QuickBooks: A Beginner’s Guide to Bookkeeping and Accounting for Small Businesses

Introduction

Owning a business requires certain financial obligations. Your main goal is to make money to keep the business running, pay for goods, expenses, employees and yourself. You have state and federal responsibilities too, such as federal and state taxes, employment taxes, sale taxes and incorporation fees (depending on the size and type of business).

Your obligations tell you to keep as much money in the business as possible, while meeting your financial responsibilities. Spending too much on expenses, such as occasional business needs, can decrease the amount of money you have for the more important expenses and bills.

Hiring an accountant who is a bookkeeper and accountant is one choice. The person fulfills the main functions for the financial responsibilities your company has. You can decide to have a bookkeeper that comes in once a week to take care of the daily, weekly, and monthly tasks, and have an accountant for the tax liabilities. For example, the accountant would file the yearly tax data and create the W-2 forms for employee tax information.

A third choice is for you to be the bookkeeper or have a staff member do part-time bookkeeping responsibilities and have an accountant to call for the important business financial questions and obligations.

If you plan on doing most of the bookkeeping in-house, whether someone comes in once a week or a staff member you already have takes care of the little things, then using accounting software, with bookkeeping capabilities is the perfect solution.

Prior to the 1980s, most bookkeeping was done by hand, using ledgers, notebooks and other manual concepts. With the invention of a more affordable computer, word processor concepts where you could create spreadsheets became the norm. One company decided to go further and create a program that would handle bookkeeping tasks and be useful for accountants. The company, Intuit, is behind QuickBooks and is the topic of discussion.

QuickBooks can be added when you start a business, to an existing business, or when you decide to switch from a different accounting and bookkeeping software. You might have used Quicken, Money, or something else that exists, so learning how to use QuickBooks and who it is meant for is going to help you decide if you want to use the program.

You are going to learn:

What QuickBooks is.

How it works.

Why you want to use it.

Its affordability.

The various tasks it helps with.

As you continue through the guide, you will gain:

●  Step by step instructions.

●  Knowledge for how to perform an every day task up to occasional duties.

●  Tips for quick usability.

By the end, you will understand whether you want to buy or download the program, use it online, and how much time and money it is going to save you. You are also going to know if switching to QuickBooks or adding it new is the right method for your company. You have a lot of decisions to make, including how you want to learn to use the program. Thank you for choosing this comprehensive guide to business and the implementation of QuickBooks.

Chapter 1: QuickBooks, Accounting and Bookkeeping

Starting a business or taking over an older business that may not be up on its technology will require you to understand the various tools you can use to help you successfully run your company. QuickBooks is one way you can perform bookkeeping and accounting duties when running a business.

What is QuickBooks?

QUICKBOOKS IS A BUSINESS software for the financial responsibilities your company has. You can do bookkeeping and accounting with QuickBooks software. Some businesses use the software only for paying their employees, while others use the full repertoire available.

QuickBooks is designed mostly for the small business retailer, contractor, manufacturer or distributor. It is also helpful for attorneys, non-profits and CPAs. The businesses that get the most use out of QuickBooks have under 50 employees, with less than $20 million in revenue.

History of QuickBooks

IN 1494, LUCA PACIOLI invented a double-entry bookkeeping concept, which became known throughout the world. Pacioli was not the first to have bookkeeping and accounting practices. However, he was the first to describe the debits and credits concept. Pacioli used debits and credits in journals and ledgers, which we still have today. By 1887, accounting became a profession with the first CPAs licensed in 1896. Large firms started adding accountants on retainer, having accountants audit the books for performance and other reasons. Eventually, we hit a point where technology became useful beyond what Pacioli and early accountants could have imagined.

QuickBooks is part of Intuit’s software line, founded in 1983 by Scott Cook and Tom Proulx. The first program they created was called Quicken. Quicken is still around today. While some functions are similar to QuickBooks, it is also meant for larger businesses. In 1992, they launched QuickBooks, which has become the most popular accounting software a small company can have. At the outset, QuickBooks had some limiting factors in what it could do and was unable to work with complex businesses. Many small businesses found tracking vendors, writing checks, paying employees and keeping up with accounts payable and receivable was doable with the software package. In 2001, QuickBooks gained new updates that made it worthwhile and, in 2015, it became the most used accounting software for small businesses.

QuickBooks has evolved from the 1992 version. At first, you had to buy the program and install it on your computer. It came in a box, with a manual and a disc. It is available in this way today, although the manual is now online. In the new millennium, QuickBooks, like many software companies, started offering the program via download from their website. It has evolved even further to be a program you access without downloading to your computer. The plans and pricings discussed later explain the CD-ROM option, download from the net, and online usage.

Intuit never stops trying to improve their accounting software. They offer continual updates and add new features that their clients will find useful.

Difference between Bookkeeping and Accounting

BOOKKEEPING IS THE recording of financial transactions. A bookkeeper is a person who enters in the data, maintains the current information, creates reports if necessary, but overall makes sure everything is recorded. Accounting is where the interpretation, classification, analysis, reporting and summation of financial data occurs. Accountants take the records created by the bookkeeper to create cash flow, taxes, employee paychecks and help show the financial health of the company through the analysis of the reports.

For a business to succeed bookkeeping and accounting must be done. How you set this up will determine the amount paid out for services, versus what you keep in-house. The size of your company also weighs in on the choice you make to have an accountant prepare documents or whether you prepare everything yourself. You are never going to be an accountant doing your taxes as a business, even if you have QuickBooks, but you can create as much data and reports as possible and handle small accounting concepts, without paying a large sum to an accountant.

Many small businesses have an accountant to do the taxes and create the W-2 forms for employee tax season. Otherwise, the owners take care of making payments, creating reports, interpreting the data for the next year projections, and other financial requirements.

Accountants work on an hourly basis, many charging over $100 per hour for their services. Imagine if you have an