform other actions such as edit, delete, and create invoices/expenses.

Here’s a step-by-step guide on how to use attachments in QuickBooks Online.

Attaching Files to Records and Transactions

  1. Open the record or transaction you want to attach a file to.
  2. Click on the Attachment (paperclip) icon.
  3. Click on Computer to upload a file from your device or Paperclip to use a file you’ve already uploaded to QuickBooks.
  4. Locate the file you want to attach. Click Open.
  5. Save the record or transaction.

Viewing and Managing Attachments

  1. Click the Gear icon at the top.
  2. Under Lists, choose Attachments to see all attachments.
  3. Click on the name of an attachment to view it.
  4. Click the drop-down arrow next to the attachment’s name for more actions, such as Download or Delete.

Attaching Files in Bulk

  1. Click the Gear icon at the top.
  2. Under Lists, choose Attachments.
  3. Drop files directly into the Drag/Drop files area or click Upload to select files from your computer.
  4. The files will now appear in your Attachments list and can be linked to transactions or records.

QuickBooks Online: Your Ally for Business Growth

Infusing your growing business with the dynamic features of QuickBooks can dramatically enhance efficiency. 

Just like a well-executed DIY home improvement project turns a house into a cozy haven, embracing QuickBooks can transform your financial landscape into a flourishing paradise for your small business.

QuickBooks is not just another accounting software; it is the key to unlocking financial prosperity for your small business.

Just as each stroke of paint brings vibrancy to your walls, every transaction entered into QuickBooks brings clarity to your financial records.

Remember, mastering QuickBooks might require some time and effort, but the rewards are well worth it. Like any project that reaps long-term benefits, your dedication to learning QuickBooks will pay off in better financial decisions and business growth.

With QuickBooks as your trusted ally, you can break free from stressing over your bookkeeping and focus on what truly matters—the continued success and growth of your business. 

Just as you bask in the delight of your beautifully renovated home, you’ll take pride in the financial insights and achievements you gain from using QuickBooks to its fullest potential.

Start your financial transformation today, and let QuickBooks be the tool that elevates your small business to new heights.

Best regards,

Tracey, QuickBooks ProAdvisor

About the Author

Tracey Hrica

Tracey Hrica joined the firm in 1995 as a bookkeeper. In 2012, she earned the designation of Enrolled Agent(EA), which enables her to prepare personal and business tax returns and represent clients before the IRS. To maintain the designation of EA, she must complete yearly continuing education in the areas of personal and business taxation. Working closely with her clients, Tracey’s primary areas of concentration are new client onboarding, client communication, research, and QuickBooks support. As a QuickBooks ProAdvisor, she works closely with clients who rely on QuickBooks for the day to day running of their business. Tracey has expertise in both QuickBooks Desktop and QuickBooks Online.

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