Accurate, up-to-date bookkeeping is the backbone of any successful small business. No matter what type of business you operate, an understanding of bookkeeping best practices is essential for keeping your business running smoothly, now and in the future.
QuickBooks is a small business accounting software program that businesses use to manage sales and expenses and keep track of daily transactions. You can use it to invoice customers, pay bills, generate reports for planning, tax filing, and more. The QuickBooks product line includes several solutions that work great for anyone from a solopreneur to a mid-sized business. We understand that the concept of accounting and bookkeeping on an online cloud can be intimidating for new business owners, so we decided to break down QuickBooks and what it can do your business.
What Small Businesses Use QuickBooks For
Small business owners typically use QuickBooks to manage their invoices, pay their bills, and track their cash flows. They also use it to generate month and year-end financial reports as well as prepare for quarterly or annual business taxes. It’s common for business owners to manage QuickBooks themselves or use an in-house or outsourced bookkeeper.
The top eight QuickBooks small business uses are:
1. Manage Sales and Income
You can manage sales and income in QuickBooks by creating invoices to track sales by customer. Stay on top of what customers owe you (also known as your accounts receivable balance) by reviewing your Accounts Receivable Aging Report, which includes the details of both current and past due invoices.
2. Keep Track of Bills and Expenses
QuickBooks automatically keeps track of your bills and expenses by connecting your bank and credit card accounts to QuickBooks so all of your expenses are downloaded and categorized. If you need to track a check or cash transaction, you can record it directly in QuickBooks in just a few minutes.
QuickBooks will also help you pay your bills when they’re due. For example, you can ensure that you pay your bills on time by creating an Accounts Payable Report in under two minutes. This report will provide you with the details of your current and past due bills so that you can be sure to quickly address any issues.
3. Gain Key Reporting Insights to Your Business
By managing all of your cash inflow and outflow activities in QuickBooks, you are able to access several reports that provide valuable insights into your business. All of the reports are pre-built in QuickBooks and can be run in just a few clicks; reports are updated in real-time as you enter and save transactions.
This can be beneficial if you need to provide financials to a potential investor or to your lender for a small business loan or line of credit. In addition to the Accounts Receivable Report and the Accounts Payable Report that we discussed previously, you can run the top three reports that you need in order to assess the overall health of your business:
- Profit and Loss Report
- Balance Sheet Report
- Statement of Cash Flows
Profit and Loss Report
The profit and loss report can be run in just a couple of minutes. It will show you how profitable you are by summarizing your income minus your expenses. It shows you your bottom line net income (loss) for a specific time period, such as a week, a month, or a quarter.
Balance Sheet Report
The balance sheet report shows the Assets, Liabilities, and Equity for a business at a particular point in time. In just a few clicks, you can create a balance sheet report in QuickBooks.
Statement of Cash Flows
You can quickly create a statement of cash flows in QuickBooks. This report will show you all of the activities that affect the operating, investing, and financing cash inflow and cash outflow for your business.
4. Run Payroll
Payroll is an area that you don’t want to skimp on by trying to do it manually. Mistakes made in calculating paychecks can result in steep penalties and unhappy employees. To help, QuickBooks has its own payroll function that can automatically calculate and run payroll as often as you need it.
The best part about using QuickBooks payroll is that it is integrated with QuickBooks so your financial statements are always up-to-date as of the latest payroll run. The purchase of a QuickBooks payroll subscription is required so that you have access to the latest payroll tax tables to calculate employee and employer payroll taxes.
Some of the benefits of running payroll with QuickBooks are:
- Pay employees with a check or direct deposit
- Federal and state payroll taxes are calculated automatically
- QuickBooks fills in the payroll tax forms for you
- You can e-pay directly from QuickBooks
5. Track Inventory
If you need to keep track of the inventory you sell, such as on-hand amounts and unit costs, QuickBooks will automatically track and update this for you as you enter transactions. In QuickBooks, there are several reports available to manage inventory. While keeping track of inventory is doable in an Excel spreadsheet, it can be very time-consuming.
6. Simplify Taxes
If you’re still not convinced that you can simplify your taxes by using QuickBooks, just think about how much you dread tax season. Whether you have to consolidate several Excel spreadsheets or organize a shoe box full of receipts, it can take you longer to get your tax professional what they need than it takes to prepare your tax return!
Here at Phoenix Management, we use QuickBooks Online to manage all of our business accounting and taxes. We have set up our tax professional with a user id and password to access our QuickBooks data and pull the information they need to file our tax returns. Since everything is tracked in QuickBooks, we do not spend a lot of time organizing receipts and bank statements. This not only ensures that we have accounted for all income and expenses, but also improves accuracy as a result.
7. Accept Online Payments
One of the best ways to improve your cash flow is to offer customers the option to pay their invoices online. With QuickBooks, you can add the Intuit Payments feature with a simple click of a button.
Once activated, all customer invoices that you send via email will include a “Pay Now” button. Your customer can click on that button and pay their invoice using any major credit card or by entering their bank account information to authorize an ACH payment directly from their bank account.
There is no monthly fee to use Intuit Payments; you simply pay per transaction as follows:
- Bank Transfers (ACH) – Free
- Card Swiped – 2.4% plus 25 cents
- Card Invoiced – 2.9% plus 25 cents
- Card Keyed-in – 3.4% plus 25 cents
8. Scan Receipts
Another key to making tax time a breeze is being able to organize your receipts in QuickBooks. All QBO subscribers can download the QuickBooks App to their mobile device for free, take a picture of a receipt, and upload it to QBO in just a few minutes.
No more lost receipts or manually matching up receipts with downloaded banking transactions. QuickBooks allows you to attach a receipt to the corresponding banking transaction! You can upload an unlimited number of receipts to QBO to store in the cloud along with your data. This can be really helpful for companies who track a lot of expenses, like lawyers and law firms.
QuickBooks Features & Pricing
The QuickBooks product line includes QuickBooks Online, QuickBooks Desktop, QuickBooks Self-Employed, and QuickBooks Mac. Each of these offers a variety of features that start at a monthly fee of $10 or a one-time fee between $299 and $1,500. To help you narrow down which one is right for you, check out the summarized table below.
QuickBooks Options for Small Businesses
|QuickBooks Products||Best For||Price Range|
|QuickBooks Online||Small to medium-sized businesses that primarily sell services.||$20 to $60 per month|
|QuickBooks Desktop||Small to medium-sized businesses in any industry.||$299 to $1,500 (one-time fee)|
|QuickBooks Self-Employed||Independent contractors, realtors, Uber/Lyft drivers.||$10 to $17 per month|
|QuickBooks Mac||Small to medium-sized businesses in any industry that need a Mac solution.||$299 and up (one-time fee)|
QuickBooks Online is a cloud-based product that does not require software installation. This QuickBooks product is available in three subscription levels (Simple Start, Essentials, Plus), and it is ideal for any service-based business that does not have complicated invoicing requirements. QBO allows you to access your data from any computer with an internet connection using your secure login.
QuickBooks Desktop comes in three versions (Pro, Premier, Enterprise). All three versions of this QuickBooks product require you to install software on your computer. QuickBooks Pro is ideal for most small businesses that do not manufacture products. QuickBooks Premier is ideal if your business falls into one of these industries: manufacturing, contractor, retail or nonprofit. QuickBooks Enterprise is for large enterprises.
These industry-specific versions of QuickBooks include a custom chart of accounts and reports for these industries.
QuickBooks Self-Employed is the ideal product for freelancers, realtors and Uber/Lyft drivers. Similar to QuickBooks Online (QBO), it is a cloud-based product that can be accessed from any computer with an internet connection and your secure login. It includes unique features that are not available in QBO and QuickBooks Desktop, like the ability to separate business from personal expenses, track miles and transfer data to TurboTax.
QuickBooks Self-Employed will calculate your estimated quarterly tax payments and remind you when they are due. There are two QuickBooks Self-Employed pricing plans.
QuickBooks Mac (QB Mac) is the only desktop product available for Mac users. If you don’t want to go with QBO and you have a Mac computer, then you have to go with QB Mac. This product is very similar to QuickBooks Pro, and it is ideal for most small businesses that do not manufacture products.
We have discussed what QuickBooks is and several options that will teach you how to use QuickBooks. Be sure to do your homework by reviewing the resources we have discussed to help you pick the right solution for your business.
Before you commit, take QuickBooks for a spin by signing up for a free 30-day trial; the trial is a fully-functional version of QuickBooks so you can test all of the bells and whistles. Best of all, no credit card is required.
Alternatively, If you sign up for one of our flat fee bookkeeping and accounting services, you will receive a 1 year FREE subscription to QuickBooks valued at $500 (payroll not included).
QuickBooks is definitely the future of bookkeeping and accounting, and we believe and can really make a difference in your business. Hopefully you now have a better grasp of what Quickbooks can do, and we encourage you to check it out for yourself and reach out if you have any questions.