Vertical Markets
Table of contents

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Accounting and CPA firms

Advertising and PR firms

Architecture

Consulting

Construction and contracting

Farming and ranching

Graphic design and printing companies

Legal firms

Manufacturer's representatives or sales representatives

Nonprofit organizations

Periodic billing businesses

Property management companies

Real estate brokers

Retailers not using QuickBooks inventory

Retailers using QuickBooks inventory

Service businesses

User groups

Writers, photographers, and other artists


Comments on industry documents

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Construction and contracting

Overview for general contractors and subcontractors

Before you begin

Setting up your QuickBooks company

Organizing your income, expenses, clients, and projects

Customizing your Chart of Accounts

Setting up customers and jobs

Creating items

How contractors and subcontractors can use classes

Estimating and invoicing overview

Using pending invoices for estimating

Recording your costs in QuickBooks

Invoicing

Entering change orders

Tracking time

Tracking worker's compensation for your employees

Understanding income and profitability with reports

Other QuickBooks tips for construction businesses

Helping us help you

Overview for general contractors and subcontractors

As a general contractor or subcontractor, you may not have a lot of time to spend on accounting details. However, accounting and financial controls are critical, especially where large sums of money are concerned.That's where QuickBooks comes in. QuickBooks will help you meet most of your financial management needs, including:

Creating invoices

Writing payroll cheques for your employees

Tracking job costs and charging them back to customers

Creating over 70 reports to find out how your business is doing

We recommend QuickBooks Pro for construction firms

While you can use QuickBooks to handle your accounting, QuickBooks Pro is particularly useful for contractors. QuickBooks Pro has additional features that let you:

Find out how your business is doing by seeing your profitability in job cost reports

Write estimates that you can deliver to customers and use to compare to actual costs

Track estimated time vs. actual time

Write payroll cheques for your employees based on their timecards

Track the time you, your employees, and subcontractors spend on a job

General contractors vs. subcontractors

This document is written for both general contractors and subcontractors, such as electricians, drywall installers, plumbers, plasterers, and so on. The QuickBooks setup for general contractors and subcontractors is similar. If there are differences in Quickbooks between general contractors and subcontractors, examples for both general contractors and subcontractors are given.

For example, general contractors might use QuickBooks classes for division-level reporting (such as general, site work, concrete and so on) while a subcontractor might use classes for distinguishing rough construction from trim (or finish) construction or tracking project supervisors.

Before you begin

This document gives you information on how to use QuickBooks for your special needs - we won't repeat what's already in the standard information you receive with QuickBooks. Instead, you'll see references to show where you can find complete information and details on using QuickBooks features.

Printing your industry document

If you're looking at this document onscreen, you're now in a "QuickBooks and Your Industry" window.

To print this document:

From the File menu, choose Print... or Print Topic.

To return to the EasyStep Interview:

If you got to this Help window from the interview, close the Help window to return to the interview.

To see other industry documents:

Click any of the industries listed in the contents.

Understanding QuickBooks terms

QuickBooks uses terms that are common in the construction and contracting industry: customers, jobs, bills, vendors, employees and so on. But there are a few special terms you need to be aware of:

Chart of accounts

A list of accounts including income, expense, asset and liability accounts. These are used to track how much money your company has, how much money it owes, how much money is coming in, and how much is going out.

Item list

A list of items that includes what your company charges for (labour and materials), miscellaneous charges and discounts, etc.

Service item

A service item is a type of item in QuickBooks, and represents services you charge for. In construction firms, you'll set up service items for labour and subcontractors.

Non-inventory part item

This type of QuickBooks item is used for materials that you purchase for your jobs.

Bill

In QuickBooks, a bill is what you receive from your vendor or subcontractor, from which you will pay that vendor.

Invoice

In QuickBooks, an invoice is what you send your customer.

Class

A way to group income and expenses.

If you want to use QuickBooks for payroll

To use QuickBooks for your payroll, make sure the payroll preference is on, and follow the directions for setting up employees and payroll items in the EasyStep Interview or the printed documentation.

For more information, see the:

"Setting up a QuickBooks company" chapter of the Getting Started Guide

Important

The information in this document was compiled from the experiences and suggestions of other QuickBooks users in construction and contracting. Your own needs may vary considerably. Only you and your accountant understand the unique needs of your business. Ultimately, you are responsible for your own books.

We encourage you to have your accountant look over the setup suggested in this document. We suggest that you give QuickBooks a thorough "trial run" early in the process. The best way to ensure that QuickBooks will provide all the information you need, is to enter a small number of your standard transactions in QuickBooks. Then try running all the reports you may need.

While we can give you technical support on how QuickBooks works, our technical support representatives are not industry experts and cannot give you specific accounting advice. If you have questions regarding accounting issues specifically related to your industry, we recommend you consult either an accountant, industry expert, or professional association.

Setting up your QuickBooks company

The QuickBooks EasyStep interview asks you questions about your business, and uses your answers to help you set up your business in QuickBooks. We recommend the interview as the easiest way to get started and to customize QuickBooks for your business.

If you choose not to use the EasyStep interview, you should follow the setup directions in the "Setting up a QuickBooks company" chapter of the Getting Started Guide.

Organizing your customers, jobs, and income

QuickBooks has powerful features that let you analyze your business in great detail:

Your Chart of Accounts, including balance sheet, income and expense accounts, tracks all of your transactions.

The Customer:Job list, with optional customer type lets you keep track of the different types of customers you serve and gives you the information you need to analyze your customer base.

Job tracking lets you track the income and expenses for each job you do for a customer.

Items let you track how many services and how much material you sell and how much they cost you.

Classes let you categorize income and expenses for different segments of your business. General contractors might use classes to separate income and expenses for different construction divisions, such as site work, masonry, etc.

The following sections give you more information about these and other features.

Customizing your Chart of Accounts

In QuickBooks, an account represents a group of transactions and is used for tracking and reporting purposes. The complete list of accounts for your company is called the Chart of Accounts. When you set up your QuickBooks company, you can choose a preset chart of accounts designed especially for construction firms. This preset chart of accounts gives you a head start in creating your balance sheet accounts, income accounts, and expense accounts.

You may find as you review the preset chart of accounts that you need to add, edit, or delete accounts from that list, or add subaccounts.

Important:	As a general rule, you should reserve the accounts on your Chart of Accounts for broad categories. Use items and subitems to see more detail about items you've sold or bought.

For more information, see the:

"Your chart of accounts" chapter in the User's Guide

Setting up customers and jobs

In QuickBooks, the Customer:Job list stores information about your customers and the individual jobs you want to track for each customer. Before you set up your customers and jobs in the Customer:Job list, consider these preferences:

Do you want to track customer types?

Do you want to set up separate jobs for your customers?

Customer types

You can use customer types to categorize your customer base and gather information based on them. For example, you can use the customer type as a way to determine which customers are most profitable or have the greatest sales volume.

A general contractor or subcontractor might be interested in tracking customer types that fall into these categories:

Advertisement vs. referral (business source)

Commercial vs. residential (client type)

East vs. West (location)

Fixed bid vs. time and materials (bidding type)

(Subcontractors only) General contractor vs. property owner (client type)

You need to decide what information you're interested in tracking because you can only track one type of information. That is, you can decide to track business source or business type, but not both. Once you decide what you want to track, be sure to specify the customer type when you set up each customer.

The customer types do not appear on QuickBooks forms, but you can use them when you create reports. For example, you can create a report on Sales and filter the report by customer type to see which customer type has greater sales volume. You can create a Profit and Loss report and filter it by customer type to see which customer type is more profitable.

In addition, you can print mailing labels and summary statements based on customer type.

For more information, see the:

"Customer types" topic in the "More QuickBooks lists" chapter of the User's Guide

Tracking jobs

If you do more than one job for a customer, you'll probably want the level of detail provided by job tracking. With job tracking you can track your income and expenses on a job-by-job basis and you can invoice for jobs separately. In QuickBooks you can track jobs for each customer by adding jobs to the Customer:Job list.

For example, suppose you recently built a library addition for the home of John and Jane Doe and will later build a guest house for them. To keep the income and expenses of these two jobs separate, you can add two jobs (Doe:Library and Doe:Guesthome) on your Customer:Job list.

Reasons for not tracking jobs

However, in some cases you might not want to add job names to the Customer:Job list because:

You never do more than one job for a customer.

You don't want to track income and expense by jobs (only by customer) and you don't want to invoice by job. (That is, you want to be able to invoice the customer for both jobs on one invoice.)

If you have cases where any of these are true, don't add jobs to your Customer:Job list for those cases.

For more information, see the:

"Customers and jobs" topic in the "More QuickBooks lists" chapter of the User's Guide

Creating items

QuickBooks items represent the services or products that you buy, sell, or resell in your business.

When you record a sale or a purchase, you use items from your Item list to fill out the form quickly. When you choose an item in the Item column on the form, QuickBooks fills in the description, rate or price, and then calculates the amount.

QuickBooks uses information you've recorded about each item to assign the sale or purchase to the right income or expense accounts. Reports and graphs can then give you valuable information, such as your greatest sources of income and which items you sell most.

Suggested item setup

This section give you a few examples of what you can call your items. Use the names that make sense to you.

Suggested Service items

For contractors

Labour (item)

-	Clean up crew (subitem)

-	Apprentice (subitem)

-	Journeyman (subitem)

-	Supervisor (subitem)

Subcontractors (item)

For an electrical subcontractor

Labour (item)

-	Rough installation (subitem)

-	Trim installation (subitem)

Suggested Non-inventory part items

For general contractors

Materials (item)

-	Lumber (subitem)

-	Fixtures (subitem)

-	Hardware (subitem)

-	Wiring (subitem)

-	Drywall (subitem)

For an electrical subcontractor

Materials (item)

-	Boxes (subitem)

-	Wire (subitem)

-	Service panel (subitem)

-	Breakers (subitem)

-	Light fixtures (subitem)

-	Receptacles, switches, and coverplates (subitem)

Suggested Other Charge items

For contractors and subcontractors

You can use Other Charge items for permit fees or for any other fees or charges you'd like to list separately on reports.

For more information, see the:

"Creating items" topic in the "Items - your products and services" chapter of the User's Guide

Creating income and expense accounts to match item names

You can create a Profit and Loss (P&L) report in QuickBooks to see the profitability of services and materials you sell. To compare the cost of an item to the revenue of an item on a P&L report , create income and expense accounts with names that match your item names.

For example, if you have set up items for Labour, Subcontractors, and Materials, set up income and expense accounts with the same names. If you have a subitem under Materials for Lumber, create income and expense subaccounts under Materials for Lumber.

1.	Set up the income accounts.

Create an account named Construction Income.

Add subaccounts for Labour, Subcontractors, and Materials.

2.	Set up the expense accounts.

Create an account called Job Expenses.

Add subaccounts for Labour, Subcontractors, and Materials.

When you generate a Profit and Loss by Job report, you can then directly compare the job expenses to the income for each of these items.

For more information, see the:

"Adding new accounts" topic in the "Your chart of accounts" chapter of the User's Guide

How contractors and subcontractors can use classes

QuickBooks classes give you an easy way to track income and expenses for different segments or areas of your business. By using classes, you can filter reports to get income and expense information on each class you set up.

General contractors can use classes to track construction divisions

Many general contractors want to get division-level reporting on their jobs. For example, if your firm does new construction, you're probably interested in tracking income and expenses by construction divisions (such as site work, wood and plastics, finishes). Classes give you an easy way to track income and expenses by these divisions.

Here is a suggested list of classes and subclasses:

1 General (class)

-	Plans and fees (subclass)

-	Surveys (subclass)

2 Site Work (class)

-	Building and demolition (subclass)

-	Clearing (subclass)

-	Excavating (subclass)

3 Concrete (class)

4 Masonry (class)

5 Metals (class)

If you set up classes for construction divisions, you can get a Profit and Loss by Class report that shows how much you made and spent by each class.

Classes for remodeling contractors or subcontractors

Some contractors and subcontractors may want to use classes in other ways:

Use a subset of the construction divisions that is appropriate for their businesses. For example, a plumbing subcontractor might have classes called Rough and Finish to distinguish rough plumbing work from finish plumbing work.

Use classes for tracking project supervisors. For example, contractors who have more than one project supervisor might want to create classes by project supervisor so they can compare profit for each project supervisor. For each supervisor you have, create a class, by the supervisor's name.

Use classes to distinguish fixed-price bids vs. time and materials bids. Some contractors bid jobs in different ways: fixed price or time and materials. You could create a class for each of these methods and compare which job bidding method is more profitable for your firm.

Important:	Use classes for one purpose only. If you decide to use classes for construction divisions, don't use classes to track project supervisors as well.

Using class tracking

To use class tracking in QuickBooks:

Make sure class tracking is on.

Create the classes you want to track.

Customize the invoice template to include a class column for items.

-	See the "Customizing form content" topic in the "Forms" chapter of the User's Guide.

Assign a class for every income and expense transaction.

-	If you enter a bill, write a cheque, enter a credit card charge, or create an invoice, be sure to choose a class for every line from the Class drop-down list.

-	If you forget to assign a class, the transaction appears as "Unclassified" on your reports. If you find unclassified or incorrectly classified transactions, you can correct the classification by locating the transaction, choosing the correct class for the item, and clicking OK.

If you're using the QuickBooks payroll feature, assign a class to each payroll item on a pay cheque or to the entire pay cheque.

-	From the Preferences menu, choose Payroll and Employees.

-	If you want to assign a class for an entire pay cheque, click "Entire pay cheque" at the bottom of this window. For example, your employee does work on concrete only. If you have a class for concrete, you can assign the employee's pay cheque to the Concrete class.

-	If you want to assign a class per earnings item, click "Earnings item" at the bottom of this window. This means you can assign a different class to each payroll item for the employee. For example, suppose your employee has done work for three different jobs in the pay period. He has done carpentry work on the Reid property, foundation work on the Ahl home, and electrical work on the Smith addition. You can assign each payroll item earned by the employee to the appropriate class.

-	You assign the class for the pay cheque or the payroll items when you generate the pay cheque.

For more information, see the:

"Classes" topic in the "More QuickBooks lists" chapter of the User's Guide

"Payroll preferences" topic in the "Customizing preferences" chapter of the User's Guide

"Adding customized fields" topic in the "Working with lists" chapter of the User's Guide

"Creating custom forms overview" topic in the "Forms" chapter of the User's Guide

"Customizing form content" topic in the "Forms" chapter of the User's Guide

Getting class information on reports

If you're using class tracking, you can get information by class on reports. The Profit and Loss reports has a separate report called By Class. For any other report, you can get class information by using the following procedure.

Note:	Not all reports can be totalled or sorted by class, that is, be made to display a column for each of your classes. But some of the reports that cannot be totalled by class can be filtered by class. That is, they can be filtered to only include data for one or more classes.

To get classes on reports:

1.	From the Reports menu, choose the report you want.

2.	Click Filters.

3.	From the Class drop-down list, choose Selected classes and then select the class you want from the drop-down list.

For example, if you have classes for General, Site Work, and Concrete, you can get a report on one of these classes.

If the report has a Columns drop-down list, you can have the class information shown in columns on your report by choosing class from the list.

4.	Click OK.

For more information, see the:

"Reports" chapter in the User's Guide

Estimating and invoicing overview

In most situations, a customer will ask you for an estimate on a job before awarding the job to your firm. The customer might tell you how she wants the job bid (either fixed or variable). With your customer's bidding preference in mind, you typically bid the job in one of three ways:

Fixed price

You agree to perform work for an agreed upon price which includes your costs and profit. Often fixed price contracts are divided into phases (survey, plans, foundation, framing) that are completed according to a timeline.

Cost plus

You invoice the customer for the costs of construction and add a percentage (markup) to these costs to cover your overhead and profit. You can either build the markup into the item sales price or use other charge items to calculate this markup.

Time and materials

You pay for the job costs and then pass the expenses to the customer and you charge the customer for your time at a set hourly rate.

Important:	The procedures for recording job costs and invoicing the customer in QuickBooks depends on whether you bid a job as fixed price or cost plus/time and materials.

Here is an outline of the estimating and invoicing process in QuickBooks:

1.	Use a pending invoice to enter the estimate.

From the Activities menu, choose Create Invoices.

Select a customized invoice template on which you have changed the default title to "Project Budget" or "Estimate". (To customize a template, see the "Customizing form content" topic in the "Forms" chapter of the User's Guide.) Click OK.

Select the service items and non-inventory part items and their quantities as appropriate.

Mark the invoice as pending. From the Edit menu, choose Mark Invoice as Pending.

2.	If customer needs adjustments to the bid, edit the pending invoice and present it to your customer.

From the Activities menu, choose Create Invoices.

Locate the pending invoice (estimate).

From the Edit menu, choose Insert Line or Delete Line.

If the customer accepts your bid and signs the contract, you begin work.

3.	If you require a down payment, enter the down payment into QuickBooks.

See "Entering a down payment" later in this document.

4.	Record jobs costs in QuickBooks.

From the Activities menu, choose Write Cheques, Enter Bills, or Enter Credit Card Charges.

Enter the expense account that corresponds to the item you're paying for and that you'll eventually be charging your customer for. (Remember, you may have set up expense accounts to match your item names.)

Be sure to specify the Customer:Job for every transaction you enter for this job.

If you are using class tracking, specify a class for every transaction.

If your job is fixed-price, don't pass through the costs to your customer. Deselect the costs in the billable column (the billable column is indicated by the small invoice icon); the invoice icon is crossed out with an X.

If your job is cost plus or time and materials, make sure you pass through the appropriate costs to your customer. The invoice icon is not crossed out in the billable column (the billable column is indicated by the invoice icon).

Note:	If you have the inventory/purchase order feature turned on, the detail area contains Expenses and Items tabs. Click the Items tab if you're tracking specific items you're paying for.

5.	If you bid the job as fixed price, convert the pending invoice into a final invoice and edit the invoice as necessary.

Locate the pending invoice in QuickBooks. From the Edit menu, choose Mark Invoice as Final. Change the custom template to your usual invoice template.

6.	If you bid the job as cost plus or time and materials, create an invoice, and pass your costs through to the customer.

See "Invoicing for cost plus or time and materials jobs" later in this document.

7.	If you get a bank draw instead of receiving payment from the customer, create an invoice (even if you don't need to send one).

If you don't invoice the customer for your services but have set up an agreement to take a draw from the customer's bank, you still need to enter an invoice so that QuickBooks can record the money you receive as income.

Create an invoice, but uncheck the To be printed checkbox on the invoice form.

When you get the bank draw, receive payment in QuickBooks.

Using pending invoices for estimating

You can use a pending invoice as an estimate in QuickBooks. When you want to invoice your customer, you make the pending invoice final, and send it to the customer. You can also use this method if you bill in phases, by creating a pending invoice for each phase.

Creating an estimate for fixed-price jobs

Often fixed-price bids are estimated and invoiced in phases. We recommend that you create an estimate for each phase of the job, because you will eventually convert your estimate (pending invoice) to a final invoice. For example, if your fixed-price job has five phases, create five separate pending invoices, one for each phase. Then when you're ready to invoice, you can convert the pending invoice for that phase into an invoice for that phase.

Note:	If you don't want to give your customer a separate estimate for each phase, also create a pending invoice for all of the phases of the job. Then create an invoice for each phase, and bill your customers based on the pending invoices for the phases(not the entire job). When you no longer need it, delete the pending invoice for the entire job as a whole.

To create estimates for fixed-price jobs with phases:

1. 	From the Activities menu, choose Create Invoices.

2. 	Select your customized estimate or project budget template (see Step 1, line 2 in previous section "Use a pending invoice to enter the estimate").

3.	Instead of selecting an item, enter "Phase 1" into the first Description line of the estimate.

4.	Enter the items associated with the first phase of the estimate.

5.	Enter a subtotal item after the items for phase one.

6.	In the Customer Message field, enter a description such as "Estimate - Phase 1"

7.	From the Edit menu, choose Mark Invoice as Pending and click OK.

8.	Print the pending invoice and give it to your customer as an estimate.

9.	Create a separate pending invoice for each remaining phase.

10.	Invoice your customer in phases by making the pending invoice for each phase a final invoice.

Creating an estimate for cost plus/time and material jobs

You can use a QuickBooks pending invoice to create estimates in phases for your cost plus/time and material jobs as well. To do this, create an estimate that includes all phases for the job. Since you will invoice your customer based on your actual expenses, don't convert the pending invoice to a final invoice (see the next section). When you no longer need the pending invoice to use as an estimate, delete it.

To create estimates for cost plus or time and materials jobs:

1. 	From the Activities menu, choose Create Invoices.

2. 	Select your customized estimate or project budget template (see Step 1, line 2 in "Use a pending invoice to enter the estimate" earlier in this document).

3.	Instead of selecting an item, enter "Phase 1" into the first Description line of the estimate.

4.	Enter the items associated with the first phase of the estimate.

5.	Enter a subtotal item after the items for phase one.

6.	For the next phase, enter "Phase 2" into the first Description line after the subtotal for the previous phase.

7.	From the Edit menu, choose Mark Invoice as Pending and click OK.

8.	Print the pending invoice and give it to your customer as an estimate.

9.	Invoice your customer by billing based on your actual costs, not by marking this pending invoice as final.

Recording your costs in QuickBooks

You should record all your costs for a specific Customer:Job whether you invoice based on costs or fixed bids. That way, you can create QuickBooks reports to see how well you're doing on all your jobs.

As you incur costs (writing cheques, entering bills or credit card charges) for the fixed-price job, enter them into QuickBooks. Specify the Customer:Job for every transaction you do for this job and if you are using class tracking, make sure to specify a class for every expense transaction.

Important:	For fixed-price jobs, don't pass through the costs to your customer. In the detail area of a cheque or Enter Bills form, deselect the costs in the billable column (the billable column is indicated by the small invoice icon); an X appears over the invoice icon. This lets you track the costs of the job to see what kind of profit you made on the job without passing through costs to your customer (since your bid is at a fixed price).

For more information, see the:

"Writing a cheque" topic in the "Managing your chequebook" chapter of the User's Guide

"Entering a bill" topic in the "Bills" chapter of the User's Guide

"Charging for reimbursable expenses" topic in the "Sales and sales forms" chapter of the User's Guide

"Charging for actual time and costs" topic in the "Sales and sales forms" chapter of the User's Guide (QuickBooks Pro)

Invoicing

The procedure for invoicing depends upon whether you're invoicing for a fixed-price, cost plus, or time and materials job. You might also have specific needs in your invoicing, such as handling retainage, entering a down payment, or customizing the invoice.

Invoicing for a fixed-price job

If you have created a pending invoice to use as an estimate in QuickBooks, turn the pending invoice into a final invoice and make changes as needed. If you created several pending invoices corresponding to phases of the job, you would convert each pending invoice to a final one to bill for each phase.

To invoice for a fixed-price job:

1.	Locate the estimate (pending invoice).

From the Activities menu, click Create Invoices. Click the Prev button until you find the particular pending invoice.

2.	Edit the invoice, as needed.

3.	If you changed the template to Estimate, click the Custom Template button and change the template to your usual invoice template. Change your Customer Message from "Estimate - Phase X" to "Invoice - Phase X"  .

4.	From the Edit menu, choose Mark Invoice as Final.

5.	Click OK.

Invoicing for cost plus or time and materials jobs

If you created a pending invoice to use as an estimate for a cost plus or time and material jobs, you won't convert the pending invoice to a final invoice. Instead you'll use your actual costs (with or without a markup) to invoice your customer.

To invoice for a cost plus or time and materials job:

1.	From the Activities menu, choose Create Invoices.

2.	Select the customer from the Customer:Job drop-down list.

3.	Click the Expenses tab.

4.	Click the Select All button or select any billable expenses by clicking next to the expense in the Use column.

The invoice icon appears beside any item you select.

(Optional) Change the tax code, if necessary.

5.	(Optional) If you charge for markup, enter the markup percentage or amount.

6.	Click OK.

QuickBooks returns you to the Create Invoices window. Click OK again to record the invoice.

Handling retainage in invoices

Some contractors need to handle retainage in their invoicing. This means that by completion of the job you've invoiced for only 90 percent of a job. After a retention period, you invoice for the final 10 percent. There are two ways to do this.

Method 1

In the first method, you invoice for 90 percent of the job at each phase.

To handle retainage (method 1):

1.	Create an other charge item, called Retainage 1.

Enter -10% in the Amount field; in the Account field, assign an Other Current Asset account for retainage.

2.	Add this retainage item to every invoice you write during the job to reduce the amount owed by 10 percent.

At the same time the Other Current Asset increases by the same amount.

3.	Create a second Other Charge item, called Retainage 2.

Leave the Amount field blank; in the Account field, assign the same Other Current Asset account for retainage.

4.	When you're ready to invoice for the final 10 percent, determine how much it is.

An easy way to determine the amount is to display the register of the Other Current Asset account for retainage, select the job in the register, and click QuickReport.

5.	Create a new invoice with only this Other Charge item (Retainage 2) on it.

Enter the amount in the Amount field of the invoice.

Method 2

In the second method, you deduct 10 percent of the total job (the retainage) on the invoice that you create at job completion. When the retention period is over, you invoice for the remaining 10 percent of the total job.

To handle retainage (method 2):

1.	Create an other charge item, called Retainage.

Leave the Amount field blank; in the Account field, assign an Other Current Asset account for retainage.

2.	At the completion of the job, record an invoice for the full amount of the phase.

3.	Create the Profit and Loss - By Job report to determine the total revenue for the job.

4.	Edit the invoice you just recorded by adding the Retainage other charge item and entering 10 percent of the total revenue as a negative number in the Amount field of the invoice.

For example, if the total revenue is $20,000, you should enter the 10 percent retainage as -2,000.

5.	When you're ready to invoice for the final 10 percent, create a new invoice with only this Retainage other charge item on it.

Enter the amount as a positive number in the Amount field of the invoice.

Entering a down payment

Some contractors require a down payment from their customers at the beginning of a new job. The down payment is usually applied to the initial materials bought for the job.

For more information, see the:

"Overpayments, down payments, and prepayments" topic in the "Receiving and depositing payments" chapter of the User's Guide

Customizing invoice appearance

Because invoices used by contractors generally require a lot of space for descriptions, you might want to customize the QuickBooks invoice. Some contractors include their hourly rate as part of the description while others want a separate rate column. Many contractors also want their invoices to include the job number. Depending on how you've done invoices in the past, you might want to remove or add information to QuickBooks standard invoice forms.

For more information, see the:

"Creating custom forms overview" topic in the "Forms" chapter of the User's Guide

"Customizing form content" topic in the "Forms" chapter of the User's Guide

"Designing form layouts" topic in the "Forms" chapter of the User's Guide

"Sales and sales form" chapter of the User's Guide

Entering change orders

A large portion of managing a construction job is tracking changes and anticipating your customer's needs. If the scope and details of a job change significantly, you may need to create an estimate for the change order. If the change order is approved, you do the work and then create an invoice for the change order.

A good way to handle a change order in QuickBooks is to create a subjob for it.

To create a subjob for a change order:

1.	From the Customer:Job list, select the job for which there is a change order.

For example, select Smith:Kitchen.

2.	Click the Customer:Job button, then click Add Job to create a subjob. You might call it CO1.

When you select this change order on cheques or invoices, it will appear as Smith:Kitchen:CO1.

3.	When you incur costs for the change order, select the change order subjob in QuickBooks.

For example, if you write a cheque for an item on the change order, select the change order subjob in the detail area of the cheque.

4.	When you invoice the customer for the job, select the change order subjob in the Customer:Job field.

5.	Click Expenses, and choose the change order expenses in order to transfer them to the invoice.

6.	(Optional) If you want to bill for parts of the entire job (not just the change order), after you transfer the change order expenses to the invoice, select the job in the Customer:Job field.

For example, you may choose Smith:Kitchen:CO1 in the Customer:Job field in order to transfer the expenses for change order CO1 to the invoice. Then, you could change the Customer:Job to Smith:Kitchen in order to bill for other parts of the kitchen job.

If you're billing the original job on a time and materials basis, you may have other expenses related to the kitchen, which you can now transfer to the invoice, and bill for them along with the change order.

To create a change order estimate:

1. 	From the Activities menu, choose Create Invoices.

2. 	Select your estimate template from the Custom Templates list.

To create a custom template, see the "Customizing form content" topic in the "Forms" chapter of the User's Guide.

3.	Select the customer, job (and subjob) in the Customer:Job field.

If you have not already created a job or subjob for the change order, you can create one easily by adding a colon (:) and a job or subjob name to the customer name.

4.	Fill in the line-item area by listing the scope of the work to be covered by this change order.

You can set up any new items, if needed, as you go.

If the change order reduces the cost of the job, enter a negative number in the item rate or cost.

5.	In the Customer Message box, enter "Change Order Estimate."

6.	From the Edit menu, choose Mark Invoice as Pending.

7.	Click OK.

If the change order reduces what the customer owes

You may have changes that reduce the work or materials needed for a job. In that case, you would still set up the change order as a subjob, as described above. But instead of invoicing for the change, you would create a credit memo in QuickBooks, and enter the items that are being reduced, along with the amount of the credit.

For more information, see the:

"Recording a return" topic in the "Receiving and depositing payments" chapter of the User's Guide

How change orders appear on reports

Using the method described here, you'll be able to see expenses and revenue related to change orders along with the original job expenses and revenue. You can also report on change orders separately by filtering reports to include only the change order subjob.

Tracking time

Time is the most valuable resource for any business, especially in construction, because you can be heavily penalized for late projects and possibly rewarded for early or timely completion.

You can track time with QuickBooks by using the Pending Invoice feature. Create service items for time charges. Record the time you, or your employees, have worked on a job by adding service items for time on an invoice, and mark the invoice as pending (from the Edit menu). When you're ready to invoice, mark the invoice as final and edit as necessary.

To get a report on time, you might put an identifier such as "time" in the memo of the pending invoices you use to track time. Then create a Pending Sales report (Reports menu, Sales Reports), and filter for "time" in the Memo field.

For more information, see the:

"Marking a sale as pending" topic in the "Sales and sales forms" chapter of the User's Guide

"Filtering report data" topic in the "Reports" chapter of the User's Guide

Tracking worker's compensation for your employees

If you're using the payroll feature of QuickBooks Pro, you can use payroll reports to help you calculate worker's compensation premiums. All provinces require employers to provide employees with worker's compensation insurance. Contact your provincial Worker's Compensation Board to determine your insurance premium.

Understanding income and profitability with reports

QuickBooks has over 70 preset reports, which you can customize to fit your needs. The most important reports for any business are the Profit and Loss report and Balance Sheet. To create these for your business, choose them from the Reports menu.

Here are some reports that contractors might be interested in:

Profit and Loss by Job. From the Reports menu, choose Profit and Loss - By Job.

Payroll Summary (to get worker's compensation wage figures). From the Reports menu, choose Payroll - Summary by employee. Click Filter. In the Name field, choose Selected Names from the drop-down list and then select the employees desired. Enter the appropriate dates in the Date field.

We suggest you try out these reports and experiment with customizing them and filtering them by the specific types of information you want to track.

For more information, see the:

"Description of each preset report" topic in the "Reports" chapter of the User's Guide

"Customizing a report" topic in the "Reports" chapter of the User's Guide

"Filtering report data" topic in the "Reports" chapter of the User's Guide

Other QuickBooks tips for construction businesses

Setting up vendors and subcontractors

You keep information about your vendors and subcontractors in the Vendor list. For most contractors, your Vendor list will include suppliers of building materials, equipment rental services, subcontractors, and general business vendors (office supplies, insurance, and so on.)

For more information, see the:

"Vendors" topic  in the "More QuickBooks lists" chapter of the User's Guide

Creating tickler notes

You need to keep track of many non-financial details related to your business. You can use the QuickBooks To Do Notes list to keep track of these details. QuickBooks will remind you of these notes on the date you specify.

For example, you can use the To Do list to remind yourself to:

Call a vendor to check the status of a shipment

Call customers to update them on status of their projects

(For subcontractors) File a pre-lien notice to property owners

From the Lists menu, choose To Do Notes. From the To Do List window, click the To Do button, then click New.

For more information, see the:

"To Do notes" topic in the "More QuickBooks lists" chapter of the User's Guide

Creating budgets

Because construction jobs can involve large amounts of money and often include bank financing, many contractors need to set up budgets. By setting up a budget, you can also see the costs you have committed for the fiscal year.

Here are some guidelines for contractors on setting up budgets:

To create a budget by job (instead of month by month), in the Set Up Budgets window, enter the budget for the entire fiscal year in the field for the first month of the fiscal year. Be sure to choose the job you are using to track the project. If you don't want a breakdown by account, don't choose any account.

Budgets that extend across two fiscal years need to have the date adjusted on the report to cover two years, for example, from 1/1/97 to 12/31/98.

You can get the many reports after you set up budgets, including: P&L Budget vs. Actual, P&L Budget by Job Overview, P&L Budget vs. Actual by Job.

For more information, see the:

"Setting up budgets" topic in the "Budgets" chapter of the User's Guide

Adding customized fields

You can set up customized fields to associate specific information about customers, employees, vendors, and items. The customized fields have a limit of about 20 characters.

For example, a general construction firm might want to add customized fields, such as these, for customers:

Designer or architect name

Designer or architect phone

Experience rating (that is, whether the customer has worked with construction firms before and how much education the customer might need about construction)

General contractors might also want to define these customized fields for vendors who are subcontractors:

Contractor's license number

Insurance policy number

Insurance policy expiration date

Experience rating

A subcontractor might want to define these customized fields for customers:

Contractor's license number (if the customer is a general contractor)

Credit rating

For more information, see the:

"Adding and using customized fields" topic in the "Working with lists" chapter of the User's Guide

Helping us help you

We'd like to know your special concerns and the problems you run into when using QuickBooks in your business. We also want to know how useful this document was in helping you with QuickBooks.

Please use this sheet to mail or fax us your comments. If possible, please also attach specific comments marked on the printed version of this document. Mail the completed form and any attachments to:

Intuit Canada, Ltd.

Industry Feedback

P.O.Box 4165

Edmonton, Alberta

Canada

Or fax your comments to us at 1-800-387-4285

Some information about your business

Name:

Business name:

Address:

Phone:

Number of employees:

My business is a: __ Sole proprietorship __ Partnership __ Corporation

What other needs do you have, specific to your type of business, that were not covered in this document?

Do you have any tips for other people in your field who use QuickBooks?

Which two or three topics did you find most useful in this document?

May we call you to discuss your comments?

___ yes    ___ no


Consulting

Overview for consultants

Before you begin

Setting up your QuickBooks company

Customizing your Chart of Accounts

Setting up clients as customers

Tracking projects as jobs

Creating items

Using classes to track different segments of your business

Writing proposals

Tracking time

Billing for consulting fees and costs

Customizing invoice appearance

Handling reimbursable expenses and employee advances

Handling product sales

Understanding income and profitability with reports

Other QuickBooks tips for consultants

Helping us help you

Overview for consultants

As a consultant, you have some basic needs from your accounting system. QuickBooks can help you meet many of those needs, including:

Sending your clients invoices that meet their requirements

Tracking reimbursable expenses and charging them back to clients

Running payroll cheques for your employees

Analyzing how your business is doing by creating detailed financial reports

We recommend QuickBooks Pro for consulting firms

Although you can use QuickBooks to handle your accounting, QuickBooks Pro is particularly useful for consultants. QuickBooks Pro has additional features that let you:

Track the billable and unbillable time you spend on each project

Create client invoices based on billable time

Track time for each person in your office

Write an estimate that you can send to clients and later turn into an invoice

Run payroll cheques based on employees' timesheets

Separate your costs for work done by subcontractors or consultants from the amount you charge your clients for that work

Get reports on actual time spent on projects, versus time billed or unbilled

Before you begin

This document gives you information on how to use QuickBooks for your special needs - we won't repeat what's already in the standard information you receive with QuickBooks. Instead, you'll see references to show where you can find complete information and details on using QuickBooks features.

Printing your industry document

If you're looking at this document onscreen, you're now in a "QuickBooks and Your Industry" window.

To print this document:

From the File menu, choose Print... or Print Topic.

If you got to this Help window from the interview, close the Help window to return to the interview.

To see other industry documents:

Click any of the industries listed in the contents.

Understanding QuickBooks terms

QuickBooks uses a few special terms that you should be aware of:

Chart of accounts

A list of accounts that you use to track how much money your company has, how much money it owes, how much money is coming in, and how much is going out.

Item

Anything you charge a client for, such as a consulting service or a product sale. In QuickBooks, any charges or discounts you want to include on an invoice should be entered on your Item list.

Service item

A specific type of item. Consulting firms would set up service items for any services they provide to clients, such as consulting fees, training, and so on.

Class

A way to categorize income and expenses. For example, you can use the Class field to track the profitability of each partner in a firm.

QuickBooks also uses some generic terms which you will need to match to the terms you use. Here are some consulting terms mapped to QuickBooks terms:

A client would be a Customer in QuickBooks.

A project would be a Job in QuickBooks.

A proposal or bid would be an Estimate in QuickBooks Pro.

Important

The information in this document was compiled from the experiences and suggestions of other QuickBooks users in consulting firms. Your own needs may vary considerably. Only you and your accountant understand the unique needs of your business. Ultimately, you are responsible for your own books.

We encourage you to have your accountant look over the setup suggested in this document. We suggest that you give QuickBooks a thorough "trial run" early in the process. The best way to ensure that QuickBooks will provide all the information you need, is to enter a small number of your standard transactions in QuickBooks. Then try running all the reports you may need.

While we can give you technical support on how QuickBooks works, our technical support representatives are not industry experts and cannot give you specific accounting advice. If you have questions regarding accounting issues specifically related to your industry, we recommend you consult either an accountant, industry expert, or professional association.

Setting up your QuickBooks company

The QuickBooks EasyStep Interview asks you questions about your business, and uses your answers to help you set up your consulting business in QuickBooks. We recommend the interview as the easiest way to get started and to customize QuickBooks for your type of business.

If you choose not to use the EasyStep Interview, you should follow the setup directions in "Setting up a QuickBooks company" chapter in the Getting Started Guide.

Organizing your income, expenses, clients, and projects

QuickBooks includes important features that let you analyze your consulting business in great detail:

Your Chart of Accounts, including balance sheet, income and expense accounts, tracks all of your transactions.

The Customer list, with optional customer types, lets you keep track of the types of clients you serve.

Job tracking lets you track the income and expenses for each project you do for a client, while the use of job types (available in QuickBooks Pro) lets you track the scope of your projects.

Items let you track the services you provide to your clients.

Classes let you track different segments of your business, and give you a way to break down your income and expenses for any client or any project.

The following sections give you more information about these and other features.

Customizing your Chart of Accounts

In QuickBooks, an account represents a group of transactions and is used for tracking and reporting purposes. The complete list of accounts for your company is called the Chart of Accounts. When you set up your QuickBooks company, you can choose a preset chart of accounts designed especially for consultants. This preset chart of accounts gives you a head start in creating your balance sheet accounts, income account, and expense accounts.

You may find as you review the preset chart of accounts that you need to add, edit, or delete accounts from that list, or add subaccounts.

Important:	As a general rule, you should reserve the accounts on your Chart of Accounts for broad categories, and use items and subitems to see more detail about items you've sold or bought.

For more information, see the:

"Your chart of accounts" chapter in the User's Guide

Setting up clients as customers

You store information about your clients in the Customer:Job list. It stores information about your clients and the individual projects you want to track for each client. You should set up each client as a customer in QuickBooks.

Customer types

If you choose, you can also categorize your clients by giving them a customer type. The customer type lets you keep track of the different types of clients you serve, and gives you the information you need to analyze your client base. Knowing your client base can help you make decisions on advertising, promotions, or special marketing campaigns. You can categorize each client in a way that is meaningful and useful for your business.

The customer types do not appear on QuickBooks forms, but you can create reports based on the information. You can also print mailing labels and summary statements based on customer type.

Examples of customer types for consulting firms

You can use QuickBooks' optional customer types to track the information that is most meaningful for your business. For example, you can set up customer types to track:

the different types of clients you serve (for example, Govt, Corporate, and Individual). This lets you create reports that show exactly where you generate the most revenue.

how a client was referred (for example, Other Client, Advertising, and Colleague). Knowing the sources of client referrals can help you decide how best to spend your marketing dollars.

the industries represented by clients you serve (for example, Computer, Publishing, Health Care, Banking). If you have customer types set up by industry, you can do special mailings targeted to specific industries. (For example, you may want to publicize a project you completed for a similar firm in the same industry.)

If you want to further break down your customer types, you can add subtypes.

Important:	Don't use customer types for two different purposes. For example, don't create customer types for tracking your client's industries as well as your referral sources. Choose the type of client information you want to track, and set up your customer types to suit that purpose.

For more information, see the:

"Customers and jobs" topic in the "More QuickBooks lists" chapter of the User's Guide

"Customer types" topic in the "More QuickBooks lists" chapter of the User's Guide

Tracking projects as jobs

If you do more than one project for a client, and you want to keep track of your income and expenses on a project-by-project basis, you may want the level of detail provided by job tracking. In QuickBooks you can track projects for each client by setting up the projects as "jobs" in the Customer:Job list.

For example, if you're a management consultant currently doing research for Company A, but you know that you'll also be conducting training seminars for them, you can add two jobs for that client on your Customer:Job list. This lets you track the income and expenses separately for each project.

If you never do more than one project for a client (or you don't want to track each project's income and expenses), you don't have to enter job names on the Customer:Job list. In that case, your list will contain only client names.

If you have QuickBooks Pro and you are using jobs to track projects, you can also categorize your projects (jobs) by type by using the Type field in the New/Edit Job window. Tracking job types gives you an idea of the profitability of each kind of project you do. It can also help you determine what proportion of your firm's time is spent on different types of projects.

Examples of job types for consulting firms (QuickBooks Pro)

You can use QuickBooks Pro's optional job types to track any information about your projects that you think is important. Then, later, you can filter reports to show only the data for specific types of projects (job types). For example, you can set up job types to:

track what proportion of your projects are for different types of services (for example, Market Research versus Training). This is useful for consultants who have one hourly rate (and who have set up one service item in their Item list), but who want to track the different types of services they offer to clients.

distinguish between Fixed Fee and Time Billing projects.

If you want to further break down your job types, you can add subtypes. For example, to the "Training" job type, you can add "On-Site" and "Off-Site" as subtypes.

For more information, see the:

"Job types" topic in the "More QuickBooks lists" chapter of the User's Guide

Creating items

QuickBooks items represent the services or products that you buy, sell, or resell in your business.

When you record a sale or a purchase, you use items from your Item list to fill out the form quickly. When you choose an item in the Item column on the form, QuickBooks fills in the description, rate or price, and then calculates the amount.

QuickBooks uses information you've recorded about each item to assign the sale or purchase to the right income or expense accounts. Reports and graphs can then give you valuable information, such as your greatest sources of income and which items you sell most.

If you have outside expenses for which you want to be reimbursed (such as blueprint copying or travel expenses), you don't need to create a QuickBooks item in order to include them on an invoice. See "Handling reimbursable expenses and employee advances" in this document.

Important:	The way you set up items depends on how you want to bill your clients, and the information you want to show on your invoices. "Billing for consulting fees and costs" in this document gives you more information on how to set up your Item list to handle specific billing needs.

Using Service items

Most consultants have service-based businesses (although some consultants also sell products to their clients.) Although you may have reimbursable expenses you pass through to the client, most of your invoices actually bill for your time and expertise. Create a QuickBooks "service" item for each type of work you do for clients, whether it's done by a partner, salaried employee, subcontractor, or hourly employee.

Using Other Charge items

Besides creating service items, you can create items for other charges. For example, if your office charges for administrative services such as copying, you can create an "other charge" type item. That way, on an item report (one of QuickBooks' Sales reports), you'll be able to see your consulting services (service items) separately from administrative charges (other charges items).

Using Inventory and Non-inventory items

If you are a consultant who also sells products (for example, computer consultants frequently purchase hardware and software for their clients), you can create "inventory" or "non-inventory" type items to track the products you buy and sell. See "Handling product sales" in this document for more information.

Example uses of items for a consulting firm

To charge clients for consulting services

Create a service item for each type of service you provide to clients, such as Consult Svcs, Research, Training. When you create the item, enter the rate you charge for that service.

If you bill at different hourly rates for different consultants or if you bill in phases (before a project is complete), you can use a combination of QuickBooks items and subitems. For details, see "Billing for consulting fees and costs" in this document.

To charge clients for products you sell to them

Create an inventory or non-inventory item for each product you sell to clients.

Use an inventory type item if you keep products in stock and you want to track the products you sell as inventory (that is, you want to track your quantities on hand, cost of goods sold, and the value of your inventory). When you create the inventory type item, enter the amount you've paid for the product as well as the price you plan to charge clients for the product.

Use a non-inventory type item if you don't keep products in stock, or if you keep products in stock, but you don't want to track inventory (you don't need to know quantities on hand, cost of goods sold, and inventory value). When you create the non-inventory type item, enter the price you plan to charge clients for the product.

For more information, see "Handling product sales" in this document.

Track forgiven charges (billable hours for which you decide not to bill the client)

Create a discount item called Courtesy. When you create the item, leave the rate at 0.00; you can enter the amount of the forgiven charge directly on the invoice. See "Forgiving charges" in this document for details.

To charge clients for non-consulting services, such as administrative fees (for example, for copying or FedEx)

Create an other charge item for each of the administrative services you provide to clients. When you create the item, enter the rate you charge for that service.

(QuickBooks Pro) To track costs of services done by subcontractors as expenses, and revenue from those services (when the client reimburses you) as income

Create service items for subcontractor services and select the "This service is performed by a subcontractor" checkbox. This lets you enter your cost and an expense account. You also enter what you charge your clients for the services, and an income account to record the reimbursement.

Setting up items specifically for subcontracted work helps you manage your books more effectively. When you use these items, QuickBooks Pro records expenses and income for subcontracted work in separate accounts. This lets you create reports that show the profitability of subcontracted work to your business.

For more information, see the:

"Items - your products and services" chapter in the User's Guide

Using classes to track different segments of your business

QuickBooks classes give you another way to track income and expenses in addition to customer type and (in QuickBooks Pro) job type.

Classes give you a way to track different segments of your business, and to break down your income and expenses for each segment. For example, if your firm does business in two different locations, you can use classes to track the proportion of your income and expenses related to those two locations.

How classes differ from customer types and job types

Classes can apply to all transactions, so they are not tied to any particular client or project. However, a job type or a customer type is associated with only certain projects or certain clients.

For example, a consultant might have "Corporate" and "Individual" customer types to categorize her clients, and "Research" and "Training" job types to categorize each project for a client. She can then get financial reports focused by type of client or type of project.

But let's say she needs a third classification that spans any type of client or project. In this case, she can use QuickBooks classes. For example, if she has a partner, she can create a class for herself and a class for her partner. She would then select one of those classes on each transaction in QuickBooks. Later, she could get reports on income and expenses by partner (class), regardless of which types of clients or projects they both worked on.

Tips for when to use classes

Here are some tips for when to use classes:

Think of the ways you'd like to categorize portions of your business in terms of income and expenses for each portion. The classes you set up should correspond to those portions, and can be any meaningful breakdown of the business you do.

Set up classes on the basis of the type of reporting you want to do, and consider how you want to see your business segmented on reports. For example, if your firm has three consultants and you want to analyze the profitability of each consultant's projects, you can create a class for each consultant. Later, you can create a report that looks at income and expenses by class (for each consultant).

Classes are most useful when you can identify both income and expenses for each class you set up, because this makes the Profit and Loss by Class report more meaningful. For example, if you do business in two different offices or locations, you can make each location a class if you can identify both your income and expenses by location. That way, you can see a Profit and Loss report by location (class).

Don't use classes for two different purposes. For example, don't create classes for tracking office locations as well as for tracking partners.

Examples of classes for consulting firms

You can use classes to:

analyze the income and expenses related to each partner's clients, by setting up each billing partner as a separate class.

analyze the income and expenses for each location, if you have offices in more than one location. Make each business office a separate class.

If you want to break down your income and expenses even further, you can create subclasses.

Writing proposals

Many consultants submit proposals at the beginning of a project. You may need to create a proposal or estimate if:

the project is being "put out to bid" by a potential client, who asks for proposals from interested consultants

you bill on a fixed-fee basis and the client wants a proposal that specifies the work you agree to complete for the stated fee

you bill on an hourly basis, but the client wants an estimate of how long it will take you to complete the project

If you have QuickBooks Pro, you can use the estimate form to create your proposal or bid. If you have QuickBooks, you can use a pending invoice.

QuickBooks Pro automates estimates

If you have QuickBooks Pro, you can use the estimate form to create a proposal or bid. Once you have all the project tasks entered on the estimate form, you can later turn the estimate (proposal) into client invoices. (See "Invoicing from a QuickBooks Pro estimate" in this document for details.)

You can also customize the estimate form to include only the columns and information you need. Depending on how you do business, here are some suggested changes and/or additions you might want to make to QuickBooks Pro's estimate form:

Change the title of the form from "Estimate" to "Proposal" or "Bid."

Change the name of the "Estimate No." field to "Proposal No."

Change the name of the Item column to "Task" or "Phase."

Change the name of the Quantity column to "Hours."

Change the name of the Cost column to "Rate" or "Fee."

Remove the Markup column from the form.

For more information, see the:

"Estimates" chapter in the User's Guide

Creating a proposal without QuickBooks Pro

If you don't have QuickBooks Pro, you can use a pending invoice to create a proposal or bid. When the client approves your proposal and you are ready to invoice for your work, you can invoice directly from your proposal. See "Invoicing from a QuickBooks pending invoice" in this document.

To create proposals without QuickBooks Pro:

1.	Create an invoice that details the work you plan to do for the client.

Enter the client name and charges as usual. (If you don't have all your charges set up in your QuickBooks Item list, you can add them as you go.)

2.	Type the words "Pending Approval" in the Customer Message field.

3.	While the invoice is displayed, choose Mark Invoice as Pending from the Edit menu.

QuickBooks displays the word "Pending" on the onscreen invoice (it does not appear on the printed invoice).

4.	Change the title of this invoice to "Proposal" or "Estimate".

Select a customized invoice template on  which you have changed the default title to "Proposal" or "Estimate". (See the "Customizing form content" topic in the "Forms" chapter of the User's Guide.) When you wish to convert this estimate back to an invoice, simply display it on your screen and select your usual invoice template.

5.	(Optional) If you think you may create more than one invoice from this proposal (because you are billing in phases), memorize the proposal by choosing Memorize Invoice from the Edit menu.

Give the memorized proposal a name such as "Company A Proposal." Click the "Don't remind me" checkbox to select it.

By memorizing the proposal, you'll be able to easily convert it to an invoice later. (See "Invoicing from a QuickBooks pending invoice" in this document.)

6.	Print the proposal for the client's review.

You can get a report listing all pending invoices by choosing A/R Reports from the Reports menu, then choosing Pending Invoices.

Tracking time

A consultant sells time and expertise, so tracking time accurately and completely is of obvious importance. If you have QuickBooks Pro, you can track your time on QuickBooks Pro timesheets and transfer the hours directly to client invoices. If you have QuickBooks, you can track your time on a pending invoice.

QuickBooks Pro automates time tracking

QuickBooks Pro lets you track your time on projects, and analyze your time costs by client or project, person who did the work, or by type of work done.

Important:	If you do your books on an accrual basis, time you enter in QuickBooks Pro is not considered revenue until you actually bill for it; similarly, it is not considered an expense until you actually run payroll.

Keeping track of time

You can enter time for an owner, partner, or employee. On the time entry form, you choose the client and project for whom the work was done in the Customer:Job field. You then choose the "service item," which is the type of work you did (see "Creating items" in this document). Later you can pass the charges to your clients on invoices or statements.

You have the option of entering individual activities on separate forms or using a weekly timesheet format. In either case, be sure to enter as complete a time record as possible so QuickBooks Pro can translate those hours into billable hours on client invoices.

Important:	Do not use QuickBooks Pro to enter time for a subcontractor. To track and invoice for actual costs of services performed by outside subcontractors, see "Services performed by subcontractors" topic in the "Items - your products and services" chapter  of the User's Guide

Which time entry form to use

QuickBooks Pro lets you track time using either the Single Activity window or the Weekly Timesheet window. The Single Activity window is for recording time spent by one consultant on a single activity for a single project on a single date. A weekly timesheet is a record of time spent by one consultant on any number of projects within a seven-day period.

Individual time entries are better for consultants who must keep detailed notes on each activity because you can see more of your notes without scrolling. Also, they are convenient to use if you will be continuously running QuickBooks Pro, and entering each activity as you do it, rather than entering all your time at the end of the week from a paper timesheet.

The weekly timesheet in QuickBooks Pro is useful when you want to work from a paper form and enter time for all your projects at once. If you want to continue using the timesheets you've been using in your firm, you can transfer the data from them to QuickBooks Pro's weekly timesheet form before invoicing clients.

Transferring time data and notes to invoices

When you are invoicing a client and have the invoice form displayed, you can click Time/Costs (and then click the Time tab) to see a list of the time entries you've recorded in QuickBooks Pro for that client's project. Clicking next to a time entry transfers it directly to the invoice.

You may also want the notes you've entered for each activity to be included on the invoice.

To use your time entry notes on the invoice:

1.	Select the client and project (Customer:Job), and click Time/Costs.

2.	Click the Time tab.

3.	If 'Transfer activity notes' does not appear under options, click the Change button, then click the "Transfer notes for each activity" button to select it, then click OK.

QuickBooks Pro has a limit on the number of characters you can enter in the notes field. That limit is the same on the weekly and individual time entry forms. If you transfer notes to invoices or statements, you may have to manually adjust the appearance of the text on those forms. (This is especially true if you entered your notes and pressed the Enter key at the end of each line. When you're entering notes, it's better to type without pressing the Enter key, so that QuickBooks Pro can automatically wrap each line.)

Tracking non-billable time

Some consultants track their non-billable hours as well as their billable ones. For example, if you spend part of your day marketing your services, or presenting proposals to clients, you may want to track the total amount of time you spend on such activities.

QuickBooks Pro lets you track the actual number of hours you spend on projects, not just the amount for which you bill clients. By tracking your non-billable hours, you can get a better idea of your business's profitability. If your firm has several staff members, you may want to track each person's billable hours versus non-billable hours.

To keep track of non-billable time (for activities you never plan to bill clients for), you need to set up service type items for each of your non-billable activities. Then, on your time entry form in QuickBooks Pro, you can choose from your list of service items to fill out the form. If the activity is non-billable, just click the Billable checkbox (in the Single Activity window) or the Billable column (in the Weekly Timesheet window) to deselect it. QuickBooks Pro places an 'X' over non-billable items.

For example, if you spend four hours doing research for one of your clients (a billable activity) and two hours following up on client leads (a non-billable activity), you enter 4.0 for the Research item and 2.0 for the Marketing item on your time entry form. Because marketing activities are not billable, you can click next to the Marketing item on the time entry form, to mark that line with an 'X.' This tells QuickBooks Pro that you don't want to invoice the client for that activity.

You can see how much of your time is spent in billable versus non-billable activities by creating a Time by Item report (one of the Project reports).

For more information, see the:

"Time tracking" chapter of the User's Guide

"Invoicing customers for time worked" topic in the "Time tracking" chapter of the User's Guide

"Charging for reimbursable expenses" topic in the "Sales and sales forms" chapter of the User's Guide

"Charging for actual time and costs" topic in the "Sales and sales forms" chapter of the User's Guide (QuickBooks Pro)

Tracking time without QuickBooks Pro

If you don't have QuickBooks Pro, you can keep track of your time on a pending invoice. Use a separate invoice for each client's project.

To keep track of time on a pending invoice:

1.	Create the invoice as usual, entering the client name and project.

2.	While the invoice is displayed, choose Mark Invoice as Pending from the Edit menu.

QuickBooks displays the word "Pending" on the onscreen invoice (not on the printed version).

3.	Whenever you work on this project for this client, enter the time and charges on the pending invoice.

4.	When you're ready to invoice for your time, display the invoice and choose Mark Invoice as Final from the Edit menu. Then print the invoice as usual.

Tip: When you're ready to mark the invoice as final, you can find the invoice quickly by creating a pending sales report and using QuickZoom to display the original invoice form. (To do so, choose Sales Reports from the Reports menu, then choose Pending Sales. In the report window, double-click the invoice you want to see.)

Billing for consulting fees and costs

When you fill out a QuickBooks invoice, you list each service you've provided for the client, along with its associated fee. You may want your invoice to show some or all of these details:

the service you're invoicing for (for example, market research or training)

the number of hours spent on each service

if you are billing by time and more than one consultant was involved, the total number of hours worked and the hourly rate for each person

if you sell products, the total amount (with sales tax) you wish to charge for each product

expenses for which you want to be reimbursed (such as delivery and travel)

Billing methods

Consultants typically bill their clients using a combination of these methods:

Time billing

Invoices based on time billing typically show the services provided, the number of hours spent on each service, the hourly rate, and the total fee. If you invoice clients using this method, see "Billing clients for time" and "Billing for work done by several consultants" in this document.

Flat-fee billing

Invoices based on flat-fee billing typically show the service and the fee. If you invoice clients using this method, see "Billing clients for a fixed fee" in this document.

Once you set up your items for billing, you can customize the invoice to show only the information you need. See "Customizing invoice appearance" in this document for details.

Setting up items for billing

Each fee you include on an invoice (each service you provide or each product you sell) should be a separate item on QuickBooks' Item list. (See "Creating items" in this document.) The way you set up your Item list depends on the services you provide and the information you want to show clients on an invoice. For example, suppose your computer consulting firm provides these services:

Consultation

Hardware

Software

Within each of these general areas are specific tasks that need to be accomplished. For example, services for Software are Installation and Training. (Of course, the services you offer depend on the type of consulting you do.)

If you want your invoices to show each main heading, as well as the time spent on individual services underneath that heading, you can use a combination of QuickBooks items and subitems - use items for each main heading and subitems for tasks underneath that heading. When creating your Item list, you should model it on the list of services your firm already uses.

To create "parent" Service items and subitems:

1.	From the Lists menu, choose Items.

2.	Click the Item button, then click New and create a parent service item for each phase of a project. Do not enter a rate for the item.

For example, if one of the services underneath Consultation is "On-site," you can create a subitem for Consultation called On-Site.

3.	For each parent item just created, create subitems for each service included in that service area.

For example, if one of the services underneath Consultation is "On-site," you can create a subitem for Consultation called On-Site.

Enter the name of the subitem.

Type a description that you want to appear on the invoice

If you are charging by time (hours worked), enter your hourly fee for the rate.

If you are charging by time, and your firm employs several consultants, leave the rate at 0.00. You'll want to create subitems underneath this task for each of your consultants, as described in "Billing for work done by several consultants."

If you are charging according to a flat fee, enter your fee for this service in the rate field.

Select the "Subitem of " checkbox and choose the name of the parent item.

Click OK.

For more information, see the:

"Items - your products and services" chapter of the User's Guide

Billing clients for time

For a project charged on a time basis (number of hours worked), you'll want your Item list to include the hourly rate you charge for each service (see Step 3 in the previous section).

If you have QuickBooks Pro, you can track your time within QuickBooks Pro, and transfer that time directly to your invoices, as described earlier in "QuickBooks Pro automates time tracking."

If you have QuickBooks, you can track your time on a pending invoice and turn that into a final invoice when you're ready to bill, as described earlier in "Tracking time without QuickBooks Pro."

Billing for work done by several consultants

If your projects typically involve the work of more than one consultant, and you bill their time at different hourly rates, you'll want to set up your Item list to include those rates.

For example, suppose your firm has three consultants, all with different hourly rates. If you want your invoices to show the time worked by each consultant, you can set up your Item list like this:

Consultation ("service" item with 0.00 rate)

On-Site (subitem of Consultation; 0.00 rate)

Partner (subitem of On-Site; 100.00 rate)

Sr. Consult (subitem of On-Site; 85.00 rate)

Jr. Consult (subitem of On-Site; 60.00 rate)

When you're ready to invoice, just choose the appropriate subitem from the list, and QuickBooks enters the service description and rate for you. All you have to do is enter the time worked by each consultant (or, if you have QuickBooks Pro, click Time/Costs and then click the Time tab).

Billing clients for a fixed fee

If you plan to charge a client a fixed fee for a service (for example, market research), create the invoice as usual. When you choose the service from the drop-down list in the Item column, you can edit the amount shown in the Rate column as necessary.

Invoicing from a proposal or estimate

If you created a proposal or estimate in QuickBooks or QuickBooks Pro (see "Writing proposals" in this document), you'll want to use that estimate as you invoice your clients.

Invoicing from a QuickBooks Pro estimate

If you have QuickBooks Pro, you can convert your entire proposal into an invoice. Then you can modify the invoice if necessary.

To convert a proposal or estimate into an invoice:

1.	Locate the estimate by displaying the Customer:Job list, selecting the project (or the client, if there is no separate project for that client), and clicking Activities, then View Estimate.

2.	Click Create Invoice at the bottom of the Create Estimates window.

3.	Delete all sections from the invoice that you don't plan to bill the client for at this time, and add any other information as necessary.

You can edit the invoice by deleting lines, changing rates or hours, and adding new charges or services.

You can create multiple invoices from the same proposal or estimate (in order to bill for different phases of the project) by repeating the preceding steps.

For more information, see the:

"Turning an estimate into an invoice" topic in the "Estimates" chapter of the User's Guide

Invoicing from a QuickBooks pending invoice

If you created a proposal by using a pending invoice, the way you invoice from that proposal depends on whether you want to create one or multiple invoices from the same proposal.

To create one invoice from a proposal or estimate:

1.	Display the pending invoice that contains your proposal.

Tip: You can find the invoice quickly by creating a pending sales report and using QuickZoom to display the original invoice form. (To do so, choose Sales Reports from the Reports menu, then choose Pending Sales. In the report window, double-click the invoice you want to see.)

2.	Change the title from "Proposal" back to "Invoice" by selecting your regular invoice template from the Custom Templates drop-down list.

3. 	Edit the invoice as necessary to reflect the charges you want to bill.

Remember to change the Customer Message, if necessary.

4. 	Choose Mark Invoice as Final from the Edit menu.

When you turn the proposal back into an invoice, the original proposal no longer exists in QuickBooks.

To create multiple invoices from a proposal or estimate:

1.	Follow the steps for creating a proposal using a pending invoice. (See "Creating a proposal without QuickBooks Pro" in this document.)

If you followed the steps listed in that section, you should have memorized your proposal.

2.	From the Lists menu, choose Memorized Transactions.

3.	Select the memorized proposal for your client and click Enter Transaction.

QuickBooks displays the proposal in the Create Invoices window.

4. 	Select your usual Invoice template from the Custom Template drop-down list to change the title from "Proposal" back to "Invoice."

5. 	Edit the invoice as necessary to reflect the changes you want to bill.

Remember to change the Customer Message, if necessary.

The next time you're ready to bill the client, you can repeat the preceding steps, beginning at Step 2.

Billing retainer clients

You may have a contract with some of your clients to "be on retainer" - they pay you a set fee to perform certain services for them. For example, a computer consultant may charge a monthly fee of $500 to answer technical support calls from clients. You can automate the billing of these retainer clients by memorizing an invoice for them in QuickBooks.

To bill retainer clients:

1.	Create an invoice for the retainer client, showing the service you agree to perform and the fee.

2.	While the invoice is displayed, choose Memorize Invoice from the Edit menu.

3.	In the Memorize Transaction window, click the "Remind Me" button or the "Automatically Enter" button. Choose Monthly in the "How Often" field.

If you click "Remind Me," QuickBooks reminds you when to invoice this client. If you click "Automatically Enter," QuickBooks creates the invoice transaction for you automatically.

If you are on retainer, but have an agreement that you can charge for reimbursable expenses, you can add your expenses to the invoice before you print it, as described in "Tracking your own costs for reimbursement" in this document.

Tracking advance payments from retainer clients

If you have retainer clients from whom you receive an up-front or advance payment, the payment is considered a liability. (This is because you owe the service to the client, and will be working off the liability.) You can track the liability in QuickBooks by setting up these three things:

a liability account for tracking retainers

an other charge type item, for showing the retainer on invoices

a payment type item, to show the original payment received

For more information, see the:

"Retainers" topic in the "Receiving and depositing payments" chapter  of the User's Guide

Invoicing for partial hours

Invoicing clients is an art, not a science. You sometimes change your mind about how and when to invoice for a billable service while you are in the midst of preparing your list of billable items.

Suppose you have spent 20 hours researching competitive products for one of your clients. But as you prepare the invoice, you decide that, since the written report is not yet complete, you'll bill the client for half the hours now, and the remaining hours on a future invoice.

If you recorded your hours in QuickBooks Pro, you just need to adjust your timesheet entry. If you recorded your hours on a pending invoice in QuickBooks, you'll need to create a second pending invoice.

To invoice for partial hours in QuickBooks Pro:

1.	Display the weekly timesheet page where you have the total hours entered.

Even if you originally entered the time on a single activity form, you can see the time entry by displaying the weekly timesheet.

2.	Edit the time to display the number of hours you want to bill for on this invoice.

3.	On the next line of the timesheet, enter the remaining hours.

Choose the same Customer:Job and the same item name.

If you need to insert a blank line, you can choose Insert Line from the Edit menu.

4.	Return to the invoice and click Time/Costs.

QuickBooks shows you the two time entries related to that particular project.

5.	Click in the Use column next to the time entry you want to include on the current invoice.

To invoice for partial hours in QuickBooks:

1.	Display the pending invoice where you have the total hours entered.

2.	Edit the time to display the number of hours you want to bill for on this invoice.

3.	Choose Mark Invoice as Final from the Edit menu.

4.	Create a new pending invoice for the remaining hours.

See "Tracking time without QuickBooks Pro" in this document for information on how to create pending invoices.

Forgiving charges

When you invoice a client, you may sometimes decide to "forgive" certain charges; that is, you decide not to bill the client for a number of billable hours. For example, suppose you estimated that a research project would take 25 hours, but it actually took you 30. For an important client, you may decide to forgive the five extra hours, and only invoice for 25 hours of time. If you want to show this forgiven time on your invoice (some consultants call this a "courtesy" item), you can handle it in one of two ways:

If you don't want to track forgiven charges for each of the services you perform, or if you perform only one kind of consulting service (you have one "service" item set up on your Item list), you can create one "discount" item called Courtesy. For example, if you create an invoice for 30 hours of consulting time (your Consulting service item), you can choose the Courtesy discount item and subtract 5 hours of time off the client's charges.

If you perform more than one kind of service (you have several "service" items set up on your Item list), you can use subitems that track your forgiven charges for each of your services. For example, you can create a "service" item called Courtesy, with a Rate of 0.00. Then you can create subitems for Service A and Service B. When you enter the amount of the forgiven charges on the invoice, you must enter a negative number.

You can see how many billable hours you've forgiven by creating a Sales by Item report (one of QuickBooks' Sales reports).

Creating a pending invoice for review

If your firm requires that all invoices be reviewed by the billing partner before they are sent to clients, you can create a pending invoice. QuickBooks doesn't show the pending invoice in registers until you mark it as a final invoice.

To create a pending invoice for review:

1.	Create the invoice as usual, entering the client name and charges.

2.	In the Customer Message field, type the word "Pending."

3.	While the invoice is displayed, choose Mark Invoice as Pending from the Edit menu.

QuickBooks displays the word "Pending" on the onscreen invoice (not on the printed form).

4.	Print the pending invoice for the billing partner's review.

5.	When the invoice has been approved, display the invoice and choose Mark Invoice as Final from the Edit menu.

Tip: You can find the invoice quickly by creating a pending sales report and using QuickZoom to display the original invoice form. (To do so, choose Sales Reports from the Reports menu, then choose Pending Sales. In the report window, double-click the invoice you want to see.)

6.	Remove the word "Pending" from the Customer Message field.

Customizing invoice appearance

Invoices used by consultants sometimes require extra space for descriptions. Some consultants include their hourly rate as part of the description, while others want a separate rate column. Many consultants also want their invoices to include a client number, project number, or project title/description.

Depending on how you've done invoices in the past, you may want to remove or add information to QuickBooks' standard invoice forms. You can add or delete fields or columns, widen or change the order of columns, and include your own customized fields on the invoice. For example, depending on your needs, you can:

Remove the Item column from the printed invoice form (not from the onscreen form). If you provide a detailed description for each item you set up, you don't need to display the item name to clients.

Change the title of the Quantity column to "Hours."

Remove the Rate column, if you always bill according to a fixed fee. (The Amount column is all you need.)

Add a customized field for a client or project number. (To do this, you must first add the field to your Customer:Job list. See "Tracking information about your clients" in this document for details.)

For more information, see the:

"Adding and using customized fields" topic in the "Working with lists" chapter of the User's Guide

"Creating custom forms overview" topic in the "Forms" chapter of the User's Guide

"Customizing form content" topic in the "Forms" chapter of the User's Guide

Adding multi-line descriptions

When you type text in the Description column, you can set exactly where your lines break by pressing Down Arrow to move to a new line.

To enter several lines of description:

1.	On the invoice form, position your cursor in the Description column.

2.	Type your lines of description, pressing Down Arrow to move to the next line of the description.

Each line has a limit of 99 characters. Although you can't see a line this long on the onscreen form, QuickBooks displays the entire line on the printed invoice. (You can click the Preview button to check how a line will print.)

Using a word processing program for client billing

Some consultants create letter-like invoices for their clients, rather than the form-based invoice used by QuickBooks. Using a word processing program to invoice or send statements is no problem. Just enter invoices or statements in QuickBooks to keep your accounts receivable information up to date, but don't print the invoices.

To use a word processing program for invoices:

1.	Enter invoices into QuickBooks as usual, but clear the "To be printed" checkbox.

2.	Use your word processing program when it's time to invoice your client.

For more information, see the:

"Changing your sales form format" topic onscreen or in the Sales and sales forms chapter of the User's Guide

Handling reimbursable expenses and employee advances

Consultants often incur expenses on behalf of clients while working on projects. These expenses - items such as delivery fees and travel expenses - are called reimbursable expenses. This section tells you how to track your own reimbursable expenses in QuickBooks, as well as how to handle employee advances for client expenses.

Tracking your own costs for reimbursement

When you incur expenses that you plan to pass along to clients, you pay for the expense by cheque, credit card, or cash. You can track these transactions as job costs in QuickBooks, and pass them along to your clients when it's time to bill them.

If you pay for items by cash, use the Splits feature in your Petty Cash account register to indicate the appropriate expense account and Customer:Job for this expense.  Enter any necessary memo information.

If you write a QuickBooks cheque or use the credit card form to pay for reimbursable expenses, select the appropriate expense account and Customer:Job for this expense. Enter a memo in the detail area of the cheque, also; this description will appear in the Description column of the invoice when you select that expense.

When you're ready to invoice the client, and you have the invoice form displayed, click the Time/Costs button, and then click the Expenses tab (in QuickBooks Pro) or click the Expenses button (in QuickBooks). QuickBooks shows you a list of expenses not yet invoiced. If you want to include the expense on the invoice, click in the Use column next to the reimbursable expense and click OK.

For more information, see the:

"Charging for reimbursable expenses" topic in the "Sales and sales forms" chapter of the User's Guide

"Charging for actual time and costs" topic in the "Sales and sales forms" chapter of the User's Guide (QuickBooks Pro)

Tracking costs and reimbursements for employees

You may have employees who incur expenses for clients. You need to reimburse those employees, then pass on the costs to the client. Here's how to handle this situation in QuickBooks.

To reimburse employees and bill clients:

1.	Have your employees track their expenses in expense reports.

You can use the paper forms you're already using.

2.	From the Activities menu, choose Write Cheques.

Write a reimbursement cheque to each employee (not a pay cheque).

In the cheque detail area, itemize each expense by client and project (Customer:Job).

Click OK to record the cheque.

3.	From the Activities menu, choose Create Invoices.

Write an invoice to the client.

If you have QuickBooks Pro, click Time/Costs, then the Expenses tab to choose the reimbursable expenses you want to include on the invoice. If you have QuickBooks, click the Expenses button to choose the reimbursable expenses you want to include on the invoice.

Click in the Use column next to the expenses you want included on the invoice, and click OK.

Issuing employee advances

If you prefer to issue your employees an advance for client costs (rather than reimbursing them later), here's how you can handle it in QuickBooks.

To issue employee advances:

1.	Create a new "other current asset" account called Advances. (From the chart of accounts, click Account, then click New.)

Leave the account's opening balance at zero.

2.	Create one "other current asset" subaccount for each employee for whom you expect to be issuing advance cheques.

For example, if you will be issuing advances to Anna Tomasson, create an other current asset subaccount called "Anna."

In the New Account window, click the "Subaccount of" checkbox, and choose the Advances account as the parent account.

Leave the subaccount's opening balance at zero.

3.	From the Write Cheques window, write an advance cheque to the employee (not a pay cheque).

4.	In the detail area of the cheque, assign the amount of the cheque to the subaccount for that employee's advances (for example, Advances:Anna), and enter a memo describing what the advance is for. Do not assign a Customer:Job to the advance cheque.

QuickBooks puts an increase transaction in the Advances:Anna account register.

5.	When the employee later turns in an expense report, enter each expense as a decrease in the employee's asset subaccount. For each expense transaction:

Leave the Payee field blank.

Assign the expense to the appropriate expense account (for example, travel).

Enter the amount of the expense in the Decrease column.

6.	Assign the expense to the appropriate Customer:Job.

Select the expense in the account register and click Edit.

At the General Journal Entry window, enter the Customer:Job in the Name column on the line for the expense transaction.

Click OK.

When you're ready to invoice the client for expenses incurred by your employee, follow the procedure described earlier in "Tracking costs and reimbursements for employees," Step 3.

If the employee spent more than the advance, you can pay the amount you owe by writing a QuickBooks cheque and entering the employee's "other current asset" subaccount in the detail area.

For more information, see the:

"Charging for reimbursable expenses" topic in the "Sales and sales forms" chapter of the User's Guide

"Charging for actual time and costs" topic in the "Sales and sales forms" chapter of the User's Guide (QuickBooks Pro)

Handling product sales

If you sell products as well as services, you may want to use QuickBooks' inventory feature to track the products you buy and sell. If you purchase items ready for resale, keep them in inventory, and then sell them, QuickBooks can track the current number in stock, your cost of goods sold, and the value of your inventory after every purchase and sale.

However, not all consultants who keep products in stock want to track their products as inventory. If you don't need to know your quantities on hand and cost of goods sold, you can create "non-inventory part" items for each of the products you sell.

If you order products only as needed and do not keep them in stock (that is, you do not have inventory), you should create "non-inventory part" items for each of the products you sell.

Consultants who sell products may want to look at two other industry documents, available in QuickBooks, that deal with product sales:

If you stock inventory, you may want to browse the document titled "Product sales businesses using QuickBooks inventory."

If you do not stock inventory, or you do not want to track your products as inventory, you may want to browse the document titled "Product sales businesses not using QuickBooks inventory."

For instructions on how to view these documents, see "Finding this and other industry documents" at the beginning of this document.

For more information, see the:

"Inventory" chapter of the User's Guide

"Non-inventory part items" topic in the "Items - your products and services" chapter of the User's Guide

Understanding income and profitability with reports

QuickBooks has approximately 70 preset reports (QuickBooks Pro has even more), which you can customize to fit your needs. Here are some reports which consultants may find especially useful, along with instructions on how to create them in QuickBooks.

Standard Profit & Loss report or Balance Sheet report

To create a Profit & Loss or Balance Sheet report, just choose that menu item from the Reports menu.

To determine amount billed for each item (for each service item, other charges item, and so on) in a specific period

From the Report menu, choose Sales Reports, then choose By Item Detail, to see a report organized by service headings. At the report window, change the date range to cover the billing period you want to see.

To determine amount billed for each customer in specific period

From the Report menu, choose Sales Reports, then choose By Customer Detail to see a report organized by client/project. At the report window, change the date range to cover the billing period you want to see.

To determine job profitability for each of your projects

From the Report menu, choose Profit & Loss, then By Job.

(If you have set up customer types) To see a report of sales by customer type

From the Report menu, choose Sales Reports, then choose By Customer Summary. At the report window, click the Filters button. In the Customer Type field, choose the customer type you want to report on.

(If you have set up classes) To determine the profitability of each segment of your business

From the Report menu, choose Profit & Loss, then By Class.

(QuickBooks Pro, If you have set up job types) To see a report of sales by job type

From the Report menu, choose Sales Reports, then choose By Customer Summary. At the report window, click the Filters button. In the Job Type field, choose the job type you want to report on.

(QuickBooks Pro) See billable versus non-billable hours by consultant

From the Report menu, choose Project Reports, then Time Activity Detail.

(QuickBooks Pro) See hours spent for each type of service item

From the Report menu, choose Project Reports, then Time by Item. Filter the report to show columns for Billed, Unbilled, and Not Billable time (click Customize).

(QuickBooks Pro) See hours spent for each project

From the Report menu, choose Project Reports, then Time by Job.

(QuickBooks Pro, If you have set up items to track subcontracted services) See a report on the profitability of your subcontracted services

From the Report menu, choose Project Reports, then Item Profitability. At the report window, click the Filters button. Then click the Invoice Opts button. In the Items field, choose the items you have set up for subcontracted services.

For more information, see the:

"Reports" chapter of the User's Guide

Other QuickBooks tips for consultants

Here are some other QuickBooks features you may find useful in your consulting firm.

Keeping track of conversations and tasks

Consultants often make decisions with clients over the telephone. It's important to keep track of your conversations with clients, whether they occur in person or by phone. QuickBooks lets you enter notes for each client in your Customer:Job list. The customer notes give you a quick way to jot down important details of a meeting.

To enter a note related to a specific client:

1.	Display the Customer:Job list.

2.	Double-click in the Notes column to the right of the client name.

QuickBooks displays the Notepad for that client.

3.	Enter your notes.

You can use the To Do list in combination with the customer notes. Suppose your client wants you to fax her a proposal for a new project, and you've agreed to send it to her in two days. You can enter a note about your conversation in your customer notes, and you can also have QuickBooks remind you of the due date by entering it in the To Do list.

To add a note to the To Do list:

1.	From the Lists menu, choose To Do Notes.

If you already have the Notepad displayed for that customer, you can click the New To Do button.

2.	Click the To Do button, then click New to add a new note.

3.	Enter the note and the date you want to be reminded.

If you have reminders turned on, QuickBooks displays your "to do" note in the Reminders window when you start QuickBooks.

Tracking information about your clients

The QuickBooks Customer list lets you add extra fields to each client's record for any purpose. You can use these customized fields to track dates, personal information, and so on. Consultants may want to add customized fields to track additional client information such as:

How client was referred

Client's email address

Client's birthday

Name of client's spouse

Name of client's administrative assistant

Information you enter into the fields can be just for your use (for example, you can look up a client's record to see his birth date), or you can add the customized fields to your sales forms and have the information appear on your invoices and cash sales receipts.

If you want to add customized fields to a client's record, see the steps below. If you want to then add the customized fields to your invoices, see "Customizing an invoice" in this document.

To add customized fields to a client's record:

1.	Select the client's name in your Customer:Job list, click the Customer:Job button, then click Edit.

2.	At the Edit Customer window, click the Additional Info tab.

3.	Click the Define Fields button to specify the custom fields you want to add to each client's record.

Enter the name of the field and where you want it to be used (you can have it displayed for your clients, vendors, and/or employees).

4.	(Optional) Fill in the fields for this customer, vendor, or employee.

You'll see the new fields on the Additional Info tab. If you fill in a field, and have added that field to your sales forms, the information you enter transfers automatically to any customized form where the field appears. For example, if the field is named "Sales Region" and you've entered "Far West" as the sales region for a particular customer, the Sales Region field on your sales forms prefills to "Far West" each time you enter a sale to the customer.

Leave a field blank if you'd prefer to fill it in at the time you make a sale.

5.	Click OK.

What's next

You can add customized fields you've set up for customers to any sales form and to the estimate form. If you want information you've entered in the customized fields to appear on a form, you must add the fields to the form. (For details on how to customize an invoice, see "Customizing an invoice" in this document.)

For more information, see the:

"Adding customized fields" topic in the "Working with lists" chapter of the User's Guide

"Changing your sales form format" topic in the "Sales and sales forms" chapter of the User's Guide

Helping us help you

We'd like to know your special concerns and the problems you run into when trying to make QuickBooks work in your business. We also want to know how useful "Consulting" was in helping you fit QuickBooks to your needs.

Please use this sheet to mail or fax us your comments. If possible, please also attach specific comments marked on the printed version of this document. Mail the completed form and any attachments to:

Intuit Canada, Ltd.

Industry Feedback

P.O.Box 4165

Edmonton, Alberta

Canada

Or fax your comments to us at 1-800-387-4285

Some information about your business

Name:

Business name:

Address:

Phone:

Number of employees:

My business is a: __ Sole proprietorship __ Partnership __ Corporation

What other needs do you have, specific to your type of business, that were not covered in this document?

Do you have any tips for other people in your field who use QuickBooks?

Which two or three topics did you find most useful in this document?

May we call you to discuss your comments?

___ yes    ___ no


Construction and contracting
using QuickBooks Pro

Overview for general contractors and subcontractors

Before you begin

Setting up your QuickBooks company

Organizing your income, expenses, clients, and projects

Customizing your Chart of Accounts

Setting up customers and jobs

Creating items

Using classes to categorize income

Estimating and invoicing overview

Estimating

Invoicing

Entering change orders

Tracking time

Tracking worker's compensation for your employees

Understanding income and profitability with reports

Other tips for contractors

Helping us help you

Overview for general contractors and subcontractors

As a general contractor or subcontractor, you're an expert at what you do, but not necessarily an expert at keeping books.

However, accounting and financial controls are critical, especially where large sums of money are concerned.That's where QuickBooks Pro comes in. QuickBooks Pro will help you meet most of your financial management needs, including:

Creating invoices

Writing payroll cheques for your employees

Tracking reimbursable expenses and charging them back to customers

Creating job cost reports to find out how your business is doing

Creating estimates for your customers and for comparing estimated costs to actual costs

Tracking the time you and your employees spend on a job

General contractors vs. subcontractors

This document is written for both general contractors (including remodeling contractors) and subcontractors, such as electricians, drywall installers, plumbers, plasterers, and so on. The QuickBooks Pro setup for general contractors and subcontractors is similar with a few differences. Where there are differences, examples for both general contractors and subcontractors are given.

For example, general contractors might use QuickBooks Pro classes for division-level reporting (such as general, site work, concrete and so on) while a subcontractor might use classes for distinguishing rough construction from trim (or finish) construction or tracking project supervisors.

Before you begin

This document gives you information on how to use QuickBooks for your special needs - we won't repeat what's already in the standard information you receive with QuickBooks. Instead, you'll see references to show where you can find complete information and details on using QuickBooks features.

Printing your industry document

If you're looking at this document onscreen, you're now in a "QuickBooks and Your Industry" window.

To print this document:

From the File menu, choose Print... or Print Topic.

If you got to this Help window from the interview, close the Help window to return to the interview.

To see other industry documents:

Click any of the industries listed in the contents.

Understanding QuickBooks Pro terms

QuickBooks Pro uses terms you can readily understand: customers, jobs, bills, vendors, employees and so on. But there are a few special terms you need to be aware of:

Chart of accounts

A list of accounts including income, expense, asset, liability, and equity accounts. These are used to track how much money your company has, how much money it owes, how much money is coming in, and how much is going out.

Item list

A list of items that includes what your company buys, sells, and/or resells in your course of business. You can also create items that represent a discount, or calculate a subtotal.

-	Service item - A service item represents services you charge for. In construction firms, you'll set up service items for your own company's labour and subcontracted services.

-	Non-inventory part item - This type of item is used for materials that you purchase for your jobs.

Bill

In QuickBooks Pro, a bill is what you receive from your vendor or subcontractor, from which you will pay that vendor.

Invoice

In QuickBooks Pro, an invoice is what you send your customer.

Class

A way to categorize transactions. For example, if you're a general contractor, you might classify transactions according to the construction division, such as Site work, Concrete, or Electrical. If you create classes that are construction divisions, you can create reports by construction division.

If you want to use QuickBooks for payroll

To use QuickBooks for your payroll, make sure the payroll preference is on, and follow the directions for setting up employees and payroll items in the EasyStep Interview or the printed documentation.

For more information, see the:

"Setting up a QuickBooks company" chapter in the Getting Started Guide

Important

The information in this document was compiled from the experiences and suggestions of other QuickBooks users in your type of business. Your own needs may vary considerably, and only you and your accountant understand the unique needs of your business.  Ultimately, you are responsible for your own books.

Therefore, we encourage you to have your accountant look over the setup suggested in this document, and we suggest that you give QuickBooks a thorough "trial run" early in the process. The best way to ensure that you have set up QuickBooks optimally for your business, and that it will provide all the information you need, is to enter a small number of your standard transactions in QuickBooks. Then try running all the reports you may eventually need.

While we can give you technical support on how QuickBooks works, our technical support representatives are not industry experts and cannot give you specific accounting advice. If you have questions regarding accounting issues specifically related to your industry, we recommend you consult either an accountant, industry expert, or professional association.

Setting up your QuickBooks company

The QuickBooks EasyStep Interview asks you questions about your business, and uses your answers to help you set up your construction business in QuickBooks. We recommend the interview as the easiest way to get started and to customize QuickBooks for your type of business.

If you choose not to use the EasyStep Interview, you should follow the setup directions in the "Setting up a QuickBooks company" chapter of the Getting Started Guide.

Organizing your income, expenses, clients and projects

QuickBooks Pro has powerful features that let you analyze your business in great detail:

Your Chart of Accounts, including balance sheet, income and expense accounts, tracks all of your transactions.

The Customer:Job list, with optional customer type lets you keep track of the different types of customers you serve and gives you the information you need to analyze your customer base.

Job tracking lets you track the income and expenses for each job you do for a customer. With QuickBooks Pro, you can use job types to categorize your jobs, for example time and materials versus fixed bid jobs.

Items let you track the services and materials you sell and how much they cost you.

Classes let you categorize income and expenses in any way that makes sense for your business, such as by department, by location, or by division such as site work, concrete, etc.

The following sections give you information about these and other features.

Customizing your Chart of Accounts

In QuickBooks, an account represents a group of transactions and is used for tracking and reporting purposes.  The complete list of accounts for your company is called the Chart of Accounts.  When you set up your QuickBooks company, you can choose a preset chart of accounts designed especially for construction firms.  This preset chart of accounts gives you a head start in creating your balance sheet accounts, income account, and expense accounts.

You may find as you review the preset chart of accounts that you need to add, edit, or delete accounts from that list, or add subaccounts.

Important:	As a general rule, you should reserve the accounts on your Chart of Accounts for broad categories, and use items and subitems to see more detail about items you've sold or bought.

For more information, see the:

"Your chart of accounts" chapter in the User's Guide

Setting up customers and jobs

In QuickBooks Pro, the Customer:Job list stores information about your customers and the individual jobs you want to track for each customer. Before you set up your customers and jobs in the Customer:Job list, consider these preferences:

Do you want to track customer types?

Do you want to set up separate jobs for your customers?

Customer types

You can use customer types to categorize your customer base and gather information based on them. For example, you can use the customer type as a way to determine which customers are most profitable or have the greatest sales volume. (Create the Profit and Loss report called Income by Customer Summary or the Sales report called By Customer Summary and filter the reports by customer type.)

Here are some examples of customer types a general contractor or subcontractor might be interested in tracking:

Advertisement vs. referral (business source)

Commercial vs. residential (client type)

North York vs. Mississauga (location)

If you're a subcontractor, you might be particularly interested in tracking:

General contractor vs. property owner (client type)

Note:	Use customer type for one purpose only. For example, if you decide to use customer type to distinguish commercial vs. residential customers, don't use customer types for locations.

The customer types do not appear on QuickBooks Pro forms, but you can create reports based on customer type. For example, you can create a report on sales and filter the report by customer type to see which customer type has greater sales volume. You can create a Profit and Loss report and filter it by customer type to see which customer type is more profitable.

In addition, you can print mailing labels and summary statements based on customer type.

For more information, see the:

"Customer types" topic in the "More QuickBooks lists" chapter of the User's Guide

"Job types" topic in the "More QuickBooks lists" chapter of the User's Guide

Tracking jobs

If you do more than one job for a customer, you'll probably want the level of detail provided by job tracking. In QuickBooks Pro you can track jobs for each customer by adding jobs to the Customer:Job list.

For example, suppose you recently built a library addition for the home of John and Jane Doe and will later build a guest house for them. To keep the income and expenses of these two jobs separate, you can add two jobs (Doe:Library and Doe:Guesthome) to your Customer:Job list.

Reasons for not tracking jobs

In some cases you might not want to add job names to the Customer:Job list because:

You never do more than one job for a customer.

You don't want to track income and expense by jobs (only by customer).

You don't want to invoice by job. (That is, you want to be able to invoice the customer for both jobs on one invoice.)

If you have cases where any of these are true, don't add jobs to your Customer:Job list for those cases.

Reports you can get on job tracking

If you track jobs, you can get many reports on your jobs, including:

Job Profitability Summary - a report that shows actual cost, actual revenue, and difference subtotaled by customer and job.

Job Estimates vs. Actuals Summary - a report that shows the estimated and actual cost for each item, and difference between the two; estimated and actual revenue, and difference; report is subtotaled by customer and job.

Time by Job - a report that shows hours worked subtotaled first by customer and job and then by service item.

Time Activity Detail - a report that lists each time activity (work recorded for a single person, Customer:Job, date, and service item) and whether the time is billed, unbilled, or not billable.

Using job types to categorize jobs

With QuickBooks Pro, you can use job types to track the different types of jobs you do. Job types allow you to determine the profitability or sales volume on the types of job you set up. You can filter all the project reports on your jobs by job type, too.

A contractor or subcontractor might want to track these types of jobs:

Residential vs. commercial (project type)

Kitchen vs. bath (remodel type)

Remodeling vs. new construction (construction type)

Fixed-price bids vs. time and materials bids (job bidding type)

Important:	Use job type for one purpose only. For example, don't use job type to distinguish both remodeling vs. new construction and kitchen vs. bath.

Using job types when analyzing estimates vs. actuals

If you're interested in analyzing actual costs and revenue versus estimates, you'll need some way of distinguishing between jobs for which you entered estimates in QuickBooks, and jobs for which you didn't. That way, you can filter QuickBooks actuals vs. estimates reports to include only jobs for which you did estimates. This is the only way to get an accurate measure of how well you estimated.

One way to know which jobs you did estimates for in QuickBooks is if you knew that you only enter estimates for fixed bid jobs, and never enter estimates for time and materials jobs. In this case, you could use job type to distinguish these two kinds of jobs, and still be able to know which jobs were estimated using QuickBooks.

But since you may want to do estimates for all your jobs, you would need to set up two job types such as "Estimate" and "No Estimate." In this case you could not use job type for any other purpose than to distinguish between jobs estimated in QuickBooks and jobs that were not.

For more information, see the:

"Adding a new job" topic in the "More QuickBooks lists" chapter of the User's Guide

Creating items

Items are the building blocks of your QuickBooks Pro company. They represent things that you buy, sell, and/or resell in your construction business. Whether you're recording an invoice to a customer or a purchase from a vendor, you use items from your Item list to fill out the QuickBooks Pro form. When you choose an item in the Item field on the form, QuickBooks Pro fills in the description, rate or price, and then calculates the amount.

Suggested item setup

This section give you a few examples of what you can call your items. Use the names that make sense to you.

Suggested service type items

For contractors

Labour (item)

-	Clean up crew (subitem)

-	Apprentice (subitem)

-	Journeyman (subitem)

-	Supervisor (subitem)

Subcontractors (item)

For an electrical subcontractor

Labour (item)

-	Rough installation (subitem)

-	Trim installation (subitem)

Suggested non-inventory part items

For general contractors

Materials (item)

-	Lumber (subitem)

-	Fixtures (subitem)

-	Hardware (subitem)

-	Wiring (subitem)

-	Drywall (subitem)

For an electrical subcontractor

Materials (item)

-	Boxes (subitem)

-	Wire (subitem)

-	Service panel (subitem)

-	Breakers (subitem)

-	Light fixtures (subitem)

-	Receptacles, switches, and coverplates (subitem)

Suggested Other Charge type items

For contractors and subcontractors

You can use Other Charge items for permit fees or for any other fees or charges you'd like to list separately on reports.

Items track costs as well as sales

You can set up the items in your Item list in many ways, but we strongly suggest you set up your items so that you can record both the cost of the item and the sales price to the customer. If you set up items to record both the cost and sales price, QuickBooks tracks the cost of the item when you write a cheque for that item, and the sales price when you create an invoice for that item. By doing this, you can see costs versus revenue per item on reports.

Setting up service type or non-inventory part items to record cost as well as sales price

When you set up your service items, make sure you select the "This service is performed by a subcontractor" checkbox in the New Item window. You can select this checkbox even if the service item is for employee labour. By selecting this checkbox, you can enter what you paid for the item, as well as what you sell it for. When you mark this checkbox, QuickBooks Pro adds separate fields for tracking purchases and sales information.

Likewise, when you set up non-inventory part items, make sure you select the "This item is purchased for and sold to a specific customer" checkbox in the new Item window. By selecting this checkbox, you can enter what you paid for the item and what you sell it for. When you mark this checkbox, QuickBooks Pro adds separate fields for tracking purchases and sales information.

For more information, see the:

"Creating items" topic in the "Items - your products and services" chapter of the User's Guide

"Adding new accounts" topic in the "Your chart of accounts" chapter of the User's Guide

Using classes to categorize income

QuickBooks Pro classes give you an easy way to categorize income and expenses to learn more about your business. Classes give you a way to categorize what you make and what you spend.

Why use classes?

By using classes, you can filter reports to get information by class. Specifically, you can find out how much profit you made on each class you set up. You can also find out how well you estimated profit and costs for each class.

Division-level tracking for general contractors

Many general contractors want to get reporting by construction divisions (such as Site Work, Concrete, Finishes) on their jobs. Classes give you an easy way to track how well you managed income and expenses, and how well you estimated in each of these areas or divisions.

Here is a suggested list of classes and subclasses adapted from the Construction Specifications Institute's standardized coding system (this is a partial list):

1 General (class)

-	Plans and fees (subclass)

-	Surveys (subclass)

2 Site Work (class)

-	Building and demolition (subclass)

-	Clearing (subclass)

-	Excavating (subclass)

3 Concrete

4 Masonry

5 Metals

If you set up classes for construction divisions, you can get an Item Profitability report that shows your revenue and cost by class.

Classes for remodeling contractors or subcontractors

Remodeling contractors and subcontractors may want to use classes in other ways:

Use a subset of the construction divisions that is appropriate for your business. For example, a plumbing subcontractor might have classes called Rough and Finish to distinguish rough plumbing work from finish plumbing work.

Use classes for tracking project supervisors. For example, contractors who have more than one project supervisor might want to create classes by project supervisor so they can compare profits for each project supervisor. For each supervisor you have, create a class with the supervisor's name.

Important:	Use classes for one purpose only. If you decide to use classes for construction divisions, don't use classes to track project supervisors as well.

Using class tracking

To use class tracking in QuickBooks Pro, make sure you do the following:

Make sure class tracking is on. (From the Preferences menu, choose Accounting.)

Create the classes you want to track.

Customize the invoice to include a class column for items.

Assign a class for every income and expense transaction.

If you enter a bill, write a cheque, enter a credit card charge, or create an invoice, be sure to choose a class for every item from the Class drop-down list.

If you're using the QuickBooks payroll feature, assign a class to each payroll item on a pay cheque or to the entire pay cheque.

-	From the Preferences menu, choose Payroll and Employees.

-	If you want to assign a class for an entire pay cheque, click "Entire pay cheque" at the bottom of this window. For example, your employee does work on concrete only. If you have a class for concrete, you can assign the employee's pay cheque to the Concrete class.

-	If you want to assign a class per earnings item, click "Earnings item" at the bottom of this window. This means you can assign a different class to each payroll item for the employee. For example, your employee has done work for three different jobs in the pay period. He has done carpentry work on the Reid property, foundation work on the Ahl home, and electrical work on the Smith addition. You can assign each payroll item earned by the employee to the appropriate class.

-	You assign the class for the pay cheque or the payroll items when you generate the pay cheque.

For more information, see the:

"Classes" topic in the "More QuickBooks lists" chapter of the User's Guide

"Payroll preferences" topic in the "Customizing preferences" chapter of the User's Guide

"Creating custom forms overview" topic in the "Forms" chapter of the User's Guide

"Customizing form content" topic in the "Forms" chapter of the User's Guide

Getting class information on reports

If you're using class tracking, you can get information by class on reports. There is a separate Profit and Loss By Class report, and for any other report, you can get class information by using the following procedure.

To get classes on reports:

1.	From the Reports menu, choose the report you want.

For example, to get a report on job profitability, choose Job Profitability Detail from the Reports menu.

2.	If the report has a Columns field, choose Class from the drop-down list.

The report shows information broken down by class.

3.	If the report doesn't have a Columns field, click Filters.

4.	In the Class field, choose Selected Classes and then select the classes you want from the drop-down list and click OK.

For example, if you have classes for General, Site Work, and Concrete, you can get a report on one or all of these classes combined.

5.	Click OK.

Estimating and invoicing overview

In a typical job, the customer asks you for an estimate on a job. You typically bid the job in one of three ways:

Fixed price

You agree to perform work for an agreed upon price which includes your costs and profit. Often fixed price contracts are divided into phases (survey, plans, foundation, framing) that are completed according to a timeline.

Cost plus

You invoice the customer for the costs of construction and add a percentage (markup) to these costs to cover your overhead and profit. You can either build the markup into the item sales price or use other charge items to calculate and show this markup.

Time and materials

You pay for the job costs and then pass the expenses to the customer. You charge the customer for your time at a set hourly rate.

Important:	The procedures for recording job costs and invoicing the customer in QuickBooks Pro depends on whether you bid a job as fixed price or cost plus/time and materials.

Here is an outline of the estimating and invoicing process in QuickBooks Pro using any of the three bidding methods:

1.	Enter the estimate.

From the Activities menu, choose Create Estimates.

(Optional) Customize the estimate. (See the "Estimates" chapter in the User's Guide.) Tip: To make conversion of estimate into invoices faster, customize the estimate and invoice with the same information.

Select the service items and non-inventory part items and their quantities as appropriate. If you set up your items to track cost as well as sales, you can see your costs as well as the sales prices on the estimate onscreen. When you print the estimate, the printed estimate shows the sales prices only.

2.	If the customer needs adjustments to the bid, edit the estimate and present a final estimate to your customer.

From the Activities menu, choose Create Estimates.

Locate the estimate.

From the Edit menu, choose Insert Line or Delete Line.

If the customer accepts your bid and signs the contract, you begin work.

3.	If you require a down payment, enter the down payment into QuickBooks Pro.

See "Entering a down payment" in this document.

4.	Records jobs costs in QuickBooks Pro.

From the Activities menu, choose Write Cheques, Enter bills, or Enter credit card charges.

Be sure to specify the Customer:Job for every transaction you do for this job.

If you are using class tracking, specify a class for every expense transaction.

If your job is fixed-price, don't pass through the costs to your customer. Under the Expenses or Items tab, deselect the costs in the billable column (indicated by the invoice icon); the invoice icon is crossed out with an X.

If your job is cost plus or time and materials, make sure you pass through the appropriate costs to your customer. The invoice icon is not crossed out in the billable column (indicated by the small invoice icon).

5.	If you bid the job as fixed price, convert the estimate into an invoice and edit the invoice as necessary.

Locate the estimate in QuickBooks Pro and click the Create Invoice button.

6.	If you bid the job as cost plus or time and materials, do not convert the estimate to an invoice, but create an invoice.

From the Activities menu, choose Create Invoices. See "Invoicing for cost plus or time and materials jobs" later in this document.

7.	If you get a bank draw instead of receiving payment from the customer, create an invoice (even if you don't need to send one).

If you don't invoice the customer for your services but have set up an agreement to take a draw from the customer's bank, you still need to enter an invoice so that QuickBooks Pro can record the money you receive as income.

Convert the estimate to an invoice (and make adjustments, as needed), but deselect the To be printed checkbox on the invoice form. If you simply deposit the money into your chequing account, QuickBooks Pro does not account for the money as income.

When you get the bank draw, receive payment in QuickBooks Pro.

8.	Receive payment and make deposits to your bank account.

For more information, see the:

"Recording an invoice or statement payment" topic in the "Receiving and depositing payments" chapter of the User's Guide

Estimating

Construction estimating is one of the most difficult and important aspects of running a construction firm, and QuickBooks Pro makes it easy to estimate and find out how well you're estimating.

To use the Estimates feature of QuickBooks Pro, make sure this preference is turned on.

From the Preferences menu, choose Jobs and Estimates.

Click Yes to the question "Do you create estimates for customer/jobs?"

Once you create an estimate, you can use the estimate to create invoices. Then, by creating estimates vs. actuals reports, you can analyze how well you are estimating.

Creating an estimate in phases

Construction estimates are often organized into phases because construction projects are often completed in phases.

To divide the estimate into phases:

1.	Instead of selecting an item, enter "Phase 1" into the first Description line of the estimate.

2.	Enter the items associated with the first phase of the estimate.

3.	Enter a subtotal item after the items for phase one.

4.	For the next phase, enter "Phase 2" into the first Description line after the subtotal for the previous phase.

For more information, see the:

"Estimates" chapter of the User's Guide

Comparing estimated to actual costs

Estimates allow you to compare your estimate of costs of items with the actual costs and your estimated revenue with the actual revenue. The following two Project reports help you compare how you estimated to how you performed on jobs or items. (To access these reports, choose Project reports from the Reports menu.)

Job Estimates vs. Actuals Summary (or Detail)

Shows estimated cost, actual cost, and difference; estimated revenue, actual revenue, and difference for one or several jobs.

Item Estimates vs. Actuals

Shows estimated cost, actual cost, and difference; estimated revenue, actual revenue, and difference; report is subtotaled by item type and item.

If you don't create an estimate for every job

If you don't create an estimate for every job, you need to understand that the estimates vs. actuals reports in QuickBooks will show actual cost and revenue for all your jobs. But they will only show estimated cost and revenue for the jobs you entered estimates for in QuickBooks.

For example, you may have worked on five jobs, but only entered estimates for two of them in QuickBooks. The job or item estimates vs. actual reports will show you the actual cost and revenue for all five jobs. But they will only show you estimated cost and revenue for the two jobs you entered estimates for in QuickBooks. Therefore, you may think your estimates were much too low compared to your actuals, and you will not get an accurate reading of how well you estimated.

Therefore, you need some way to filter the reports so that they will only count the jobs for which you did estimates. You can do this by filtering for certain job types. See "Using job types to categorize jobs" earlier in this document, under "Setting up customers and jobs."

Invoicing

This section discusses several issues on invoicing. For example, the procedure for invoicing varies if you're invoicing for a fixed-price job vs. a cost plus or time and materials job. You might also have specific needs in your invoicing, such as handling retainage, entering a down payment, or customizing the invoice.

Invoicing for a fixed-price job

If you have created an estimate in QuickBooks Pro, turn the estimate into an invoice and make changes as needed.

As you incur costs (writing cheques, entering bills or credit card charges) for the fixed-price job, enter them into QuickBooks Pro. Specify the Customer:Job for every transaction you do for this jobs so you can create reports on job expenses, and if you are using class tracking, make sure to specify a class for every transaction.

While you do want to track the costs of the job so you can see what kind of profit you made on the job, you don't want to pass through costs to your customer since your bid is at a fixed price.

Important:	For fixed-price jobs, don't pass your costs to your customer. In the detail area of the Write Cheques or Enter Bills window in QuickBooks, click the billable column on the far right (indicated by the small invoice icon). An "X" appears in the column indicating that the cost will not be passed through to the customer.

To invoice for a fixed-price job:

1.	Locate the estimate by displaying the Customer:Job list, selecting the job (or the customer, if there is no separate job), and clicking Activities, then View Estimate.

2.	Click the Create Invoice button at the bottom of the Create Estimates window.

QuickBooks Pro displays an invoice with all the information from the estimate.

3.	Edit the invoice.

For example, if you're invoicing for phase 1, delete the lines pertaining to phases after phase 1. (Put your cursor on the line item you want to delete and choose Delete Line from the Edit menu.)

4.	Click OK.

Invoicing for cost plus or time and materials jobs

Even if you created an estimate for a cost plus or time and material job, you won't convert the estimate to an invoice. Instead you'll use your actual costs (with or without a markup) to invoice your customer.

As you incur costs for the cost plus or time and materials job, enter them into QuickBooks Pro as cheques, bills, or credit card charges. Specify the appropriate Customer:Job on every expense, and if you are using class tracking, make sure you also specify a class for every expense.

Important:	On cheques, bills, and credit card charges for cost plus or time and material jobs, make sure the costs are marked as billable to your customer. (In the detail area, the small invoice icon is not crossed out in the billable column on the far right).

To invoice for a cost plus or time and materials job:

1.	From the Activities menu, choose Create Invoices.

2.	Select the customer from the Customer:Job drop-down list.

3.	Click the Time/Costs button.

You'll see the Items tab.

4.	Click the Select All button or select the billable items by clicking next to the items in the Use column.

The invoice icon appears beside any item you select.

5.	Click the Expenses tab.

6.	Click the Select All button or select any billable expenses by clicking by the expense in the Use column.

The checkmark appears beside any item you select.

(Optional) If the expenses are taxable, edit the "Tax Code" box, if necessary.

7.	If you're using the time tracking feature to charge time for employees, owners, or partners for this job, click the Time tab.

Click the Select All button or select the time you want to charge the customer for.

If you don't want to pass a time entry to your customer, check the Hide column. You'll still be able to see reports showing hours worked vs. hours invoiced. (From the Reports menu, choose Project Reports - Time Activity Detail.)

8.	(Optional) If you want selected time and costs to appear as one invoice item, click "Print selected time and costs as one invoice item."

9.	Click OK.

QuickBooks Pro returns you to the Create Invoices window.

10.	If you don't charge a markup (time and materials jobs) or you already built your markup into the sales price of your items, click OK.

11.	If you charge a markup and did not build your markup into the sales price of your items, add other charge items to include your markup to the invoice and click OK.

For more information, see the:

"Invoicing customers for time" topic in the "Time tracking" chapter of the User's Guide

"Charging for actual time and costs" topic in the "Sales and sales forms" chapter of the User's Guide

Handling retainage in invoices

Some contractors need to handle retainage in their invoicing. This means that by completion of the job you've invoiced for only 90 percent of a job. After a retention period, you invoice for the final 10 percent. There are two ways to do this.

Method 1

In the first method, you invoice for 90 percent of the job at each phase.

To handle retainage (method 1):

1.	Create an other charge item, called Retainage 1.

Enter -10% in the Amount field; in the Account field, assign an Other Current Asset account for retainage.

2.	Add this retainage item to every invoice you write during the job to reduce the amount owed by 10 percent.

At the same time the Other Current Asset increases by the same amount.

3.	Create a second Other Charge item, called Retainage 2.

Leave the Amount field blank; in the Account field, assign the same Other Current Asset account for retainage.

4.	When you're ready to invoice for the final 10 percent, determine how much it is.

An easy way to determine the amount is to display the register of the Other Current Asset account for retainage, select the job in the register, and click QuickReport.

5.	Create a new invoice with only this Other Charge item (Retainage 2) on it.

Enter the amount in the Amount field of the invoice.

Method 2

In the second method, you deduct 10 percent of the total job (the retainage) on the invoice that you create at job completion. When the retention period is over, you invoice for the remaining 10 percent of the total job.

To handle retainage (method 2):

1.	Create an other charge item, called Retainage.

Leave the Amount field blank; in the Account field, assign an Other Current Asset account for retainage.

2.	At the completion of the job, record an invoice for the full amount of the phase.

3.	Run the Job Profitability Summary Report to determine the total revenue for the job.

4.	Edit the invoice you just recorded by adding the Retainage other charge item and entering 10 percent of the total revenue as a negative number in the Amount field of the invoice.

For example, if the total revenue is $20,000, you should enter the 10 percent retainage as -2,000.

5.	When you're ready to invoice for the final 10 percent, create a new invoice with only this Retainage other charge item on it.

Enter the amount as a positive number in the Amount field of the invoice.

Entering a down payment

Some contractors require a down payment from their customers at the beginning of a new job. The down payment is usually applied to the initial materials bought for the job.

For more information, see the:

"Overpayments, down payments, and prepayments" topic in the "Receiving and depositing payments" chapter of the User's Guide

Customizing invoice appearance

Invoices used by contractors generally require lots of space for descriptions. Some contractors include their hourly rate as part of the description while others want a separate rate column. Many contractors also want their invoices to include the job number. Depending on how you've done invoices in the past, you might want to remove or add information to QuickBooks standard invoice forms.

For more information, see the:

"Creating custom forms overview" topic in the "Forms" chapter of the User's Guide

"Customizing form content" topic in the "Forms" chapter of the User's Guide

"Designing form layouts" topic in the "Forms" chapter of the User's Guide

Invoices with special requirements

You might have special requirements for your invoices that QuickBooks Pro doesn't accommodate well. In this case, you can use QuickBooks Pro to calculate subtotals and totals for your invoices and then create the invoice form in a word processor or desktop publishing software outside of QuickBooks Pro.

Note:	You must record the invoices in QuickBooks so that your accounts receivable and sales and income information will be correct.

To use a word processor (instead of QuickBooks Pro) for customer invoicing:

1.	Enter invoices into QuickBooks Pro as usual, but clear the "to be printed" checkbox.

2.	Use your word processor when it's time to invoice your customer.

Entering change orders

A large portion of managing a construction job is tracking changes and anticipating your customer's needs. If the scope and details of a job change significantly, you may need to create an estimate for the change order. You can bill for the change order as a fixed bid or on a time and materials basis. Contractors often bill a change order for a fixed bid job on a time and materials basis. You can then create an invoice for the change order by itself or in combination with other charges for the job.

A good way to handle a change order in QuickBooks is to create a subjob for it.

To create a subjob for a change order:

1.	From the Customer:Job list, select the job for which there is a change order.

For example, select Smith:Kitchen.

2.	Click Customer:Job, then click Add Job to create a subjob. You might call it CO1.

When you select this change order on cheques or invoices, it will appear as Smith:Kitchen:CO1.

3.	When you incur costs for the change order, select the change order subjob in QuickBooks.

For example, if you write a cheque for an item on the change order, select the change order subjob in the detail area of the cheque.

4.	When you invoice the customer for the job, select the change order subjob in the Customer:Job field.

5.	Click Time/Costs, and choose the change order costs in order to transfer them to the invoice.

6.	(Optional) If you want to bill for parts of the entire job (not just the change order), after you transfer the change order costs to the invoice, select the job in the Customer:Job field.

For example, you may choose Smith:Kitchen:CO1 in the Customer:Job field in order to transfer the costs for change order CO1 to the invoice. Then, you could change the Customer:Job to Smith:Kitchen in order to bill for other parts of the kitchen job.

If you're billing the original job on a time and materials basis, you may have other costs related to the kitchen, which you can now transfer to the invoice, and bill for them along with the change order.

Note:	If you're billing the original job from an estimate, and you want to bill for the original job and for the change in one invoice, create the invoice from the estimate first. Then change the Customer:Job field on the invoice to show the change order subjob. You can then click Time/Costs to transfer costs related to the change order to the invoice.

To create a change order estimate:

1.	From the Activities menu, choose Create Estimates.

2.	Select the customer, job (and subjob) in the Customer:Job field.

If you have not already created a job or subjob for the change order, you can create one easily by adding a colon (:) and a job or subjob name to the customer name.

3.	Fill in the line-item area of the estimate by listing the scope of the work to be covered by this change order.

You can set up any new items, if needed, as you go.

If the change order reduces what the customer owes

You may have changes that reduce the work or materials needed for a job. In that case, you would still set up the change order as a subjob, as described above. But instead of invoicing for the change, you would create a credit memo in QuickBooks, and enter the items that are being reduced, along with the amount of the credit.

How change orders appear on reports

Using the method described here, you'll be able to see costs and revenue related to change orders along with the original job costs and revenue. You can also report on change orders separately by filtering reports to include only the change order subjob.

For more information, see the:

"Recording a return" topic in the "Receiving and depositing payments" chapter of the User's Guide

Tracking time

Time is the most valuable resource for any business, especially in construction in which you can be heavily penalized for late projects and possibly rewarded for early or timely completion.

QuickBooks Pro automates time tracking. It lets you track billable and non-billable time, pass along billable time to your customers, and analyze your time costs by customer, person who did the work, and by type of work done.

You have the option of entering individual activities on separate forms or using a weekly timesheet format. In either case, be sure to enter as complete a record as possible if you want your time accurately and completely transferred to invoices and shown on reports.

Keeping track of time for employees, owners, or partners

You can enter time for employees or others such as owner or partner. On the time entry form, you choose the customer and job for whom the work was done in the Customer:Job field. You then choose the service item, which is the type of work done.

Invoicing for subcontractor time

You don't need to use time tracking for subcontractors, who send you a bill for the time they spend. Instead create a service item for work performed by subcontractors, and check the "This service is performed by a subcontractor" checkbox. This lets you enter both an income and an expense account for that service.

When you write cheques or enter bills from subcontractors, use the Items tab in the detail area, select the subcontractor service item, and select the Customer:Job (and class, if you're tracking them). This records your cost for the subcontractor, and allocates that cost to the expense account you entered when creating that service item.

When you invoice your customer, click the Time/Costs button in the Create Invoices window. Under the Items tab, select the subcontractor item to add the item to the invoice. This records your income for the subcontractor, and allocates it to the income account you entered when creating the item.

Invoicing for time

If you're working on a cost plus or time and materials job, you'll pass the charges for the time to your customers on invoices.

If you're working on a fixed-price job, remember not to invoice for time. Don't mark the time as billable so you don't accidentally overcharge your customer (that is, be sure the billable column is crossed out on the timesheet).

For more information, see the:

"Invoicing for cost plus or time and materials jobs" in this document

"Time tracking" chapter of the User's Guide

"Invoicing customers for time" topic in the "Time tracking" chapter of the User's Guide

Tracking worker's compensation for your employees

If you're using the payroll feature of QuickBooks Pro, you can use payroll reports to help you calculate worker's compensation premiums.  All provinces require employers to provide employees with worker's compensation insurance.  Contact your provincial Worker's Compensation Board to determine your insurance premium.

Understanding income and profitability with reports

QuickBooks Pro has over 90 preset reports, which you can customize to fit your needs. Here are some of the reports construction firms may find especially useful, along with instructions on how to create them in QuickBooks.

Standard Profit & Loss report or Balance Sheet report

To create a Profit & Loss or Balance Sheet report, just choose that menu item from the Reports menu.

Profit and Loss by Job

From the Reports menu, choose Profit and Loss - By Job.

Payroll Summary (to get worker's compensation wage figures)

From the Reports menu, choose Payroll - Summary by employee. Click Filters. In the Name field, choose Selected Names from the drop-down list and then select the employees desired. Enter the appropriate dates in the Date field.

Accounts Receivable Aging

From the Reports menu, choose Accounts Receivable - Aging Summary.

Job Administration

Lists information about each job.

Job Profitability Summary

Shows actual cost, actual revenue, and difference, subtotaled by customer and job.

Job Profitability Detail

Shows actual cost, actual revenue, and difference, subtotaled by item type and item.

Job Estimates vs. Actuals

Shows estimated cost and revenue vs. actual costs and revenue. Filter by job type to show only the jobs you did estimates for in QuickBooks.

Item Estimates vs. Actuals

Shows estimated cost and revenue for items vs actual cost and revenue for items. Filter the report by job type to show only the jobs you did estimates for in QuickBooks.

Item Profitability

Shows actual cost, actual revenue and difference, subtotaled by item type and item.

We suggest you try out these reports and experiment with customizing them and filtering them by the specific types of information you want to track.

For more information, see the:

"Customizing a report" topic in the "Reports" chapter of the User's Guide

"Filtering report data" topic in the "Reports" chapter of the User's Guide

Other tips for contractors

Setting up vendors and subcontractors

You keep information about your vendors and subcontractors in the Vendor list. For most contractors, your Vendor list will include suppliers of building materials, equipment rental services, subcontractors, and general business vendors (office supplies, insurance, and so on.)

For more information, see the:

"Vendor" topic in the "More QuickBooks lists" chapter of the User's Guide

Creating tickler (to do) notes

You need to keep track of many non-financial details related to your business. You can use the QuickBooks Pro To Do list to keep track of these.

Use to the To Do list to remind yourself to:

Call a vendor to check the status of a shipment

Call customers to update them on status of their projects

(For subcontractors) File a pre-lien notice to property owners

From the Lists menu, choose To Do Notes. From the To Do List window, click the To Do button, then click New.

For more information, see the:

"To Do notes" topic in the "More QuickBooks lists" chapter of the User's Guide

Creating budgets

Because construction jobs can involve large amounts of money and often include bank financing, many contractors need to set up budgets. By setting up a budget, you can also get an understanding of the costs you have committed for the fiscal year.

You can set up budgets in QuickBooks Pro in two ways:

the QuickBooks Pro estimates feature

the Budgets feature

We recommend you use the QuickBooks Estimate feature because of the reports you can get through Estimates. If you set up estimates, you can get these Project reports on estimates vs. actual costs: Job Estimates vs. Actuals Summary or Detail, Item Estimates vs. Actuals.

For more information, see the:

"Setting up budgets" topic in the "Budgets" chapter of the User's Guide

Adding customized fields

You can set up customized fields to associate specific information about customers, employees, vendors, and items. The customized fields have a limit of about 20 characters.

For example, a general construction firm might want to add customized fields, such as these, for customers:

Designer or architect name

Designer or architect phone

Experience rating (that is, whether the customer has worked with construction firms before and how much education the customer might need about construction)

General contractors might also want to define these customized fields for vendors who are subcontractors:

Contractor's license number

Insurance policy number

Insurance policy expiration date

Experience rating

A subcontractor might want to define these customized fields for customers:

Contractor's license number (if the customer is a general contractor)

Credit rating

For more information, see the:

"Adding and using customized fields" topic in the "Working with lists" chapter of the User's Guide

Helping us help you

We'd like to know your special concerns and the problems you run into when trying to make QuickBooks work in your business. We also want to know how useful "Construction and contracting using QuickBooks Pro" was in helping you fit QuickBooks to your needs.

Please use this sheet to mail or fax us your comments. If possible, please also attach specific comments marked on the printed version of this document. Mail the completed form and any attachments to:

Intuit Canada, Ltd.

Industry Feedback

P.O.Box 4165

Edmonton, Alberta

Canada

Or fax your comments to us at 1-800-387-4285

Some information about your business

Name:

Business name:

Address:

Phone:

Number of employees:

My business is a: __ Sole proprietorship __ Partnership __ Corporation

What other needs do you have, specific to your type of business, that were not covered in this document?

Do you have any tips for other people in your field who use QuickBooks?

Which two or three topics did you find most useful in this document?

May we call you to discuss your comments?

___ yes    ___ no


Accounting firms

Overview for accountants

Before you begin

Setting up your QuickBooks company

Organizing your income, expenses, clients, and projects

Setting up clients as customers

Tracking projects as jobs

Creating items

Using classes to track different segments of your business

Tracking time

Billing for accounting fees and costs

Tracking write-downs or write-offs (QuickBooks Pro)

Customizing invoice appearance

Handling reimbursable expenses and employee advances

Understanding income and profitability with reports

Other QuickBooks tips for accountants

If you have clients using QuickBooks

Helping us help you

Overview for accountants

QuickBooks has been designed for users who want an easy to use, double-entry accounting system, but who don't have a background in accounting. As an accountant, you're a sophisticated user familiar with generally accepted accounting practices, and you're comfortable with accounting terminology.

Because QuickBooks accomplishes many of its accounting tasks in the background (to make the process easier for non-accountants to understand), you may be curious about how QuickBooks relates to standard accounting practices. Be assured that QuickBooks is a true double-entry system. You create almost all QuickBooks transactions on a form or in a register of a balance sheet account. (You can also choose to enter most information in a General Journal Entry window.) You then assign the transaction to one or more income and expense accounts or balance sheet accounts. In traditional accounting terms, you are recording debits and credits in the equivalent of a journal for a balance sheet account. At the same time, you are posting the transaction to income and expense accounts or transferring it to another balance sheet account. The accounting equation is maintained: total debits equal total credits.

This document provides information on how accountants can use QuickBooks to record their own financial transactions and create reports that show work in progress and profitability figures. If you've purchased QuickBooks for your own use, this entire document applies to you. If you don't plan to use QuickBooks for your firm, but you have clients who use QuickBooks, see "If you have clients using QuickBooks," later in this document.

As an accountant, you have some special needs you want met by your accounting system. QuickBooks can help you meet many of those needs, including:

Sending your clients invoices and/or statements that meet their requirements

Tracking reimbursable expenses and charging them back to clients

Running payroll cheques for your employees

Analyzing how your business is doing by creating financial reports

We recommend QuickBooks Pro for accounting firms

For accountants who need to track time and who often bill clients based on time worked, we recommend the use of QuickBooks Pro. QuickBooks Pro has additional features that let you:

Track the billable and unbillable time you spend on each project

Create client invoices based on billable time

Track time for each person in your office

Run payroll cheques based on employees' timesheets

Get work-in-progress (WIP) reports

Get reports on how much billable and unbilled time each associate in your office is accumulating

Before you begin

 This document gives you information on how to use QuickBooks for your special needs - we won't repeat what's already in the standard information you receive with QuickBooks. Instead, you'll see references to show where you can find complete information and details on using QuickBooks features.

Printing your industry document

If you're looking at this document onscreen, you're now in a "QuickBooks and Your Industry" window.

To print this document:

From the File menu, choose Print... or Print Topic.

If you got to this Help window from the interview, close the Help window to return to the interview.

To see other industry documents:

Click any of the industries listed in the contents.

Understanding QuickBooks terminology

QuickBooks uses a few special terms that you should be aware of:

QuickBooks term	Accounting term
Customer	Client
Job	Project
Item	Accounting service or charge (anything you bill a client for)
Sales, invoicing	Billing
Important

The information in this document was compiled from the experiences and suggestions of other QuickBooks users in your type of business. Your own needs may vary considerably, and only you understand the unique needs of your business.

Therefore, we suggest that you give QuickBooks a thorough "trial run" early in the process. The best way to ensure that you have set up QuickBooks optimally for your business, and that it will provide all the information you need, is to enter a small number of your standard transactions in QuickBooks. Then try running all the reports you may eventually need.

While we can give you technical support on how QuickBooks works, our technical support representatives are not industry experts and cannot give you specific accounting advice.

Setting up your QuickBooks company

The QuickBooks EasyStep Interview asks you questions about your business, and uses your answers to help you set up your accounting firm in QuickBooks. Although the interview is designed for non-accounting professionals, we recommend the interview as the easiest way to get started and to customize QuickBooks for accountants.

If you choose not to use the interview to set up your accounting firm, you should follow the setup directions in the "Setting up a QuickBooks company" chapter of the Getting Started Guide.

Organizing your income, expenses, clients, and projects

QuickBooks includes important features that let you analyze your business in great detail:

The Customer list, with optional customer types, lets you keep track of the types of clients you serve.

Job tracking lets you track the income and expenses for each project you do for a client, while the use of job types (available in QuickBooks Pro) lets you track the scope of your projects.

Items let you track the services you provide to your clients.

Classes let you categorize income and expenses associated with any client or any project.

The following sections give you more information about these and other features.

Setting up clients as customers

In QuickBooks, the list that holds information about your clients is called the Customer:Job list. It stores information about your clients and the individual projects you want to track for each client. You should set up each client as a customer in QuickBooks.

Customer types

If you choose, you can also categorize your clients by giving them a customer type.The customer type lets you keep track of the different types of clients you serve, and gives you the information you need to analyze your client base. You can categorize each client in a way that is meaningful and useful for your business.

The customer types do not appear on QuickBooks forms, but you can create reports based on the information. You can also print mailing labels and summary statements based on customer type.

Examples of customer types for accounting firms

You can use QuickBooks' optional customer types to track the information that is most meaningful for your business. For example, you can set up customer types to:

Track the different types of clients you serve (for example, Corporate and Individual)

Track how a client was referred (for example, Other Client, Advertising, and Colleague)

If you want to further break down your customer types, you could add subtypes.

For more information, see the:

"Customers and jobs" topic in the "More QuickBooks lists" chapter of the User's Guide

"Customer types" topic in the "More QuickBooks lists" chapter of the User's Guide

Tracking projects as jobs

If you do more than one project for a client, and you want to keep track of your income and expenses on a project-by-project basis, you may want the level of detail provided by job tracking. In QuickBooks, you can track projects for each client by setting up the projects as "jobs" in the Customer:Job list.

For example, suppose you prepare monthly financial statements for a client who owns a small business, but you also prepare her yearly tax return. You can add two jobs for that client on your Customer:Job list. This lets you track the income and expenses separately for each project.

If you never do more than one project for a client (or you don't want to track each project), you don't have to enter job names on the Customer:Job list. In that case, your list will contain only customer names.

If you have QuickBooks Pro and are using jobs to track projects, you can also categorize your projects (jobs) by type by using the Type field in the New/Edit Job window. Tracking job types gives you an idea of the profitability of each kind of project you do. It can also help you determine what proportion of your firm's time is spent on different types of projects.

Examples of job types for accounting firms (QuickBooks Pro)

You can use QuickBooks Pro's optional job types to track any information about your projects that you think is important. For example, you can set up job types to:

Distinguish between Financial Statement and Tax Preparation projects

Distinguish between Retainer and Time Billing projects

If you want to further break down your job types, you can add subtypes. For example, to the "Tax Preparation" job type, you could add "Quarter" and "Annual" as subtypes.

For more information, see the:

"Job types" topic in the "More QuickBooks lists" chapter of the User's Guide

Creating items

As an accountant, you sell mainly services. Although you also incur reimbursable expenses you pass on to clients, most of your invoices actually bill for your expertise. The items on your QuickBooks Item list represent the services you provide to your clients.

QuickBooks items automate your billing. When you're writing an invoice and you choose an item from the Item list, QuickBooks prints the name of the item, a description, and the item's cost per unit or rate per hour. When you enter a quantity for the item (for example, 10 hours of time), QuickBooks also figures out the total, and assigns that total to the appropriate income account.

Each fee you plan to list on an invoice (each service you provide) should be a separate item on QuickBooks' Item list. Create a QuickBooks "service" item for each type of work you do for clients, whether it's done by a partner, salaried employee, subcontractor, or hourly employee. When you set up items, you also designate an income account you want them assigned to. (You'll typically have many items assigned to the same income account.) You can set up your items all at once or "on the fly," as you're filling out an invoice.

Besides creating service-type items, you can create items for other charges. For example, if your office charges for administrative services such as copying, you can create an "other charge" type item. That way, on an item report (one of QuickBooks sales reports), you'll be able to see your accounting services (service items) separately from administrative charges (other charges items).

If you have reimbursable expenses, you don't need to create a QuickBooks item in order to include them on an invoice. For details, see "Handling reimbursable expenses and employee advances" in this document.

Important:	The way you set up items depends on how you want to bill your clients, and the information you want to show on your invoices. Below are some sample uses of items in QuickBooks. "Billing for accounting fees and costs" in this document gives you more information on how to set up your Item list to handle specific billing needs.

Example uses of items for an accounting firm

To charge clients for accounting services

Create a "service" item for each type of service you provide to clients, such as Monthly Financial Statements, Annual T4 Preparation, Quarterly GST Returns, Tax Planning. When you create the item, enter the rate you charge for that service.

If you bill at different hourly rates for different accountants or if you bill in phases (before a project is complete), you can use a combination of QuickBooks items and subitems. For details, see "Billing for accounting fees and costs" in this document.

To charge clients for non-accounting services, such as administrative fees (for example, for copying)

Create an "other charge" item for each of the administrative services you provide to clients. When you create the item, enter the rate you charge for that service.

(QuickBooks Pro) Track costs of services done by subcontractors as expenses, and revenue from those services (when the client reimburses you) as income

Create "service" items for subcontractor services and select the "This service is performed by a subcontractor" checkbox. This lets you enter your cost and an expense account. You also enter what you charge your clients for the services, and an income account to record the reimbursement.

For more information, see the:

"Items - your products and services" chapter of the User's Guide

Using classes to track different segments of your business

QuickBooks classes give you another way to track income and expenses in addition to customer type and (in QuickBooks Pro) job type.

Classes give you a way to break down your income and expenses for the services you perform. For example, if your firm does business in two different locations, you can use classes to track the proportion of your income and expenses related to each of the two locations.

How classes differ from customer types and job types

Classes can apply to all transactions, so they are not tied to any particular customer or job. However, a job type or a customer type is associated with only certain jobs or certain customers.

For example, an accountant might have "Corporate" and "Individual" customer types to categorize her clients, and "Financial Statements" and "Tax Preparation" job types to categorize each project for a client. She can then get financial reports focused by type of client or type of project.

But let's say she needs a third classification that spans any type of client or project. In this case, she can use QuickBooks classes. For example, if she has a partner, she can create a class for herself and a class for her partner. She would then select one of those classes on each transaction in QuickBooks. Later, she could get reports on income and expenses by partner (class), regardless of which types of clients or projects they both worked on.

Tips for when to use classes

Think of the ways you'd like to categorize portions of your business in terms of income and expenses for each portion. The classes you set up should correspond to those portions, and can be any meaningful breakdown of the business you do.

Set up classes on the basis of the type of reporting you want to do, and consider how you want to see your business segmented on reports. For example, if you want to analyze the profitability of each partner's projects, you can create a class for each partner. Later, you can create a report that looks at income and expenses by class (for each partner).

Classes are most useful when you can identify both income and expenses for each class you set up, because this lets you create a Profit and Loss report by class. For example, if you do business in two different offices or locations, you can make each location a class if you can identify both your income and expenses by location. That way, you can see a Profit and Loss report by location (class).

Don't use classes for two different purposes. For example, don't create classes for tracking office locations as well as for tracking partners.

Examples of classes for accounting firms

You can use classes to:

analyze the income and expenses for each partner's projects, by setting up each partner as a separate class.

analyze the income and expenses for each location, if you have offices in more than one location. Make each business office a separate class.

If you decide to use classes, you can set them up all at once or "on the fly."

Tracking time

An accountant sells time and expertise, so tracking time accurately and completely is of obvious importance. If you have QuickBooks Pro, you can track your time on QuickBooks Pro timesheets and transfer the hours directly to client invoices. If you have QuickBooks, you can track your time on a pending invoice.

QuickBooks Pro automates time tracking

QuickBooks Pro lets you track your time on projects, and analyze your time costs by client or project, person who did the work, or by type of work done.

Important:	If you do your books on an accrual basis, time you enter in QuickBooks Pro is not considered revenue until you actually bill for it; similarly, it is not considered an expense until you actually run payroll.

Keeping track of time

You can enter time for an owner, partner, or employee. On the time entry form, you choose the client and project for whom the work was done in the Customer:Job field. You then choose the "service item," which is the type of work you did (see "Creating "items" for billable services" in this document). Later you can pass the charges to your clients on invoices or statements.

You have the option of entering individual activities on separate forms or using a weekly timesheet format. In either case, be sure to enter as complete a record as possible so QuickBooks can translate those hours into billable hours on client invoices or statements.

Which time entry form to use

QuickBooks Pro lets you track time using either the Single Activity window or the Weekly Timesheet window. The Single Activity window is for recording time spent by one person on a single activity for a single project on a single date. A weekly timesheet is a record of time spent by one person on any number of projects within a seven-day period.

Individual time entries are better for accountants who must keep detailed notes on each activity, because you can see more of your notes without scrolling. Also, they are convenient to use if you will be continuously running QuickBooks, and entering each activity as you do it, rather than entering all your time at the end of the week from a paper timesheet.

The weekly timesheet in QuickBooks is useful when you want to work from a paper form and enter time for all your projects at once. If you want to continue using the timesheets you've been using in your firm, you can transfer the data from them to QuickBooks' weekly timesheet form before invoicing clients.

Transferring time data and notes to invoices

When you are invoicing a client and have the invoice form displayed, you can click Time/Costs (and then click the Time tab) to see a list of the time entries you've recorded in QuickBooks Pro for that client's project. Clicking next to a time entry transfers it directly to the invoice.

You may also want the notes you've entered for each activity to be included on the invoice.

To use your time entry notes on the invoice:

1.	Select the client and project (Customer:Job), and click Time/Costs.

2.	Click the Time tab.

3.	If 'Transfer activity notes' does not appear under options, click the Change button, then click the "Transfer notes for each activity" box to select it, and click OK.

QuickBooks has a limit on the number of characters you can enter in the notes field. That limit is the same on the weekly and individual time entry forms. If you transfer notes to invoices or statements, you may have to manually adjust the appearance of the text on those forms. (This is especially true if you entered your notes and pressed the Enter key at the end of each line. When you're entering notes, it's better to type without pressing the Enter key, so that QuickBooks can automatically wrap each line.)

Tracking non-billable time

Most accountants track their non-billable hours as well as their billable ones. QuickBooks Pro lets you track the actual number of hours you spend on projects, not just the amount for which you bill clients. By tracking your non-billable hours, you can get a better idea of your business's profitability. If your firm has several accountants, you may want to track each person's billable hours versus non-billable hours.

To keep track of non-billable time (for activities you never plan to bill clients for), you need to set up "service" type items for each of your non-billable activities. Then, on your time entry form in QuickBooks Pro, you can choose from your list of service items to fill out the form. If the activity is non-billable, just click the Billable checkbox (in the Single Activity window) or the Billable column (in the Weekly Timesheet window) to deselect it. QuickBooks Pro places an 'X' over non-billable items.

For example, if you spend four hours doing research (a billable activity) and two hours following up on client leads (a non-billable activity), you enter 4.0 for the Research item and 2.0 for the Marketing item on your time entry form. Because marketing activities are not billable, you can click next to the Marketing item on the time entry form, to mark that line with an 'X.' This tells QuickBooks Pro that you don't want to invoice the client for that activity.

You can see how much of your time is spent in billable versus non-billable activities by creating a Time by Item report (one of the Project reports).

For more information, see the:

"Time tracking" chapter of the User's Guide

"Invoicing customers for time" topic in the "Time tracking" chapter of the User's Guide

"Charging for reimbursable expenses" topic in the "Sales and sales forms" chapter of the User's Guide

"Charging for actual time and costs" topic in the "Sales and sales forms" chapter of the User's Guide (QuickBooks Pro)

Tracking time without QuickBooks Pro

If you don't have QuickBooks Pro, you can keep track of your time on a pending invoice. Use a separate invoice for each client's project.

To keep track of time on a pending invoice:

1.	Create the invoice as usual, entering the client name and project.

2.	While the invoice is displayed, choose Mark Invoice as Pending from the Edit menu.

QuickBooks displays the word "Pending" on the onscreen invoice (not on the printed version).

3.	Whenever you work on this project for this client, enter the time and charges on the pending invoice.

4.	When you're ready to invoice for your time, display the invoice and choose Mark Invoice as Final from the Edit menu. Then print the invoice as usual.

Tip: When you're ready to mark the invoice as final, you can find the invoice quickly by creating a pending sales report and using QuickZoom to display the original invoice form. (To do so, choose Sales Reports from the Reports menu, then choose Pending Sales. In the report window, double-click the invoice you want to see.)

Billing for accounting fees and costs

When you fill out a QuickBooks invoice, you list each service you've provided for the client, along with its associated fee. You may want your invoice to show some or all of these details:

the service you're invoicing for (for example, amended tax return preparation or audit services)

the number of hours spent on each service

if you are billing by time and more than one accountant was involved, the hourly rate for each person

reimbursable expenses (such as travel and phone charges)

Accountants bill their clients using a combination of these methods:

Time billing

Invoices based on time billing typically show the services provided, the number of hours spent on each service, the hourly rate, and the total fee. If you invoice clients using this method, see "Billing clients for time" and "Billing for work done by several accountants" in this document.

Flat-fee billing

Invoices based on flat-fee billing typically show the service and the fee. If you invoice clients using this method, see "Billing clients for a fixed fee" in this document.

Setting up items for billing

Each fee you include on an invoice (each service you provide) should be a separate item on QuickBooks' Item list. (See "Creating items.") The way you set up your Item list depends on the services you provide and the information you want to show clients on an invoice.

Accountants typically work from a list of job/project codes when they bill their time. You can model the organization of your QuickBooks Item list on the list of job codes your firm already uses. For example, suppose your firm uses a list that organizes services according to several main headings:

Monthly Acctg

Qtrly Acctg

Yrly Acctng

Tax Acctng

Audit Svcs

Review Svcs

Within each of these headings are specific services your firm provides to clients. For example, services underneath Audit Svcs are annual audit of books of accounts, audit of pension plan, insurance audit, and tax audit. (Of course, the way you organize your services may differ slightly from these examples.)

If you want your invoices to show each main heading, as well as the time spent on individual services underneath that heading, you can use a combination of QuickBooks items and subitems - use items for each main heading and subitems for tasks underneath that heading. When creating your Item list, you should model it on the list of job/project codes your firm already uses.

To set up the Item list to show service headings with subservices:

1.	Create "service" type items for each main service heading, such as Tax Services. Do not enter a Rate for the item.

2.	For each service item just created, create subitems for each service included in that heading.

For example, if one of the services underneath Tax Services is "Individual tax return," you can create a subitem for Tax Services called Indiv Tax Rtn.

3.	Type a description that you want to appear on the invoice.

Because the item name usually requires abbreviation, you'll want to provide a complete description that will be understandable to your clients.

4.	Enter a Rate for the new subitem:

If you are charging by time (hours worked), enter your hourly fee for the Rate.

If you are charging by time, and your firm employs several accountants, leave the Rate at 0.00. You'll want to create subitems underneath this task for each of your accountants, as described in "Billing for work done by several accountants" in this document.

If you are charging according to a flat fee, enter your fee for this service in the Rate field.

On the invoice, when you choose "Tax Services:Indiv Tax Rtn" from the Item list, QuickBooks displays the item and subitem name (separated by a colon), the description, and the rate.

For more information, see the:

"Items - your products and services" chapter of the User's Guide

Billing clients for time

For a project charged on a time basis (number of hours worked), you'll want your Item list to include the hourly rate you charge for each service (see Step 4 in the previous section).

If you have QuickBooks Pro, you can track your time within QuickBooks Pro, and transfer that time directly to your invoices, as described earlier in "Tracking time."

If you have QuickBooks, you can track your time on a pending invoice and turn that into a final invoice when you're ready to bill, as described earlier in "Tracking time without QuickBooks Pro."

Billing for work done by several accountants

If your projects typically involve the work of more than one accountant, and you bill their time at different hourly rates, you'll want to set up your Item list to include those rates.

For example, suppose your firm has three accountants, all with different hourly rates. If you want your invoices to show the time worked by each accountant, you can set up your Item list like this:

Tax Services ("service" item with 0.00 rate)

Indiv Tax Rtn (subitem of Tax Services; 0.00 rate)

Partner (subitem of Indiv Tax Rtn; 100.00 rate)

Sr Acctnt (subitem of Indiv Tax Rtn; 85.00 rate)

Jr Acctnt (subitem of Indiv Tax Rtn; 60.00 rate)

When you're ready to invoice, just choose the appropriate subitem from the drop-down list in the Item column, and QuickBooks enters the service description and rate for you. All you have to do is enter the time worked by each accountant (or, if you have QuickBooks Pro, click Time/Costs to transfer your time data to the invoice).

Billing clients for a fixed fee

If you plan to charge a client a fixed fee for a service (for example, preparation of an individual income tax return), create the invoice as usual. When you choose the service from your Item list, you can edit the amount shown in the Rate column as necessary.

Billing retainer clients

If you have clients for whom you prepare monthly financial statements, you probably charge them the same amount each month. You can automate the billing of these retainer clients by memorizing an invoice for them in QuickBooks.

To bill retainer clients:

1.	Create an invoice for the retainer client, showing the service you agree to perform and the fee.

2.	While the invoice is displayed, choose Memorize Invoice from the Edit menu.

3.	In the Memorize Transaction window, click the "Remind Me" button or the "Automatically Enter" button. Choose Monthly in the "How Often" field.

If you click "Remind Me," QuickBooks reminds you when to invoice this client. If you click "Automatically Enter," QuickBooks creates the invoice transaction for you automatically.

If you have retainer clients from whom you receive an up-front or advance payment, you can track the liability in QuickBooks by setting up these three things:

A liability account for tracking retainers

An "other charges" type item, for showing the retainer on invoices

A "payment" type item, to show the original payment received

For more information, see the:

"Retainers" topic in the "Receiving and depositing payments" chapter  of the User's Guide

Creating a pending invoice for review

If your firm requires that all invoices be reviewed by the billing partner before they are sent to clients, you can create a pending invoice. QuickBooks doesn't show the pending invoice in registers until you mark it as a final invoice.

To create a pending invoice for review:

1.	Create the invoice as usual, entering the client name and charges.

2.	In the Customer Message field, type the word "Pending."

3.	While the invoice is displayed, choose Mark Invoice as Pending from the Edit menu.

QuickBooks displays the word "Pending" on the onscreen invoice (not on the printed form).

4.	Print the pending invoice for the billing partner's review.

5.	When the invoice has been approved, display the invoice and choose Mark Invoice as Final from the Edit menu.

6.	Remove the word "Pending" from the Customer Message field.

Invoicing for partial hours

Invoicing clients is an art, not a science. You sometimes change your mind about how and when to invoice for a billable service while you are in the midst of preparing your list of billable items.

Suppose you have spent 20 hours researching tax information for one of your clients. But as you prepare the invoice, you decide that, since the written report is not yet complete, you'll bill the client for half the hours now, and the remaining hours on a future invoice.

If you recorded your hours in QuickBooks Pro, you just need to adjust your timesheet entry. If you recorded your hours on a pending invoice in QuickBooks, you'll need to create a second pending invoice.

To invoice for partial hours in QuickBooks Pro:

1.	Display the weekly timesheet page where you have the total hours entered.

Even if you originally entered the time on a single activity form, you can see the time entry by displaying the weekly timesheet.

2.	Edit the time to display the number of hours you want to bill for on this invoice.

3.	On the next line of the timesheet, enter the remaining hours.

Choose the same Customer:Job and the same item name.

If you need to insert a blank line, you can choose Insert Line from the Edit menu.

4.	Return to the invoice and click Time/Costs.

QuickBooks shows you the two time entries related to that particular project.

5.	Click in the Use column next to the time entry you want to include on the current invoice.

To invoice for partial hours in QuickBooks:

1.	Display the pending invoice where you have the total hours entered.

2.	Edit the time to display the number of hours you want to bill for on this invoice.

3.	Choose Mark Invoice as Final from the Edit menu.

4.	Create a new pending invoice for the remaining hours.

See "Tracking time without QuickBooks Pro" in this document for information on how to create pending invoices.

Forgiving charges

When you invoice a client, you may sometimes decide to "forgive" certain charges; that is, you decide not to bill the client for a number of billable hours. For example, suppose you estimated that a project would take 25 hours, but it actually took you 30. For an important client, you may decide to forgive the five extra hours, and only invoice for 25 hours of time. If you want to show this forgiven time on your invoice (sometimes called a "courtesy" item), you can handle it in one of two ways:

If you don't want to track forgiven charges for each of the services you perform, or if you perform only one kind of service (you have one "service" item set up on your Item list), you can create one "discount" item called Courtesy. For example, if you create an invoice for 30 hours of writing time (your Writing Services item), you can choose the Courtesy discount item and subtract 5 hours of time off the client's charges.

If you perform more than one kind of service (you have several "service" items set up on your Item list), you can use subitems that track your forgiven charges for each of your services. For example, you can create a "service" item called Courtesy, with a Rate of 0.00. Then you can create subitems for Service A and Service B. When you enter the amount of the forgiven charges on the invoice, you must enter a negative number.

You can see how many billable hours you've forgiven by creating a Sales by Item report (one of QuickBooks' Sales reports).

Sending summary statements to clients

As you enter invoices and client payments day to day, QuickBooks tracks the information to create summary statements that you can send to your clients. Summary statements are like a mini-report of the charges and payments made on a client's account; you just review them, decide whether to add finance charges, and print them.

Important:	Do not confuse summary statements with billing statements. A billing statement is a second method QuickBooks provides for you to bill your clients (invoices are the other billing method). You should choose whether to use invoices or billing statements and use that method consistently.

For more information, see the:

"Choosing to use invoices or billing statements" topic in the "Sales and sales forms" chapter of the User's Guide

Tracking write-downs or write-offs (QuickBooks Pro)

Because an accountant's fees are based on time (or an estimate of time), it's important to periodically analyze your fee schedule. Consistently high write-downs (some accountants call them write-offs) may indicate that you need to revise your standard billing rates.

If you want to track your write-downs in QuickBooks Pro, you should make sure that you are using QuickBooks Pro's timesheets to enter the time spent by staff on client projects. Then you can create a Time by Name report to see - for each service item - how much billed, unbilled, and not billable time each staff accountant has accumulated.

To determine write-downs for each service provided by your firm:

1.	From the Reports menu, choose Project Reports. Then choose Time by Name.

2.	From the report window, click the Customize button.

3.	In the Formats field, choose "Time by Name by Item" from the drop-down list.

4.	For "Other Columns," click the Billed, Unbilled, and Not Billable checkboxes.

5.	Click OK.

The customized report shows the amount of billed, unbilled, and not billable time spent by each accountant for various service items. To determine write-downs, you can look at the Billed time versus Unbilled time for each service. If you or your staff consistently have a lot of unbilled time for a particular service, you may want to consider raising your fee for that service.

If you want to see the time in dollar amounts, you can print the report to a spreadsheet file. In the spreadsheet, you can add a column for each accountant's hourly rate, and a column for dollar totals. See "Showing dollar amounts on time reports" in this document for more information.

Customizing invoice appearance

Invoices used by accountants sometimes require extra space for descriptions. Some accountants include their hourly rate as part of the description, while others want a separate rate column. Many accountants also want their invoices to include a client or project number. QuickBooks lets you customize an invoice to show only the information you want your clients to see.

Depending on how you've done invoices in the past, you may want to remove or add information to QuickBooks' standard invoice forms. Here's a list of some of the changes you may want to make to QuickBooks' invoices:

Remove the Item column from the printed invoice form (not from the onscreen form). If you provide a detailed description for each item you set up, you don't need to display the item name to clients.

Change the title of the Quantity column to "Hours."

Remove the Rate column, if you always bill according to a fixed fee. (The Amount column is all you need.)

Add a customized field for a client or project number. (To do this, you must first add the field to your Customer:Job list. See "Tracking information about your clients" in this document for details.)

Adding multi-line descriptions

When you type text in the Description column, QuickBooks automatically wraps lines for you. However, you can also set exactly where your lines break by pressing Down Arrow to move to a new line.

To enter several lines of description:

1.	On the invoice form, position your cursor in the Description column.

2.	Type your lines of description, pressing Down Arrow to move to the next line of the description.

Each line has a limit of 99 characters. Although you can't see a line this long on the onscreen form, QuickBooks displays the entire line on the printed invoice. (You can click the Preview button to check how a line will print.)

Using a word processor for client billing

Some accountants create letter-like invoices for their clients, rather than the form-based invoice used by QuickBooks. Using a word processing program to invoice or send statements is no problem. Just enter invoices or statements in QuickBooks to keep your Accounts Receivable information up to date, but don't print the invoices.

To use a word processing program for invoices:

1.	Enter invoices into QuickBooks as usual, but clear the "To be printed" checkbox.

2.	Use your word processing program when it's time to invoice your client.

For more information, see the:

"Creating custom forms overview" topic in the "Forms" chapter of the User's Guide

"Customizing form content" topic in the "Forms" chapter of the User's Guide

Handling reimbursable expenses and employee advances

Accountants often incur reimbursable expenses for items such as travel and long-distance phone calls. This section tells you how to track your own reimbursable expenses in QuickBooks, as well as how to handle employee advances for client expenses.

Tracking your own costs for reimbursement

When you incur expenses that you plan to pass along to clients, you pay for the expense by cheque, credit card, or cash. You can track these transactions as job costs in QuickBooks, and pass them along to your clients when it's time to bill them.

If you pay for items by cash, use the Splits feature in your Petty Cash account register to indicate the appropriate expense account and Customer:Job for this expense.  Enter any necessary memo information.

If you write a QuickBooks cheque or use the credit card form to pay for reimbursable expenses, select the appropriate expense account and Customer:Job for this expense. Enter a memo in the detail area of the cheque, also; this description will appear in the Description column of the invoice when you select that expense.

When you're ready to invoice the client, and you have the invoice form displayed, click the Time/Costs button, and then click the Expenses tab (in QuickBooks Pro) or click the Expenses button (in QuickBooks). QuickBooks shows you a list of expenses not yet invoiced. If you want to include the expense on the invoice, click in the Use column next to the reimbursable expense and click OK.

For more information, see the:

"Charging for reimbursable expenses" topic in the "Sales and sales forms" chapter of the User's Guide

"Charging for actual time and costs" topic in the "Sales and sales forms" chapter of the User's Guide (QuickBooks Pro)

Tracking costs and reimbursements for employees

You may have employees who incur expenses for clients. You need to reimburse those employees, then pass on the costs to the client. Here's how to handle this situation in QuickBooks.

To reimburse employees and bill clients:

1.	Have your employees track their expenses in expense reports.

You can use the paper forms you're already using.

2.	From the Activities menu, choose Write Cheques.

Write a reimbursement cheque to each employee (not a pay cheque).

In the cheque detail area, itemize each expense by client and project (Customer:Job).

Click OK to record the cheque.

3.	From the Activities menu, choose Create Invoices.

Write an invoice to the client.

If you have QuickBooks Pro, click Time/Costs, then the Expenses tab to choose the reimbursable expenses you want to include on the invoice. If you have QuickBooks, click the Expenses button to choose the reimbursable expenses you want to include on the invoice.

Click in the Use column next to the expenses you want included on the invoice, and click OK.

For more information, see the:

"Charging for reimbursable expenses" topic in the "Sales and sales forms" chapter of the User's Guide

"Charging for actual time and costs" topic in the "Sales and sales forms" chapter of the User's Guide (QuickBooks Pro)

Issuing employee advances

If you prefer to issue your employees an advance for client costs (rather than reimbursing them later), here's how you can handle it in QuickBooks.

To issue an employee advance:

1.	Create a new "other current asset" account called Advances. (From the chart of accounts, click Accounts, then click New.)

Leave the account's opening balance at zero.

2.	Create one "other current asset" subaccount for each employee for whom you expect to be issuing advance cheques.

For example, if you will be issuing advances to Anna Tomasson, create an other current asset account called "Anna."

In the New Account window, click the "Subaccount of" checkbox, and choose the Advances account as the parent account.

Leave the subaccount's opening balance at zero.

3.	From the Write Cheques window, write an advance cheque to the employee (not a pay cheque).

4.	In the detail area of the cheque, make these entries:

In the Account column, choose the subaccount you created for that employee's advances (for example, Advances:Anna).

In the Memo column, type a description of what the advance is for.

Do not make an entry in the Customer:Job column. (You don't assign a Customer:Job until the employee has spent the advance, and an expense actually occurs.)

When you record the check, QuickBooks puts an increase transaction in the Advance:Anna account register.

5.	When the employee later turns in an expense report, enter each expense as a decrease in the employee's asset subaccount. (You can display the register by double-clicking the subaccount's name in your chart of accounts.) For each expense transaction, make these entries:

Leave the Payee field blank.

In the Account field, assign the expense to the appropriate expense account (for example, Travel).

Enter the amount of the expense in the Decrease column.

6.	Assign the expense to the appropriate Customer:Job.

Select the expense in the account register and click Edit.

At the General Journal Entry window, enter the Customer:Job in the Name column on the line for the expense transaction.

Click OK.

When you're ready to invoice the client for expenses incurred by your employee, follow the procedure described earlier in "Tracking costs and reimbursements for employees," Step 3.

If the employee spent more than the advance, you can pay the amount you owe by writing a QuickBooks cheque and entering the employee's "other current asset" subaccount in the detail area.

For more information, see the:

"Charging for reimbursable expenses" topic in the "Sales and sales forms" chapter of the User's Guide

"Charging for actual time and costs" topic in the "Sales and sales forms" chapter of the User's Guide (QuickBooks Pro)

Understanding income and profitability with reports

QuickBooks has over seventy preset reports (QuickBooks Pro has even more), which you can customize to fit your needs. To create a Profit and Loss or Balance Sheet report, just choose from the Reports menu.

Here are some reports which accountants may find especially useful, along with instructions on how to create them in QuickBooks from the Reports menu. Note that some of the reports are available only in QuickBooks Pro.

(QuickBooks Pro) Work in progress (WIP) report

Choose Project Reports, then Time Activity Detail. For each client, this report shows the total billed, unbilled, and not billable time spent by each accountant for various service items.

To see the time totals converted to dollar amounts, you can export the report to a spreadsheet. See "Showing dollar amounts on time reports" in this document for details on where to find this information in the standard QuickBooks materials.

(QuickBooks Pro) Realization report

QuickBooks is not able to produce the standard realization report required by some accounting firms. However, you can approximate the figures shown in a realization report by creating these QuickBooks reports:

-	A Time by Name report (one of the Project reports) shows the amount of time worked by each employee for the date range covered by the report. To see columns for Billed, Unbilled, and Not Billable time, click the Customize button and click those choices for Other Columns.

-	To determine your firm's write-downs or write-offs, customize the previous Time by Name report by clicking Customize, and choosing "Time by Name by Item" in the Formats field.

(QuickBooks Pro) See hours spent for each type of service item

Choose Project Reports, then Time by Item. Filter the report to show columns for Billed, Unbilled, and Not Billable time. (Click the Customize button to filter the report.)

(QuickBooks Pro) Labour and expense analysis by task, to determine exact time/expenses project has incurred.

Choose Project Reports, then Item Profitability. Click Filters, to customize the Item Profitability report as needed.

See accounts receivable by billing partner, so the partner can ensure that clients' invoices have been paid. (Requires that you use QuickBooks classes to track your billing partners.)

Choose A/R Reports, then Open Invoices. At the report window, click Filters. In the Class field, choose Selected Classes and select the billing partner you want.

Billing reports, to determine amount billed in a specific period.

Choose Sales Reports, then By Item Detail to see a report organized by service headings. Choose By Customer Detail to see a report organized by client/project. At the report window, change the date range to cover the billing period you want to see.

Job profitability for each of your projects.

Choose Profit & Loss, then By Job.

Partnership equity detail, to analyze each partner's capital.

Choose Transaction Reports, then By Account. At the report window, click the Filters button. In the Account field, choose the specific equity accounts you want to report on.

Cash flow, to determine how cash is used in company and if cash is available to pay bills, payroll, etc.

Choose Other Reports, then choose Cash Flow Forecast.

Cash disbursements report

Choose Transaction Reports, then By Account. At the report window, click Customize. In the Report Basis field, click Cash to select it.

Check detail report, to see a listing of cheques written and the accounts associated with those cheques.

Choose Other Reports, then choose Cheque Detail.

For more information, see the:

"Reports" chapter of the User's Guide

"Customizing a report" topic in the "Reports" chapter of the User's Guide

Showing dollar amounts on time reports

QuickBooks Pro lets you create several reports that show you the amount of time spent by individuals on various projects. The amounts shown on these time reports are in hours. If you want to see dollar amounts incorporated in your time reports, you can export your QuickBooks report to a spreadsheet and calculate the dollar amounts in that program.

For more information, see the:

"Printing to a file" topic in the "Printing" chapter of the User's Guide

Showing debit/credit columns on a report

QuickBooks reports come set up to show an Amount column. If you prefer to see columns for debits and credits, rather than positive and negative numbers under an Amount column, you can customize your reports to add those columns.

To customize a report to show debit/credit columns:

1.	From the report window, click the Customize button.

2.	In the Columns box, deselect the "Amount" column; then select the "Credit" and "Debit" columns.

3.	Click OK to return to the report window.

For more information, see the:

"Reports" chapter of the User's Guide

Other QuickBooks tips for accountants

Here are some other QuickBooks features you may find useful in your accounting firm.

Using account numbers

QuickBooks lets you use both numbers and names for any accounts on your chart of accounts. You can turn on account numbers by setting a company preference.

To turn on account numbers:

1.	From the Preferences menu, choose Accounting.

2.	Select "Use account numbers."

If you want to work with account numbers, but you don't want them to appear on financial reports, you must turn off the account numbers before you create and print the report. (Repeat the previous steps to turn off account numbers.) When you're done printing, you can turn the account numbers back on.

Keeping track of conversations and tasks

Accountants often make decisions with clients over the telephone. It's important to keep track of your conversations with clients, whether they occur in person or by phone. QuickBooks lets you enter notes for each client in your Customer:Job list. The customer notes give you a quick way to jot down important details of a meeting.

To enter a note related to a specific client:

1.	Display the Customer:Job list.

2.	Double-click in the Notes column to the right of the client name.

QuickBooks displays the Notepad for that client.

3.	Enter your notes.

You can use the To Do list in combination with the customer notes. Suppose your client wants you to fax her a summary of her estimated tax payment schedule, and you've agreed to send it to her in two days. You can enter a note about your conversation in your customer notes, and you can also have QuickBooks remind you of the due date by entering it in the To Do list.

To add a note to the To Do list:

1.	From the Lists menu, choose To Do Notes.

If you already have the Notepad displayed for that customer, you can click the New To Do button.

2.	Click the To Do button, then click New to add a new note.

3.	Enter the note and the date you want to be reminded.

If you have reminders turned on, QuickBooks displays your "to do" note in the Reminders window when you start QuickBooks.

Tracking information about your clients

The QuickBooks Customer list lets you add extra fields to each client's record for any purpose. You can use these customized fields to track dates, personal information, and so on. Accountants may want to add customized fields to track additional client information such as:

Client's account number

How client was referred

Client's Internet address

Client's birthday

Name of client's spouse

Name of client's administrative assistant

Client's fiscal year-end date

Client's industry

Information you enter into the fields can be just for your use (for example, you can look up a client's record to see his birth date), or you can add the customized fields to your sales forms and have the information appear on your invoices and cash sales receipts.

If you want to add customized fields to a client's record, see the steps below. If you want to then add the customized fields to your invoices, see "Customizing an invoice" earlier in this document.

To add customized fields to a client's record:

1.	Select the client's name in your Customer:Job list, click the Customer:Job button, and click Edit.

2.	At the Edit Customer window, click the Additional Info tab.

3.	Click the Define Fields button to specify the custom fields you want to add to each client's record.

Enter the name of the field and where you want it to be used (you can have it displayed for your clients, vendors, and/or employees).

4.	(Optional) Fill in the fields for this customer, vendor, or employee.

You'll see the new fields on the Additional Info tab. If you fill in a field, and have added that field to your sales forms, the information you enter transfers automatically to any customized form where the field appears.

Leave a field blank if you'd prefer to fill it in at the time you make a sale.

5.	Click OK.

What's next

You can add customized fields you've set up for customers to any sales form and to the estimate form. If you want information you've entered in the customized fields to appear on a form, you must add the fields to the form. (For details on how to customize an invoice, see "Customizing an invoice" in this document.)

For more information, see the:

"Adding customized fields" topic the "Working with lists" chapter of the User's Guide

"Creating custom forms overview" topic in the "Forms" chapter of the User's Guide

"Customizing form content" topic in the "Forms" chapter of the User's Guide

"Customizing your estimates" topic in the "Estimates" chapter of the User's Guide

If you have clients using QuickBooks

If your company is typical of many accounting firms, you probably have clients who are using QuickBooks to record their daily business transactions.

What we tell QuickBooks users

We recommend that non-accounting professionals use QuickBooks as a means of presenting their accountant with organized financial information. We make it clear that a software program is no substitute for professional advice. We also advise users to ask their accountant for advice as they set up QuickBooks, not only in obtaining the business's current balance sheet and profit and loss statement, but in setting up the chart of accounts and the company file.

If you have a client who is already set up on QuickBooks, you'll want to check their QuickBooks chart of accounts and make corrections if necessary.

If you have a client who is getting ready to set up their QuickBooks company, you may want to review the QuickBooks document written for their particular business. Just as this document gives accountants information about how to use QuickBooks for their special needs, there are QuickBooks documents written to address the needs of many professions, such as architects, consultants, medical personnel, and retailers/wholesalers. See "About your industry document" (the first section in this document) for information about how to view a document for a different industry.

Linking to tax software

QuickBooks links with the Windows' version of QuickTax.

Using the audit trail

QuickBooks has an audit trail that users can turn on from the Accounting Preferences menu. When the audit trail is on, QuickBooks maintains a record of all changes made to transactions. If the audit trail is off, QuickBooks only maintains the most current state of the transactions.

If you want to see all the changes your QuickBooks clients have made to their transactions, you can have them turn on the audit trail. Then, when you have questions about a particular transaction, you can create an audit trail report.

Important:	Before you turn on the audit trail, you should be aware that doing so will slow down the program and increase the size of your QuickBooks file.

For more information, see the:

"Keeping an audit trail" topic in the "Maintaining your data" chapter of the User's Guide

Controlling access to QuickBooks data with passwords

You may want to set up passwords for your client's QuickBooks company, to help prevent unauthorized access or to restrict certain activities. QuickBooks has a four-level password system:

The owner password allows unlimited access to the QuickBooks company file.

The payroll password allows the person who uses it to enter and edit payroll transactions, payroll items, and employees (including salary and wage information). This password restricts the person from viewing any reports, graphs, or registers, and prevents the editing of transactions entered in previous sessions.

The data entry password allows others to enter new transactions but not to edit transactions entered in an earlier session. It also restricts the user from viewing registers, account balances, customer and vendor balances, reports, or graphs.

The transaction password restricts editing of transactions in a prior period, defined by the date you enter.

The transaction password is particularly useful for accountants. Whenever you finish making your adjusting entries for a period (month, quarter, or year), you can update the transaction password with the date you have reviewed through. This prevents your client from accidentally adding or modifying a transaction to a period you have already finished reviewing.

To enter a transaction password:

1.	From the File menu, choose Passwords.

2.	Enter the transaction password and the date through which you want the books to be closed.

Once you set a transaction password, QuickBooks asks for the password when a user tries to add or edit a transaction that has a date before the date you've chosen.

For more information, see the:

"Password preferences" topic in the "Customizing preferences" chapter of the User's Guide

Making adjusting entries in a general journal

If you are accustomed to making adjusting entries in a general journal, you can use the General Journal Entry window.

To record a general journal transaction:

1.	From the Activities menu, choose Make Journal Entry.

2.	Fill in the date of the transaction and an entry number.

QuickBooks does not monitor or assign entry numbers, so make sure you do not enter a duplicate number.

3.	In the detail area, enter the first account in your transaction, the debit or credit amount, any memo, related name, and class.

4.	Continue to enter distribution lines until your transaction reaches a zero balance, then click OK.

To print a report that shows all your general journal transactions:

1.	From the Reports menu, choose Transaction Reports, then By Date.

2.	In the Transactions by Date report window, click Filters.

3.	In the Transaction Type field, choose Journal.

4.	(Optional) Memorize the report by clicking Memorize.

Reports you may want to see

In addition to the typical financial reports accountants create for their clients, you may want your clients to create the following reports:

General Ledger report

Trial Balance report

You can find both of these reports on the Other Reports submenu of the Reports menu.

For more information, see the:

"Reports" chapter of the User's Guide

Helping us help you

We'd like to know your special concerns and the problems you run into when trying to make QuickBooks work in your business. We also want to know how useful "Accounting and CPA firms" was in helping you fit QuickBooks to your needs.

Please use this sheet to mail or fax us your comments. If possible, please also attach specific comments marked on the printed version of this document. Mail the completed form and any attachments to:

Intuit Canada, Ltd.

Industry Feedback

P.O.Box 4165

Edmonton, Alberta

Canada

Or fax your comments to us at 1-800-387-4285

Some information about your business

Name:

Business name:

Address:

Phone:

Number of employees:

My business is a: __ Sole proprietorship __ Partnership __ Corporation

What other needs do you have, specific to your type of business, that were not covered in this document?

Do you have any tips for other people in your field who use QuickBooks?

Which two or three topics did you find most useful in this document?

May we call you to discuss your comments?

___ yes    ___ no


Graphic design and
printing companies

Overview for graphic design and printing companies

Before you begin

Setting up your QuickBooks company

Organizing your income, expenses, customers and jobs

Customizing your Chart of Accounts

Creating items

Setting up customers and jobs

Setting up service providers as vendors and
subcontractors

Tracking sales by rep

Using classes

Creating estimates

Tracking time

Making changes to an estimate

Billing for graphic design and
printing services

Handling reimbursable expenses

Customizing the appearance of estimates and invoices

Recording cash sales

Handling leases for equipment

Recording depreciation of assets

Creating budgets

Understanding income and profitability with reports

Other QuickBooks tips for graphic design and printing companies

Helping us help you

Overview for graphic design and printing companies

Whether your company provides one or several services such as design, desktop publishing, film preparation, or printing on various presses, you have some basic needs from your accounting system. These needs include:

Collecting money from your customers for the services you provide

Collecting taxes from your customers, disbursing these taxes, and providing detailed tax reports

Running payroll cheques for your employees

Analyzing your profitability in terms of hours worked versus hours billed, and types of services performed

And whether your company is a sole proprietorship, partnership, or corporation, QuickBooks meets these needs. With QuickBooks, keeping track of your finances becomes easy, giving you more time to focus on your customers and meet those tight deadlines.

We recommend QuickBooks Pro for graphic design and printing companies

For graphic design and printing companies - who need to keep track of how much each job is costing - we recommend you use QuickBooks Pro. With QuickBooks Pro, you can also:

Track the time you and others in your company spend on each job

Create customer invoices based on billable time

Write estimates that you can send to clients and later turn into an invoice

Get reports to analyze profitability and compare estimated time to actual

Run payroll cheques based on employees' timesheets

Before you begin

This document gives you information on how to use QuickBooks for your special needs - we won't repeat what's already in the standard information you receive with QuickBooks. Instead, you'll see references to show where you can find complete information and details on using QuickBooks features.

Printing your industry document

If you're looking at this document onscreen, you're now in a "QuickBooks and Your Industry" window.

To print this document:

From the File menu, choose Print... or Print Topic.

To return to the EasyStep Interview:

If you got to this Help window from the interview, close the Help window to return to the interview.

To see other industry documents:

Click any of the industries listed in the contents.

Understanding QuickBooks terminology

QuickBooks uses a few special terms that you should be aware of:

Item

Each service or product your company buys or sells, miscellaneous charges and discounts.

Service item

A service item is another type of item. In graphic design and printing companies, you'll set up a service item for each type of service you perform, such as artwork labour, page layout and colour scanning.

Bill

A bill is what you receive from a vendor or subcontractor, from which you will pay that vendor or subcontractor.

Invoice

An invoice is what you send your customer and from which you will be paid.

Important

The information in this document was compiled from the experiences and suggestions of other QuickBooks users in graphics design and printing businesses. Your own needs may vary considerably. Only you and your accountant understand the unique needs of your business. Ultimately, you are responsible for your own books.

Therefore, we encourage you to have your accountant look over the setup suggested in this document. We suggest that you give QuickBooks a thorough "trial run" early in the process. The best way to ensure that QuickBooks will provide all the information you need, is to enter a small number of your standard transactions. Then try running all the reports you may need.

While we can give you technical support on how QuickBooks works, our technical support representatives are not industry experts and cannot give you specific accounting advice. If you have questions regarding accounting issues specifically related to your industry, we recommend you consult either an accountant, industry expert, or professional association.

Setting up your QuickBooks company

The QuickBooks EasyStep Interview asks you questions about your business, and uses your answers to help you set up your graphic design or print shop  in QuickBooks. We recommend the interview as the easiest way to get started and to customize QuickBooks for your type of business.

If you choose not to use the EasyStep Interview, you should follow the setup directions in the "Setting up a QuickBooks company" chapter of the Getting Started Guide.

Organizing your income, expenses, customers and jobs

QuickBooks provides powerful features that let you analyze your business in great detail:

Your Chart of Accounts (balance sheet, income and expense accounts) tracks all of your transactions.

Items let you track the services you sell and the taxes that you collect.

The Customer:Job list, with customer types, lets you keep track of your customer base and the jobs you perform for each customer.

Job tracking, and the use of job types, lets you track the income and expenses for each job you do for a customer and lets you categorize your jobs. (Job types are available only in QuickBooks Pro).

Classes let you separate the income and expenses associated with different parts of your business.

The following sections give you more information about these and other features.

Customizing your Chart of Accounts

In QuickBooks, an account represents a group of transactions and is used for tracking and reporting purposes.  The complete list of accounts for your company is called the Chart of Accounts.  When you set up your QuickBooks company, you can choose a preset chart of accounts designed especially for graphic design firms and print companies.  This preset chart of accounts gives you a head start in creating your balance sheet accounts, income account, and expense accounts.

You may find as you review the preset chart of accounts that you need to add, edit, or delete accounts from that list, or add subaccounts.

Important:	As a general rule, you should reserve the accounts on your Chart of Accounts for broad categories, and use items and subitems to see more detail about items you've sold or bought.

For more information, see the:

"Your chart of accounts" chapter in the User's Guide

Creating items

QuickBooks items represent the services or products that you buy, sell, or resell in your business.

When you record a sale or a purchase, you use items from your Item list to fill out the form quickly.  When you choose an item in the Item column on the form, QuickBooks fills in the description, rate or price, and then calculates the amount.

QuickBooks uses information you've recorded about each item to assign the sale or purchase to the right income or expense accounts.  Reports and graphs can then give you valuable information, such as your greatest sources of income and which items you sell most.

Important:	The way you set up items depends on how you want to bill your clients, and the information you want to show on your invoices. Following are some sample uses of items in QuickBooks. "Billing for graphic design and printing services" in this document gives you detailed information on how to set up your Item list to handle specific billing needs.

Using Service items

Create a service item for each type of work you do for clients, whether it's done by a partner, salaried employee, subcontractor, or hourly employee.

For example, perhaps you provide layout and design services on an hourly basis. By creating a service item called "Layout/Design" and specifying the hourly rate, you can choose this item from the drop-down Item list when preparing an invoice - you don't have to re-type it. When you enter a quantity for the item (for example, 10 hours of desktop publishing time), QuickBooks also figures out the total, and assigns that total to the right income account.

Service items are just as helpful for fixed price services. For example, you can create an item for "Design Services" and then leave the rate blank. Then you can enter the price when you prepare the estimate or invoice.

Examples of service type items used in graphic design and printing companies

Scanning

Design/Layout

Three-Colour Press

Technical Illustration

Using service items to track time in QuickBooks Pro

QuickBooks' service items not only make it easy to prepare your invoices and keep track of what your company is selling, they also automate your time tracking if you're using QuickBooks Pro. When you enter a customer's invoice you can look at all the time that your employees spent on the customer's job and select any items you want to charge.

To create a service item:

1.	From the Lists menu, choose Items.

2.	Click the Item button (at the bottom of the window), then click New.

3.	For the Type field, choose Service.

4.	In the Item Name/Number field, enter the name of the service, such as Technical Illustration.

5.	Optional in QuickBooks Pro: Click "This service is performed by a subcontractor" if you pay someone (other than an employee) to do the service and then charge your customer.

This feature lets you track the subcontractor service as an expense. It also lets you charge your client a different rate than your cost, and track it as income.

6.	Click OK to have QuickBooks add the item to your Item list.

Items are flexible

You can change items at any time. For example, your scanning jobs are usually 300 dpi 4-Bit colour scans in TIFF format. So when you create the item, you enter this as the item's description. Then, when you do a different type of scan, you can either adjust the description of this item as you prepare the invoice or you can set up a different item for each type of scan. It all depends on how much detail you want to see on your reports.

Do you want to enter several items at once?

If you want to enter several items all at once on a sales form such as a cash receipt, an estimate or an invoice, you can use a group item to save you the effort of entering the same set of line items again and again.

For example, if you prepare an invoice for a newsletter design and layout job, you may be using one item called "Newsletter." In this case, your sales report will show your income from newsletters. However, if you use more detailed items, you could learn more from your sales reports. You could break down the newsletter cost, and use items such as "concept design," "electronic layout," and "mechanical paste-up." You can group these items under one item called "Newsletter." You can choose not to print the items in the group on the invoice for your customer to see, but you can still have those details on your sales report.

To create a group item:

1.	From the Lists menu, choose Items.

2.	Click the Item button (at the bottom of the window), then click New.

3.	In the Type field of the New Item window, choose Group.

4.	Enter a group name or number.

5.	Enter a description.

6.	Select the Print items in group checkbox if you want your customers to see a list of individual items and their amounts.

7.	In the Item column, select items from your Item list that you want to include in the group.

8.	Click OK.

Use subitems to get even more details

If you want more detail than items will give you, you can also use subitems. For example, if you created the service type item "Scanning", you may want to create two subitems to distinguishes between scans you do are colour and how many are black and white.

When printing items and subitems on forms, QuickBooks uses a colon between the item name and subitem name. For example, Scanning:Colour. QuickBooks knows that the words before the colon are the item and the words after the colon are the subitem.

Example uses of items and subitems

Charge customers for your services

Create service items with names of services you charge for, such as: colour scanning, page layout, or corporate identity package. For each service item, specify the rate you charge. For details, see "Billing for graphic design and printing services" in this document.

Track services done by subcontractors as expenses and charge your customers for those services

In QuickBooks Pro:

Create "service" type items for subcontractor services and select the "This service is performed by a subcontractor" checkbox. This lets you enter your cost in an associated expense account for the money you pay to the subcontractor. You also enter what you charge your clients for the services and the associated income account.

In QuickBooks:

Whenever you pay a subcontractor by cheque or enter a subcontractor bill in QuickBooks, also enter the customer and job in the "Customer:Job" field. Then when you invoice the client (choose the customer and job), click the Expenses button to see the subcontractor expenses you incurred on behalf of that customer.

Add a surcharge for rush jobs

Create an "other charge" type item called Rush Surcharge and assign it to an income account such as Income:Surcharges.

Charge customers for a product you sell occasionally.

Create a "non-inventory part" type item for the product. In most cases, graphic design and printing companies do not stock inventory. However, if your company does use inventory, create an "inventory part" type item instead.

Charge shipping charges to your customers.

Create an "other charge" type item for each type of shipping charge.

Discount your customers for high volume jobs.

Create a "discount" type item and specify the name of the discount and the amount, at a specific price or as a percentage. Enter the discount immediately after entering a subtotal item on an invoice and QuickBooks enters the discount.

For more information, see the:

"Using subitems" topic in the "Items - your products and services" chapter of the User's Guide

Setting up customers and jobs

Graphic design and printing companies often do more than one job for their customers. You'll want to keep track of income and expenses on a job-by-job basis as well as for each customer. In QuickBooks, the Customer:Job list stores information about both your customers and the jobs. Before setting up specific customers and jobs, you should take a look at how you want to categorize your customers by defining "types." In QuickBooks Pro, you can also define "types" of jobs.

Defining Customer Types

When setting up customers you can specify a customer type. This lets you keep track of the different types of customers you deal with. You can categorize each customer in a way that is meaningful and useful for your company. By setting up customer types, you can create reports, mailing labels, and statements based on customer type.

Examples of customer types for graphic design and printing companies

You may want to categorize your customers in various ways, such as:

"corporate," "small business" and "individuals"

"referral", "newspaper ad," "yellow pages," and "drive-by"

or any distinction meaningful to your company

For more information, see the:

"Customers and jobs" topic in the "More QuickBooks lists" chapter of the User's Guide

"Customer types" topic in the "More QuickBooks lists" chapter of the User's Guide

Defining Job Types in QuickBooks Pro

When setting up jobs for customers in QuickBooks Pro, you can specify a job type. This lets you keep track of the different types of jobs you do. You can print reports based on job type to help you determine what proportion of your company's time is spent on different types of jobs. By setting up job types, you can keep track of the income and expenses associated with each type of job you do.

For example, you might want to keep track of how many of your jobs are "fixed price" and how many are "time and materials." To analyze your company by each type of job you deal with, you can filter reports by job type. For example, you can find out which type of job is more profitable by printing a profit and loss report for fixed price jobs and another for time and materials jobs. With this type of information at your fingertips, it's easier for you to make effective decisions.

Examples of job types for graphic design and printing companies

You may want to categorize your jobs in various ways, such as:

"fixed bid" and "time and materials"

"economy service" and "rush service"

or any distinction that is meaningful to your company

For more information, see the:

"Job types" topic in the "More QuickBooks lists" chapter of the User's Guide

Adding Customers and Jobs

When adding information about a customer, you'll also want to add a job for that customer. This lets you track both jobs and customers. For example, if you're designing business cards for ABC Movers, but you know that you'll later be designing an advertising pamphlet for them, you can add two jobs for that customer on your Customer:Job list. This lets you track the income and expenses separately for each job.

QuickBooks uses a colon between a customer and a job for that customer, for example,
ABC Movers:Business Cards.

When you set up jobs in this way, you only have to enter the customer's information once in QuickBooks (when you set the customer up). From then on, every time you have a different job for that customer, you simply add a job to that customer in QuickBooks. This also makes it much easier to get reports for all jobs for a specific customer.

Always choose the job name as well as the customer name when entering any transactions in QuickBooks.

For more information, see the:

"Adding a new customer" topic in the "More QuickBooks lists" chapter of the User's Guide

"Adding a new job" topic in the "More QuickBooks lists" chapter of the User's Guide

Recording Status and Job Details in QuickBooks Pro

Most graphic design and printing companies handle multiple jobs. Therefore, you may find it useful to use QuickBooks Pro to keep track of the status of your company's jobs and record any useful notes to yourself or your employees about a job.

In the Jobs and Estimates Preferences window (QuickBooks Pro), you can edit the names of the choices for job status. QuickBooks Pro gives you five choices for job status: Pending, Awarded, In progress, Closed, and Not awarded. You can change these descriptions to ones that are more meaningful to your company. For example, PO Rec'd, In Design, On Hold, On Press, and Shipped. You can then select a job status from a drop-down list in one of the job windows. Status is displayed in the Customer:Job list window and printed on the Job administration report.

The Job Notes window is a place where you can keep notes about a job. For example, you can note factors that might affect the cost quoted on an estimate such as the customer's requests for changes.

For more information, see the:

"Job preferences" topic in the "Customizing preferences" chapter of the User's Guide

"Keeping notes about a customer or job" topic in the "More QuickBooks lists" chapter of the User's Guide

Setting up service providers as vendors and subcontractors

You keep information about your vendors and subcontractors in the Vendor list. For most graphic design and printing companies, your Vendor list includes suppliers of paper, art supplies, equipment rental services, and general business needs such as office supplies and insurance.

For more information, see the:

"Adding a new vendor" topic in the "More QuickBooks lists" chapter of the User's Guide

Tracking sales by rep

In QuickBooks, you can associate each customer with an employee. Although your sales representatives may or may not be your employees, you might want to set them up as employees so that you can use this feature. In doing so, all you need to do is specify the rep's name and the initials that you want to use on the New Employee window. Then you can select the agent from the drop-down list in the "Rep" field when you're entering information about the customer.

You can then print sales reports by rep that lists all sales transactions that occurred for each of your sales representatives.

Another way to track your sales by rep is to use "classes."

For more information, see the:

"Adding a new customer" topic in the "More QuickBooks lists" chapter of the User's Guide

"Adding employees" topic in the "Setting up employee information" chapter of the User's Guide

Using classes

QuickBooks classes give you a way to break down your income and expenses for different segments of your business, regardless of the customer or job.

Classes can apply to all transactions, so they are not tied to any particular customer or job. However a job type or a customer type is associated with only certain customers.

For example, you might use customer types to classify your customers into "corporate" and "small business", and then use job types to categorize each job you do for a customer into "fixed price" and "time and materials." You can then get reports that give you valuable financial information for a type of customer or type of job.

But let's say you need a third classification that spans any type of customer or job. In this case, you can use QuickBooks classes. For example, if you're a two-person graphic design company, you can create a class for the work that you bring into the company and a class for the work your partner brings in. You would then select one of those classes on each transaction in QuickBooks. Then you could get reports on income and expenses for the work that each of you brought in, regardless of what types of clients or jobs they are.

Since classes are very versatile, you can also use them as secondary customer or job types. In the previous example, you could use classes to split up your "corporate" customer type into "city A" and "city B."

Some tips for when to use classes

Set up classes on the basis of how you'd like to see your entire business segmented on reports. For example, if your company is a partnership in which each owner brings in work to the company and you want to analyze your profitability of each partner's projects, you can create a class for each partner.

Classes are most useful when you can identify both income and expenses for each class you set up. That way, you can see a Profit and Loss report by class. For example, if you do business in two different offices or locations, you could make each location a class and designate both your income and expense transactions in QuickBooks by location.

If you can't identify your expenses for a category, service, or line of business, don't use classes. For example you may not know your expenses for each service you provide to a customer, because it's easier to keep track of your costs per customer rather than per service. (Don't worry, you can still report on your income per service by setting up those services as "items" and looking at sales reports by item.)

Set up a class such as "other" that you can use to deliberately classify transactions that don't fit into any specific class that you've defined. This eliminates confusion between transactions that you forget to classify and those that do not fit into one of your defined classes.

If you want to break down your income and expenses even further, you can create subclasses.

Examples of classes for graphic design and printing companies

Analyze the income and expenses for each owner's or partner's projects (if more than one owner or partner brings in work). Make each owner or project a separate class.

Analyze the income and expenses for each location, if you have offices in more than one location. Make each office a separate class.

Analyze the income and expenses for each line of business, if your business involves several main types of work such as "printing" and "design." Make each line of business a separate class.

For more information, see the:

"Classes" topic in the "More QuickBooks lists" chapter of the User's Guide

Creating estimates

Graphic design and printing companies often need to create estimates to present to their customers and prospective customers. An estimate describes the services that you will provide and how much these services will cost the customer.

If you have QuickBooks Pro, you can use the estimate form to create your estimates. If you have QuickBooks, you can use a pending invoice.

QuickBooks Pro automates estimates

QuickBooks Pro makes creating estimates easy. And if the customer accepts your estimate, you can later turn it into an invoice, making any necessary changes. Then, when you have actual costs and revenues, you can compare them to your estimated costs and revenues by printing project reports.

Before you can create estimates, the QuickBooks Pro estimating feature must be turned on using the Jobs and Estimates  Preferences window. QuickBooksPro also lets you customize the wording and columns that are shown on your estimate forms. You can specify which fields you want to appear on the screen and which ones you want on the printed copy that you give to your customer. For example, QuickBooks Pro allows you to include the markup of your costs when you write the estimate. However, by default, QuickBooks Pro does not print this markup unless you customize the estimate form.

For more information, see the:

"Estimates" chapter of the User's Guide

To create an estimate:

1.	From the Activities menu, choose Create Estimates.

If this choice is not on the menu, you haven't turned on the estimate feature. To turn on estimates, choose Jobs and Estimates from the Preferences menu, then click Yes to the question 'Do You Create Estimates?'

2.	In the Customer:Job field, choose the customer and the job that the estimate is for.

3.	Enter the customer name and address in the Name/Address field.

You can record a job number in this field also.

4.	In the Item column, enter the services or tasks involved in the job. (Choose from your QuickBooks Item list.)

5.	Enter the number of hours expected for each task or service.

If you have entered a Rate when you set up the item, QuickBooks figures out the Amount and Total columns for you. If you did not enter a Rate, you can enter it on the estimate form.

Creating estimates that list options

In graphic design and printing companies, it is common to give your customers alternative price estimates. For example, your customer may want an estimate that compares the cost of printing a brochure in two colours versus three colours. Or, you may want to provide your customer with different pricing based on quantities.

QuickBooks Pro keeps only one estimate for each job. If you need to have alternative estimates, you can create slightly different job names (for example, Brochure 2 and Brochure 3) and write a different estimate for each. To do this easily, you can memorize the first estimate using QuickBooks Pro's memorized transaction feature. Once memorized, you can recall it whenever you need it and then just enter any necessary changes. For more information, see "Memorized transactions" topic in the "More QuickBooks lists" chapter of the User's Guide.

Another way you can use to estimate various options is to choose the item you want to enter on your estimate and then add lines to the description to describe alternatives and how it affects the price. Then later, when the customer chooses an option, you can remove this additional information from the estimate, if you prefer.

Markup of items when creating estimates

QuickBooks Pro allows you to add a markup to your costs when you write an estimate. When you create your estimate and you enter an item that has both a cost and a sales price (such as items for services that are performed by subcontractors), QuickBooks Pro fills in the markup percentage based on those two prices. For these items, you can enter a different markup on the estimate. When doing so, you can enter either an amount or a percentage. If you enter a percentage, you must include the % sign . If you don't include a percentage sign, QuickBooks interprets the markup as a fixed amount.

Printing the estimate

You can customize how QuickBooks prints your estimates by creating a customized Estimate template. (See the "Estimates" chapter of the User's Guide.) For each field on your estimates, you can tell QuickBooks whether you want to display the field on the screen, print it, or do both. This is especially useful for markups. By default, QuickBooks hides markups from the customer by printing only the price or rate after the markup. However, you can customize your estimates to include the markup if you want customers to see this information.

Printing two "different" copies of an estimate

Graphic design and printing companies sometimes want to print two different copies of the estimate - one for the customer that doesn't include details such as cost, number or hours (quantity), or markup and one to distribute internally that does include the details.

To print two "different" copies of an estimate:

1. 	Specify how you want to print the internal copy using the Customize Estimates window.

2.	Print the internal copy of the estimate.

3.	Go back to the Customize Estimates window and clear the checkbox for the fields that you don't want to print on the customer's copy.

4.	Print the customer's copy.

Creating estimates without QuickBooks Pro

If you don't have QuickBooks Pro, you can use a pending invoice to create an estimate.

To create an estimate without QuickBooks Pro:

1.	Create an invoice that details the work you plan to do for your customer.

Enter the customer's name and the charges as usual. (Make sure you have all your charges set up in your QuickBooks Item list.)

2.	Type the words "Pending Approval" in the Customer Message field.

3.	While the invoice is displayed, choose Mark Invoice as Pending from the Edit menu.

QuickBooks displays the word "Pending" on the onscreen invoice (it does not appear on the printed invoice).

4.	Change the title of this invoice to "Project Budget" or "Estimate".

Select a customized invoice template on  which you have changed the default title to "Project Budget" or "Estimate". (See the "Forms" chapter of the User's Guide.) When you wish to convert this estimate back to an invoice, simply display it on your screen and select your usual invoice template.

5.	Memorize the invoice by choosing Memorize Invoice from the Edit menu.

Give the memorized invoice a name such as "ABC Movers Project Estimate." Click the "Don't remind me" checkbox to select it.

6.	Print the project estimate for the client's review.

You can get a report listing all pending invoices by choosing A/R Reports from the Reports menu, then choosing Pending Invoices.

For more information, see the:

"Customizing your estimates" topic in the "Estimates" chapter of the User's Guide

"Creating custom forms overview" topic in the "Forms" chapter of the User's Guide

"Customizing form content" topic in the "Forms" chapter of the User's Guide

"Marking a sale as pending" topic in the "Sales and sales forms" chapter of the User's Guide

Tracking time

Even if you do most of your projects for a fixed fee, you need to track the time you spend on each project in order to determine your profitability.

QuickBooks Pro automates time tracking

In QuickBooks Pro, you can track your time, or your employees' time to make it simple for you to invoice customers, pay employees, analyze profitability and compare estimated time to actual time.

Employees enter hours spent on each job into timesheets. Then when you're invoicing the customer, you can look at these hours that employees spent on a particular customer's job directly from the invoice form.

QuickBooks Pro lets you track billable and non-billable time, pass along billable time to your clients, and analyze your time costs by customer or job, person who did the work, or by type of job.

Keeping track of time

You can enter time for employees or others such as owner, partner, or subcontractor. On the time entry form, you choose the customer and job for whom the work was done in the Customer:Job field. You then choose the "service item," which is the type of work you did. Later you can pass the billable charges to your customer on the invoice.

You have the option of entering individual activities on separate forms or using a weekly timesheet format. In either case, be sure to enter as complete a record as possible so QuickBooks Pro can translate those hours into billable hours on the customer's invoice.

Keeping track of unbillable time

To keep track of the unbillable time you and your employees spend on overhead and administration tasks, set these tasks as customer jobs. You can then use these jobs only for printing reports that tell you how much time was spent on them. For example, you can create a customer called "Overhead" and then create three different jobs such as "Training," "Preparing Estimates," and "Sales." Then you can print reports that show your overhead and administration costs.

If you don't want to keep track of the type of work that is done using unbillable time, you can mark the time card as unbillable and leave the Customer:Job blank.

Which time entry form to use

QuickBooks Pro lets you track time using either the Single Activity window or the Weekly Timesheet window.

If you want to record how much time you spent on a single activity for a single job on a single day, use the Single Activity window. This window lets you keep track of each activity you do for a job. It is convenient to use if you are continuously running QuickBooks Pro, and entering each activity as you do it, rather than entering all your time at the end of the day or week.

If you want to record the time spent on any number of projects within a seven-day period, use the Weekly Timesheet window. The weekly timesheet is useful when you enter time at the end of a week or a certain period, working from a paper time record.

For details on how to use the actual time spent on a customer's job to invoice the client, see "Creating the invoice based on actual costs".

Transferring timesheet notes to the invoice

When you invoice your customer, you can include any notes that you entered on the timesheets.

To enter your timesheet notes on the invoice:

1.	Select the customer and job, and click Job Costs.

2. 	Click the Time tab.

3. 	If 'Transfer activity notes' does not appear under options, click the Change button, then click the "Transfer notes for each activity" box to select it, and click OK.

QuickBooks Pro has a limit on the number of characters you can enter in the notes field. That limit is the same on the weekly and individual time entry forms. If you transfer notes to invoices or statements, you may have to manually adjust the appearance of the text on those forms. This is especially true if you entered your note and pressed the Enter key at the end of each line. When you're entering notes, it's better to type without pressing the Enter key, so that QuickBooks Pro can automatically wrap each line.

Tracking time without QuickBooks Pro

If you don't have QuickBooks Pro, you can keep track of your time on a pending invoice. Use a separate invoice for each customer job.

To keep track of time on a pending invoice:

1.	Create the invoice as usual, entering the customer name and job.

2.	While the invoice is displayed, choose Mark as Pending from the Edit menu.

QuickBooks displays the word "Pending" on the onscreen invoice (not on the printed version).

3.	Whenever you work on this project for this client, enter the time and charges on the pending invoice.

4.	When you're ready to invoice for your time, display the invoice and choose Mark as Final from the Edit menu. Then print the invoice as usual.

For more information, see the:

"Time tracking" chapter of the User's Guide

"Invoicing customers for time" topic in the "Time tracking" chapter of the User's Guide

"Charging for reimbursable expenses" topic in the "Sales and sales forms" chapter of the User's Guide

"Charging for actual time and costs" topic in the "Sales and sales forms" chapter of the User's Guide (QuickBooks Pro)

Making changes to an estimate

After a customer has approved an estimate and you are going ahead with the work based on that estimate, it is important to keep track of any changes that are made to the scope of work. You need to maintain accurate information in the customer's estimate so that your estimate to actual reports are realistic and so that you can notify your client of any additional charges.

In QuickBooks, you can always make changes to an existing estimate. Simply display the estimate, make the changes, and click OK to record them. When you make changes, QuickBooks automatically recalculates totals.

In QuickBooks Pro, if you have an estimate for a job and the customer wants additional work done that's not part of this orginal job, you'll need to create a new job and an estimate for that job. For example, suppose you are producing 1000 black and white copies of a document for your customer. The customer calls and asks you to also produce 500 colour copies. You'll want to create a new job and estimate for the 500 colour copies.

Billing for graphic design and printing services

In graphic design and printing companies, you invoice your customers when you complete the job. Graphic design and printing companies usually invoice in one of two ways:

Fixed price based on an estimate

You agree to perform work for an agreed upon price which includes your costs and profit. You prepared an estimate and the customer accepts and signs the estimate before you begin work.

Time and materials

You charge the customer for your (or your employees') time at a set hourly rate and pass any costs that you incurred to the customer.

The methods you use to invoice your customer are provided below.

Creating the invoice from a QuickBooks Pro estimate

In QuickBooks Pro, you can easily turn the estimate into an invoice. You can then modify the invoice if necessary.

To turn an estimate into an invoice:

1.	Select the job on the Customer:Job list, click the Activities button and click Estimate.

2.	On the Create Estimates window, click Create Invoice.

QuickBooks displays an invoice with all the information from the estimate.

3.	Edit the invoice by deleting lines, changing rates or hours, and adding new charges or services.

For more information, see the:

"Turning an estimate into an invoice" topic in the "Estimates" chapter of the User's Guide

Creating the invoice from a QuickBooks pending invoice

If you don't have QuickBooks Pro and you created an estimate using a pending invoice in QuickBooks, you can invoice your customer using this estimate.

To create an invoice from a pending invoice:

1.	Display the pending invoice that contains your estimate.

2.	Change the title from "Project Budget" back to "Invoice" by selecting your regular invoice template.

3. 	Edit the invoice as necessary to reflect the charges you want to bill.

4. 	Choose Mark as Final from the Edit menu.

Creating the invoice based on actual costs

To invoice your customer for the actual time that your company spent on the job and the other costs that your company incurred, you must be tracking these carefully.

To create the invoice based on actual costs:

1.	On a QuickBooks invoice, select the customer and job in the Customer:Job field.

2.	Click Expenses (QuickBooks) or Time/Costs (QuickBooks Pro).

3.	On the Items tab, select each part, subcontracted service, or other charge for which you want to be reimbursed.

4.	On the Expenses tab, select each expense for which you want to be reimbursed.

5.	On the Time tab, select the time you wish to charge the client for.

The hide column on the time tab lets you hide a billable time entry that you never intend to pass along to your client.

Even if you don't invoice the client for all billable time, you'll still be able to see reports showing billable hours worked versus billed.

Note:	To include the actual time costs without the details of each person's time spent per day, you can use the information from the Time tab of the Choose Billable Time and Costs window to enter a single line item for each service provided. Another option is to include all costs (time, expenses, and items) as a single line item on the invoice by checking the "Print selected reimbursable job costs as one invoice item."

6.	Click OK to add all selected costs to the invoice.

If you have outside expenses for which you want to be reimbursed (such as purchase of special items and courier fees), you can also include those on the invoice.

For more information, see the:

"Time tracking" chapter of the User's Guide

"Invoicing customers for time" topic in the "Time tracking" chapter of the User's Guide

"Tips for invoicing for time and costs" topic in the "Sales and sales forms" chapter of the User's Guide

"Charging for reimbursable expenses" topic in the "Sales and sales forms" chapter of the User's Guide

"Charging for actual time and costs" topic in the "Sales and sales forms" chapter of the User's Guide (QuickBooks Pro)

"Handling reimbursable expenses" in this document

Handling reimbursable expenses

Graphic design and printing companies may incur expenses on behalf of customers while working on jobs. These expenses - such as delivery fees and film purchases - are called reimbursable expenses.

When you incur expenses that you plan to pass along to clients, you pay for the expense by cheque, credit card, or cash. You can track these transactions as job costs in QuickBooks, and pass them along to your clients when it's time to bill them.

If you pay for items by cash, use the Splits feature in your Petty Cash account register to indicate the appropriate expense account and Customer:Job for this expense.  Enter any necessary memo information.

If you write a QuickBooks cheque or use the credit card form to pay for reimbursable expenses, select the appropriate expense account and Customer:Job for this expense. Enter a memo in the detail area of the cheque, also; this description will appear in the Description column of the invoice when you select that expense.

When you're ready to invoice the client, and you have the invoice form displayed, click the Time/Costs button, and then click the Expenses tab (in QuickBooks Pro) or click the Expenses button (in QuickBooks). QuickBooks shows you a list of expenses not yet invoiced. If you want to include the expense on the invoice, click in the Use column next to the reimbursable expense and click OK.

Including reimbursable expenses on estimates and invoices

If you want to include your reimbursable expenses on the estimate, you can enter the expense in the same way you enter any other item. Then, when you invoice the customer, you can delete the expense that you entered and automatically enter the reimbursable expense by selecting it from the Choose Billable Time and Costs window.

Marking up reimbursable expenses

You can transfer reimbursable expenses to the invoice with or without a markup.

For more information, see the:

"Charging for reimbursable expenses" topic in the "Sales and sales forms" chapter of the User's Guide

"Charging for actual time and costs" topic in the "Sales and sales forms" chapter of the User's Guide (QuickBooks Pro)

Customizing the appearance of estimates and invoices

For graphic design and printing companies, estimating or invoicing is an art that must demonstrate your firm's creativity. QuickBooks features a custom format that allows you to use your own titles, fonts, and logo for your forms. You can also choose which fields you want to see on your screen, and which fields you want to print.

 If QuickBooks' standard estimate and invoice formats are not suited for your company, there are several ways you can customize them. You can adjust the fields and the names of these fields and you can change how your form prints by adjusting fonts and specifying a company logo.

You can tell QuickBooks how you want to print your invoices and estimates. You can specify the type of paper you'll use, the fonts you want to use and the logo (if any) that you want to include.

For more information, see the:

"Creating custom forms overview" topic in the "Forms" chapter of the User's Guide

"Customizing form content" topic in the "Forms" chapter of the User's Guide

"Adding your company logo" topic in the "Forms" chapter of the User's Guide

"Changing fonts" topic in the "Printing" chapter of the User's Guide

"Purchase order and estimate printer setup" topic in the "Printing" chapter of the User's Guide

Recording cash sales

If you have customers who pay at the time of sale, you can use a cash sales receipt to record the sale. Cash sales can be payments of cash, credit card or cheque. The difference between a cash sale and those that you record on invoices or statements is that cash sales do not involve accounts receivable. QuickBooks puts the money you receive from cash sales into an account called Undeposited Funds until you deposit it into a specific account or you can indicate that the money should be directly deposited to a specific Bank account.

The cash sales receipt is useful for over-the counter sales such as photocopying or fax services. For these customers, you don't need to add their name to your customer list.

For more information, see the:

"Cash sales" topic in the "Sales and sales forms" chapter of the User's Guide

Handling leases for equipment

To keep up with rapidly changing technology, it is likely that you'll be leasing some of your equipment, especially big ticket items such as high resolution printers and color copying machines. When leasing equipment, you often have the option to keep the equipment when the lease expires by paying a lump sum or updating the equipment and signing a new lease.

The way you set up your lease in QuickBooks depends on whether or not you are keeping the equipment.

If you are keeping the equipment, you are acquiring an asset. In QuickBooks, add the equipment to your fixed asset account and set up a current liability account for the lease note payable. You can then apply the payments to this liability account to reduce the amount payable whenever you make a payment. You'll also need to record the interest that you are paying and associate this interest with an expense account such as Interest Expense or Loan Interest.

If you are not keeping the equipment, you are not acquiring an asset. In this case, you should set up your entire lease payment as a long term liability.

It is important to know that each lease is unique and may have different tax consequences. Therefore, we strongly recommend that you talk to your accountant and get some advice on the best way to handle your specific lease.

For more information, see the:

"Asset accounts" chapter of the User's Guide

"Liability accounts" chapter of the User's Guide

Recording depreciation of assets

For equipment that your company owns, such as computers, printers, photocopiers and printing presses, you'll want to keep track of the depreciation. To track depreciation in QuickBooks, you enter a new fixed asset account, such as photocopier and then you enter two subaccounts: Cost and Depreciation. You'll also need to use an expense account to track all your depreciation since the amount that your assets lose in value is an expense to your company (a depreciation expense account is included in your default chart of accounts).

Using QuickBooks' memorized transactions feature, you can tell QuickBooks to automatically enter depreciation for you at specified intervals.

Note:	Determining how much depreciation you can deduct when preparing your taxes can be complicated. Ask your accountant to help you determine exact depreciation amounts.

For more information, see the:

"Asset accounts" chapter of the User's Guide

"Memorized transactions" topic in the "More QuickBooks lists" chapter of the User's Guide

Creating budgets

Because graphic design and printing jobs can involve large amounts of money and often include bank financing, many graphic design and printing companies need to set up budgets. By setting up a budget, you can also get an understanding of the costs you have committed for the fiscal year.

You can set up budgets that show your projected income and expenses and your projected account balances. You can then compare your actual income and expenses or your actual account balances against your plan by printing budget reports or creating budget graphs.

You can also create budgets for different jobs. Graphic design and printing companies find it helpful to budget by job, especially when working on a large job that spans over several months. To create a budget by job, in the Set Up Budgets window, choose the Customer:Job and then enter in the budgeted amounts for each applicable month. You can print reports that look at budget by job.

What's the difference between job budgets and job estimates?

When creating a job budget, you assign projected amounts to each income and expense account. Then, you can compare the actual income and expenses for each job with the budgeted amounts. Job budgets are used for your own purposes to project income and expenses for particular time periods. You can create budgets in both QuickBooks and QuickBooks Pro.

Job estimates, on the other hand, are prepared for the customer in QuickBooks Pro to show how much you will be charging the customer for each service that you provide. When creating a job estimate, you assign amounts to each item (service). Then, you can compare the estimated costs to the actual costs for a customer's job.

For more information, see the:

"Budgets" chapter in the User's Guide

Understanding income and profitability with reports

QuickBooks has over 70 preset reports that you can customize to fit your needs. QuickBooks Pro has even more. The most important reports for any business are the Profit and Loss reports and the Balance Sheet reports.

The following describes how you can use reports for purposes that graphic design and printing companies might find especially useful. To create the reports listed below, choose them from the Reports menu.

(QuickBooks Pro) Check the profitability of a job.

Project Reports, Job Profitability Summary or Job Profitability Detail

To assess the exact time and expenses that were incurred on a specific job versus the income received on that job, you can filter this report by Customer:Job. These reports do not include hours spent by the owners or hours for which employees have not yet been paid.

See income by type of work performed or analyze how much of each type of service you sold.

Sales Reports, By Item Summary or By Item Detail

This report lists sales by item for each item that you set up and are using on your sales forms.

(QuickBooks Pro) Check the status of each job.

Project Reports, Job Administration

This report also gives you the customer's contact name and telephone and fax numbers.

See outstanding customer balances.

A/R Reports, Aging Summary or Aging Detail

QuickBooks lets you print various types of accounts receivable reports. For example, you can list each unpaid invoice by customer by printing the open invoices for customer report. To list only the overdue invoices for a customer, you can print one of the aging reports. Outstanding customer balances are also displayed in the Customer:Job list.

Check budgets by customer job.

P&L Budget by job overview report and P&L Budget vs. actual by job report.

(QuickBooks Pro) Analyze time records of employees.

Project Report, Time By Name.

For more information, see the:

"Reports" chapter of the User's Guide

Other QuickBooks tips for graphic design and printing companies

Here are some other QuickBooks features that you may find useful in your graphic design and printing company.

Keeping track of information and tasks

Graphic design and printing companies often make decisions with customers over the telephone. It's important to keep track of your conversations with your customers, whether they occur in person or by phone. QuickBooks lets you enter notes for each client in your Customer:Job list. The customer notes give you a quick way to jot down important details of a meeting.

To enter a note for a specific customer:

1.	Display the Customer:Job list.

2.	Click in the column to the right of the customer name.

3.	Enter your notes.

You can use the To Do list in combination with the customer notes. Suppose your customer wants you to send her an edit of an annual report and you've agreed to send it to her in three days. You can enter a note about your conversation in your customer notes, and you can also have QuickBooks remind you of the due date by entering it in the To Do list.

To add a note to the To Do list:

1.	From the Lists menu, choose To Do notes.

2.	Click the To Do button, then click New to add a new note.

3.	Enter the note and the date you want to be reminded.

If you have reminders turned on, QuickBooks displays your "to do" note in the Reminders window when you start QuickBooks.

For more information, see the:

"Keeping notes about a customer or job" topic in the "More QuickBooks lists" chapter of the User's Guide

"To Do notes" topic in the "More QuickBooks lists" chapter of the User's Guide

Tracking information about your clients

You can use QuickBooks' customized fields to add additional information about your customers, vendors, and employees. You can use these fields to track dates, personal information, and so on.

To add a customized field:

1.	Open the Customer:Job list.

2.	Click the Customer:Job button, then click New, or click Edit for an existing customer.

3.	Go to the Additional Info tab of the New/Edit Customer window.

4.	Click Define Fields.

5.	Enter a name in the label field and select in which lists you want to use the field.

You can show the custom field in one or more lists.

6.	Click OK.

QuickBooks adds the customized field to the setup window and you can fill in the fields to record the additional information.

To display or print a customized field on invoices:

1.	From the Lists menu, select Templates.

2.	From the list of templates, select your usual invoice template, then click the Templates button.

3.	Create a new template based on your selected template. Click on the Fields tab to edit customized fields.

The Field tab will include any customized fields that you created.

4.	Next to the customized field, click "screen" if you want the customized field to be displayed on the invoice when it is on your screen and click "print" if you want the customized field to be printed on the invoice.

5.	Provide a name for your customized invoice. Click OK to record the changes.

For more information, see the:

"Adding customized fields" topic in the "Working with lists" chapter of the User's Guide

"Customizing form content" topic in the "Forms" chapter of the User's Guide

Helping us help you

We'd like to know your special concerns and the problems you run into when using QuickBooks in your business. We also want to know how useful this document was in helping you fit QuickBooks to your needs.

Please use this sheet to mail or fax us your comments. If possible, please also attach specific comments marked on the printed version of this document. Mail the completed form and any attachments to:

Intuit Canada, Ltd.

Industry Feedback

P.O.Box 4165

Edmonton, Alberta

Canada

Or fax your comments to us at 1-800-387-4285

Some information about your business

Name:

Business name:

Address:

Phone:

Number of employees:

My business is a: __ Sole proprietorship __ Partnership __ Corporation

What other needs do you have, specific to your type of business, that were not covered in this document?

Do you have any tips for other people in your field who use QuickBooks?

Which two or three topics did you find most useful in this document?

May we call you to discuss your comments?

___ yes    ___ no


Farming and ranching

Overview for farmers and ranchers

Before you begin

Setting up your QuickBooks company

Organizing your income, expenses, and enterprises

Customizing your Chart of Accounts

Creating items

Using 'classes' for enterprise accounting

Setting up customers

Customizing sales forms

Recording sales

Tracking current and fixed assets

Tracking liabilities

Preparing and analyzing budgets

Understanding income and profitability with reports

Issues for organic farmers

Helping us help you

Overview for farmers and ranchers

Within the last few years, many farmers and ranchers have stated that keeping better records is an important key to ensuring the success of their business. QuickBooks is a valuable tool that lets you track income and expenses, plan for seasonal cycles, and analyze the true profitability of your business.

As a farmer or rancher, you have some basic needs from your accounting system. QuickBooks can help you meet many of those needs, including:

Tracking the crops or livestock you sell

Tracking income, expenses, and profitability for each of your farm/ranch enterprises

Tracking short- and long-term loans

Preparing budgets to analyze income and expenses for each of your enterprises

Running payroll cheques for your employees

Getting reports that show you the financial health of your enterprises

Important:	Because most farmers track their income and expenses on a cash basis, rather than on an accrual basis, this document shows you how to use QuickBooks for cash-basis bookkeeping. The difference between accrual and cash-basis accounting is explained in "Appendix B - Accounting Basics" of the Getting Started Guide.

Before you begin

This document gives you information on how to use QuickBooks for your special needs - we won't repeat what's already in the standard information you receive with QuickBooks. Instead, you'll see references to show where you can find complete information and details on using QuickBooks features.

Printing your industry document

If you're looking at this document onscreen, you're now in a "QuickBooks and Your Industry" window.

To print this document:

From the File menu, choose Print... or Print Topic.

To return to the EasyStep Interview:

If you got to this Help window from the interview, close the Help window to return to the interview.

To see other industry documents:

Click any of the industries listed in the contents.

Understanding QuickBooks terms

QuickBooks uses a few special terms that you should be aware of:

Company

Your farm or ranch. Together all your enterprises make up your QuickBooks company.

Chart of accounts

A list of accounts that you use to track how much money your business has, how much money it owes, how much money is coming in, and how much is going out.

Customer

Anyone who pays you money for your crops or livestock.

Item

Products you sell from your farm or ranch (what you charge a customer for). In QuickBooks, any charges you want to include on a cash sales receipt or invoice form should be entered on your Item list.

Class

A way to categorize income and expenses. For example, you can use the Class field to track how much you're earning and spending on each of your farm's enterprises, such as cattle, wheat, and alfalfa.

Important

The information in this document was compiled from the experiences and suggestions of other QuickBooks users in farming and ranching. Your own needs may vary considerably. Only you and your accountant understand the unique needs of your business. Ultimately, you are responsible for your own books.

Therefore, we encourage you to have your accountant look over the setup suggested in this document, and we suggest that you give QuickBooks a thorough "trial run" early in the process. The best way to ensure that QuickBooks will provide all the information you need is to enter a small number of your standard transactions. Then try running all the reports you may need.

While we can give you technical support on how QuickBooks works, our technical support representatives are not industry experts and cannot give you specific accounting advice. If you have questions regarding accounting issues specifically related to your industry, we recommend you consult either an accountant, industry expert, or professional association.

Setting up your QuickBooks company

The QuickBooks EasyStep Interview asks you questions about your business, and uses your answers to help you set up your farming or ranching business in QuickBooks. We recommend the interview as the easiest way to get started and to customize QuickBooks for farming or ranching.

If you choose not to use the EasyStep Interview, you should follow the setup directions in the "Setting up a QuickBooks company" chapter of the Getting Started Guide.

Organizing your income, expenses, and enterprises

If you are a typical farmer or rancher, you probably have more than one source of income. For example, your primary business may be a cow-calf operation, but you may also receive income from sheep, poultry, or grain sales. In the same way, some of your expenses may be general overhead that apply to all your enterprises (such as telephone and professional fees), while others are direct costs for specific enterprises (such as a feed purchase for a cow-calf operation).

If you keep your books by hand, it's very difficult to analyze the income and expenses for each of your farm enterprises - tracking all that detail is too complicated. But QuickBooks includes many features that let you analyze your business in great detail. For farmers and ranchers, the most important are accounts, items, and classes:

Income and expense accounts help you answer the questions, "Where does my money come from?" and "How am I spending the money?"

Items let you track the products you sell, whether you have one enterprise or many.

Classes let you track different segments of your business, and can be especially useful to farmers and ranchers in tracking different enterprises.

Customizing your Chart of Accounts

In QuickBooks, an account is a group of transactions used for tracking and reporting purposes. Examples of accounts include a chequing account, which is used to record all the transactions that occur in your chequebook; an income account called "Corn Sales," which is used to track sales of your corn crop; and an expense account called "Utilities," which is used to track the money you spend on electricity and gas.

These are the types of accounts you'll work with in QuickBooks:

Balance sheet accounts record the actual worth of your business at any given time. Examples include bank accounts, accounts receivable, credit card accounts, and equity accounts.

Income accounts are accounts that track the sources of your income.

Expense accounts are accounts that track where and how you spend your money.

The complete list of accounts for your company is called the chart of accounts. When you set up your QuickBooks company, you can choose a preset chart of accounts designed especially for farmers and ranchers. QuickBooks' preset chart of accounts gives you a head start in creating your balance sheet accounts, income accounts, and expense accounts. However, because one farm or ranch can have a very different enterprise mix than another, you'll need to modify the list to suit your own business.

You might want to add some subaccounts to QuickBooks' preset chart of accounts. A subaccount lets you track things in more detail. For example, suppose you set up an expense account called "Tractors" to keep track of everything you spend to keep your tractors going. You can then set up subaccounts for Insurance, Repairs, and Service to track your tractor expenses in more detail.

Here are some tips for modifying the chart of accounts to suit your farming or ranching business:

Under the Sales income account, delete subaccounts that do not apply to your type of farming or ranching.

-	If you plan to track your farm/ranch enterprises with QuickBooks classes, do not add a separate income subaccount for each enterprise. See "Using 'classes' for enterprise accounting" in this document.

-	If you do not plan to use QuickBooks classes to track your enterprises, add a new subaccount for each type of enterprise for which you receive revenue. For example, if you include timber production as one of your enterprises, add a new subaccount called Timber.

Important:	You don't need to add a separate income subaccount for each type of product you sell. For example, if you have an income account for Cattle Sales, you don't need to create subaccounts for Cows, Heifers, or Bulls - you should create separate QuickBooks items instead. See "Creating items" in this document for details.

Delete expense accounts that do not apply to your type of ranching or farming.

Add expense accounts for things not included on the chart of accounts. For example, a rancher might want to add these accounts: Brand Inspection; Hauling; Horseshoeing; Pasturage; Processing, Livestock; Registration Fees.

Add expense subaccounts if you want to track more details of an expense. For example, under the Repairs account, you may want to add subaccounts for Equipment, Water System, and Fencing.

Under the Supplies account, you may want to add subaccounts for Shop, Ranch House, and Fencing/Corrals.

If you track your breeding livestock or dairy cattle as fixed assets (depreciated over their useful life), create fixed asset accounts for each type of depreciated livestock. See "Tracking current and fixed assets" in this document for details.

For more information, see the:

 "Your chart of accounts" chapter in the User's Guide

"Adding fixed asset and depreciation accounts" topic in the "Asset accounts" chapter of the User's Guide

Creating items

The items on your QuickBooks Item list represent the services or products you buy and sell. When you're ready to fill out an invoice or cash sales receipt and you choose an item from the Item list, QuickBooks prints the name of the item (for example, Corn), a description, and the item's cost per unit. When you enter a quantity for the item (for example, 1000 bushels), QuickBooks also figures out the total, and assigns that total to the appropriate income account.

Each product you sell should be a separate item on QuickBooks' Item list. Create a QuickBooks item for each type of crop, livestock, or product you sell to customers. When you set up items, you also designate an income account you want them assigned to. (You'll typically have more than one item assigned to the same income account.) You can set up your items all at once or "on the fly," as you're filling out an invoice or sales receipt.

If you want to track your sales in more detail, you can use subitems. For example, if you are a rancher who has an item for Stocker Cattle, you can create subitems for Cows, Heifers, and Bulls.

If you are a farmer, you can use items and subitems to track not only each crop you produce, but the varieties within each crop as well. For example, if you grow three types of beans, and you want to know the profitability of each variety, you can set up an item for beans and three subitems for the varieties you grow:

Dried Beans

Adzuki

Black turtle

Cranberry

Important:	Using a combination of items and subitems to track income detail is a better solution than adding several income subaccounts to your chart of accounts. As a general rule, you should reserve the accounts on your chart of accounts for broad categories of income. Use subitems on your Item list when you want to see more detail about what you've sold. You can see reports on the items you sold (total sales subtotaled by item or subitem) by creating a Sales by Item report (one of QuickBooks' Sales reports).

Besides creating items for the products you sell, you can create items for other charges or deductions that appear on your sales forms. For example, if the cattle feedlot charges you for veterinary medicine and deducts it from their payment to you, you can include a "discount" item for Vet Medicine.

Example uses of items for a farming or ranching business

To charge customers for crops you plan to sell, either immediately after harvest or later

Create a "non-inventory part" item for each crop you plan to sell. If you want to track your sales in detail, you can create an item for the type of crop (for example, Potatoes) and subitems for each variety you grow (for example, Yukon Gold).

In the New Item window, enter the current market price per unit (for example, per bushel or per lug). Or, you can leave the Price field blank, and enter your price at the time of the sale. In the Account field, enter the income account you want sales of this item assigned to.

To charge customers for non-breeding livestock you sell to them

Create a "non-inventory part" item for each type of livestock you plan to sell. If you want to track your sales in detail, you can create an item for the type of livestock (for example, Cattle) and subitems for each specific class of animal (for example, Cow, Heifer, and Bull).

Do not enter a sales price for the livestock item; later, you can enter the price you receive at the time of sale. Assign the item or subitem to the appropriate income account.

To charge customers for breeding livestock you sell to them

Breeding livestock are considered fixed assets, and are tracked with QuickBooks' fixed asset accounts. See "Tracking current and fixed assets" in this document for more information.

To track deductions from product sales (for example, for a discount or a fee deducted from your total sale, such as a co-op fee or vet medicine charge)

Create a "discount" type item for each deduction that appears on your sales slip. Assign the discount item to the appropriate expense account. Because the price of these discount items may change, don't enter a price at the New Item window. When you enter the sale, you can type the amount of the discount in the Amount column of the sales form.

Important:	We do not recommend that you use QuickBooks inventory (that is, "inventory part" items) to track your farm inventories (such as crops you plan to hold in storage, supplies, and market livestock). QuickBooks' inventory feature is suitable for businesses that purchase items ready for resale. It cannot track the costs that go into the manufacture of a product (for example, corn that has been grown or livestock that has been raised).

For more information, see the:

"Items - your products and services" chapter in the User's Guide

Adding customized fields to your items

QuickBooks lets you add up to five customized fields to your items. For example, if you sell many different types of products, you may want to add a customized field called "Unit," to track the unit of measurement by which you price your products. (If you grow peaches and melons, you can then enter "lug" as the unit of measurement for peaches and "crate" as the unit of measurement for melons.)

After you add one or more customized fields to your Item list, you can customize your invoices and cash sales receipts to display the custom field as a column in the line item area.

To add a customized field to your Item list:

1.	Select the item name in your Item list, click the Item button, then click Edit. (If you are adding a new item, click New.)

2.	At the New/Edit Item window, click the Custom Fields button.

3.	Click the Define Fields button to specify the customized fields you want to add to each of your items.

Enter the name of the field and click the "Use" checkbox to select it.

4.	(Optional) Fill in the fields for this item.

If you fill in a field, and have added that field to your sales forms, the information you enter transfers automatically to any customized form where the field appears. For example, if the field is named "Unit" and you've entered "bushel" as the unit of measurement for a particular item, the Unit field on your sales form prefills to "bushel" each time you enter a sale of that item.

Leave a field blank if you'd prefer to fill it in at the time you enter a customer order.

5.	Click OK.

What's next

You can add customized fields you've set up for items to any sales form (invoice or cash sales receipt). If you want information you've entered in the customized fields to appear on a form, you must add the fields to the form as described in "Customizing sales forms," later in this document.

Using classes for enterprise accounting

Many farmers and ranchers operate several different enterprises. For example, a farmer may grow corn as one enterprise, and raise hogs as another. Well-managed farms and ranches track the profitability of each of their enterprises through a technique called enterprise accounting. If you have one or more enterprises you want to track separately, you can use QuickBooks classes.

You can think about QuickBooks classes like this: If income accounts, expense accounts, and items are the what of your business ("What did I sell?" and "What did I buy?"), classes represent the why or where ("Why did I purchase feed? Where did it go?" (What enterprise did it go to?))

What is an enterprise?

An enterprise can be any segment of your business for which you want to track revenues, expenses, and profitability. For example, you may want to track profitability by the different types of crops you grow; each crop is a separate enterprise. You may also want to track revenues and expenses for livestock, such as cattle, poultry, and hogs. Each of these is a separate enterprise.

If you're involved in any type of side business, such as a feed business or a nursery, it is also an enterprise. Together all your enterprises make up your QuickBooks company - your farm or ranch.

Important:	Many smaller farms and ranches mix their personal funds with business funds. Keeping your books accurate when you do this can be confusing. For help in handling these types of transactions in QuickBooks, see the document called "Combining personal and business expenses," accessible through the EasyStep Interview. (To view the document, choose EasyStep Interview from the Help menu, and click the Documents tab.)

When to use an enterprise versus a separate company

You may be wondering if you should set up a separate QuickBooks company for each of your different enterprises. This really depends on how you pay your taxes. If you file separate returns for each enterprise, you should have separate QuickBooks companies. If you file only one return, you should have only one QuickBooks company  - and use classes to track enterprises within one QuickBooks company. This lets you have consolidated numbers for your tax return, while still tracking the profitability of each enterprise.

Tracking enterprise profitability

When you turn on class tracking (see "Steps for setting up classes" in this document), QuickBooks displays a Class field on sales receipts, bills, and other transactions. Whenever you want to enter a class, just choose one from the list (or add a new one).

For example, suppose you write a $2,000 cheque for fertilizer for your corn crop. You'll probably want to assign the expense to your Fertilizer expense account. But you can also keep track of how much you spent for fertilizer specifically for your corn crop. When you enter the cheque at the Write Cheques window, just choose Fertilizer as the Account and Corn as the Class. Every time you receive income or spend money for your corn crop, you can enter Corn as the class. Then you'll be able to run reports that show your income, expenses, and profitability for that specific enterprise.

Tracking general overhead costs

Direct costs that apply to only one enterprise are easy to assign, but what do you do about general overhead costs? For example, if you grow both corn and wheat (you have two enterprises), how do you assign tractor repair costs? Or when you write a cheque to pay your tax professional, which enterprise do you assign the expense to?

Besides creating a class for each of your farm/ranch enterprises, we recommend you create a class called Overhead, to track the expenses that apply to your farm/ranch operation as a whole. When you have expenses that apply to more than one enterprise, you can choose Overhead from your Class list.

Tip: In addition to adding a class for Overhead, you may want to set up a class called "Other." You can use the Other class to deliberately classify transactions that don't fit into any specific class that you've defined. This eliminates confusion between transactions that you forget to classify and those that do not fit into one of your defined classes. On reports, transactions that you forget to classify will be listed as "unclassified."

Steps for setting up classes

If you set up a class for each of your enterprises, and also set up a class for overhead and "other" transactions, you should have a QuickBooks class entered for every one of your transactions.

To set up and use classes for enterprises:

1.	Make sure class tracking is turned on.

From the Preferences menu, choose Accounting and check "Use class tracking."

2.	Create a class for each of your enterprises, including one for "Overhead" and "Other." (To create classes: Choose Classes from the Lists menu, click the Class button, then click New.)

For example, your classes could be Beans, Corn, Melons, Overhead, and Other.

3.	When you enter sales, cheques, bills, credit card charges, or other transactions in QuickBooks, choose the class from the drop-down list in the Class field.

If you want to break down your income and expenses even further, you can create subclasses. For example, suppose you grow corn on two different properties. You want to track each property as a separate enterprise, and you also want to track the profitability of your corn on each property. For this situation, you can set up a class for the corn enterprise, and subclasses for the two properties:

Corn

Property A

Property B

If you decide to use classes, you can set them up all at once or "on the fly."

Dividing expenses among enterprises

When you have direct costs that apply to more than one enterprise, you need to assign the expense to the appropriate enterprises. For example, suppose you bought fertilizer for both corn and soybeans with a $2,000 cheque. The corn fertilizer cost $1,200, and the soybean fertilizer cost $800. You can track this in the detail area of the cheque, under the Expenses tab.

The Write Cheques window is where you enter cheques you've written. The top half of the window displays the cheque, and the bottom half is the detail area (where you itemize what the cheque was for). On the first line of the detail area, choose "Fertilizers" as the Account, type $1,200 for the Amount, and choose "Corn" as the Class. On the second line, again choose "Fertilizers" for the Account, but then type $800 for the Amount and choose "Soybeans" for the Class.

By assigning your expenses to the correct enterprises, you can track your direct costs per enterprise. You can see what you've spent on fertilizer for each of your enterprises by selecting the "Fertilizers" expense account in your chart of accounts and clicking QuickReport. At the report window, click the Customize button, and add "Class" as a column in the report (in the Columns box, click Class to select it).

Handling transfers between enterprises

Many farms have output from one enterprise that becomes input to another. For example, suppose you're a farmer who raises hogs and grows corn. You want to use some of the corn you've grown to feed your hogs. To maintain accurate profitability figures, you need to record these transfers between enterprises.

To account for the corn you're using up, you need to "sell" the corn to the Hogs enterprise - the Corn enterprise will receive revenue and the Hogs enterprise will have a feed expense. You can handle enterprise transfers in QuickBooks by following the steps below.

To handle transfers between enterprises:

1.	From the Activities menu, choose Make Journal Entry.

2.	In the General Journal Entry window, make these entries:

Enter the date. You may leave the Entry No. field blank.

On the first line of the detail area, enter your sales income account in the Account field, the value of the sold crop (say, $7,500) in the Credit field, and the selling enterprise (Corn) in the Class field.

On the second line of the detail area, enter your feed expense account in the Account field and the consuming enterprise (Hogs) in the Class field. QuickBooks automatically puts the value of the sold crop ($7,500, in this example) in the Debit field.

3.	Click OK to record.

In a transfer between enterprises, no money changes hands. The net effect on the entire farm is zero. However, one enterprise (Corn) has additional income, and the other (Hogs) has an additional expense.

General journal transactions for income and expense accounts do not appear in any register. However, you can see them on several reports. For example:

On your chart of accounts, select the Feed and Grain expense account and click QuickReport. The special transactions have the words "General Journal" in the Type column of the report.

For a report listing all transfers between enterprises, grouped by enterprise, create a transactions by date report: From the Reports menu, choose Transaction Reports; then choose By Date. At the report window, click Customize. Adjust the date range to include the transactions you want to see. Click Filters. In the Transaction Type field, choose Journal. In the Account field, choose "All income/expense accounts." Then click OK to create the report. Memorize it for easy recall next time.

Tips for setting up classes

Classes are very flexible, and the way you set them up depends on the type of information you want to track. For example, if you have a larger operation, you might want to set up classes for Overhead, Farm, and Ranch. You can then create subclasses for the Farm class (Corn, Wheat, and Barley) and subclasses for the Ranch class (Cattle and Sheep). Here's a synopsis showing three classes and their subclasses from this example:

Overhead (class)

Farm (class)

-	Corn

-	Wheat

-	Barley

Ranch (class)

-	Cattle

-	Sheep

Here are some tips when deciding how to use classes:

Set up classes based on the type of reporting you want to do, and consider how you want to see your finances arranged on reports. For example, if you have a flower farm that grows lilies and irises, and you want to analyze the profitability of each variety you grow, you can set up a class for each main flower type (Lilies and Irises) and subclasses for each variety within that type. Later, you can create a Profit and Loss Report by Class to look at income and expenses for each flower variety.

Classes are most useful when you can identify both income and expenses for each class you set up, because this lets you create a Profit and Loss report by class.

For more information, see the:

"Classes" topic in the "More QuickBooks lists" chapter of the User's Guide

Setting up customers

You store information about the people who buy your products in the Customer:Job list. Not all farmers and ranchers want to keep track of each individual customer. However, you can use the Customer:Job list in whatever way works best for you.

For example, if you do some direct sales (for example, at a farmer's market or a roadside stand), you can summarize your product sales for the day on a QuickBooks cash sales receipt. Set up a QuickBooks customer called "Direct Sales," and enter the amount of your sales in the line item area.

For more information, see the:

"Customers and jobs" topic in the "More QuickBooks lists" chapter of the User's Guide

"Creating a daily sales summary" topic in the "Sales and sales forms" chapter of the User's Guide

Customizing sales forms

You may want to remove or add information to QuickBooks' standard sales forms. You can add or delete fields or columns, widen or change the order of columns, and include your own customized fields on the invoice. For example, depending on your needs, you can:

Remove the shipping information from the sales form.

Change the title of the "Quantity" column to the unit of measurement your farm products are measured in (for example, if you sell corn by the bushel, you can change the title from "Quantity" to "Bushel").

Change the title of the "Rate" column to "Per Unit" (or "Per Bushel," "Per Head," and so on).

Include a customized field on your invoice (if you've added a customized field to your Item list). For example, if you grow or raise many types of products, you may have added a customized field to your items that displays a unit of measurement for the item (such as bushel, lug, and so on).

For more information, see the:

"Creating custom forms overview" topic in the "Forms" chapter of the User's Guide

"Customizing form content" topic in the "Forms" chapter of the User's Guide

Recording sales

Many farmers and ranchers do not invoice their customers. Instead, they deliver the product and receive a cheque on the spot, or soon after. However, even if you don't plan to use QuickBooks' invoice forms, it's important to record any revenue you receive from your enterprises.

When you receive revenue from the sale of your products, you should enter a cash sales receipt for the amount of the cheque, listing the items you've sold to the customer. If you tell QuickBooks you want the money to go to your chequing account, it automatically enters the transaction for you.

For example, suppose you are a cattle rancher who has sold three heifers weighing a total of 2,390 pounds. You were paid $.57 per pound, for a total of $1,362.30. From the total, the auction yard deducted $179.46, for yardage, brand inspection, beef promotion, and insurance. You've received a cheque for $1,182.84, and now you're ready to enter the cash sales receipt. Here's what you enter in the line item area:

In the Item field, choose your "Feeder Cattle:Heifer" item (Feeder Cattle is the item and Heifer is the subitem).

Enter 2,390 for Qty, and 0.57 for Rate. (QuickBooks figures out the total for you.)

On the second line of the Item field, choose your "Deduction" item. (This is a "discount" type item you set up.) Enter 179.46 in the Rate field.

When you receive a payment at the time of sale, here's how to enter the sale:

1.	Fill out QuickBooks' sales receipt form. (Begin by choosing Enter Cash Sales from the Activities menu.)

If you want to invoice a customer (for later payment), choose Create Invoices from the Activities menu instead.  You'll want to mark the invoice as pending if you are using cash-based accounting.

2.	List the items purchased by the customer, by choosing from your Item list (as described in "Creating items" in this document).

3.	Enter the quantity sold and rate, or you can enter the total amount you've received in the Amount column (and have QuickBooks calculate the Rate for you).

4.	List any sales expenses deducted from the sale (co-op fees, brand inspection, and so on), by choosing a Discount item from your Item list.

5.	If you operate more than one enterprise, use the Class field to choose the enterprise each line item should be assigned to.

6.	In the Deposit To field, choose the chequing account where you want to deposit the funds.

For more information, see the:

"Entering a sale" topic in the "Sales and sales forms" chapter of the User's Guide

Tracking current and fixed assets

A current asset is anything you own that you expect to convert into cash or use up within one year of purchasing it. Any QuickBooks bank accounts you set up are a current asset. A farmer or rancher may want to set up "other current asset" accounts to track treasury bills, certificates of deposit, or prepaid expenses (amounts already paid for services you have yet to receive).

A fixed asset is anything you own that you don't expect to convert into cash or use up within one year of purchasing it. For a farmer or rancher, breeding livestock, dairy cattle, land, buildings, and equipment are all fixed assets. You track fixed assets in a QuickBooks fixed asset account, with one account for each type of fixed asset. If the asset is depreciable, you can use subaccounts to track the asset's cost and accumulated depreciation. When you sell the asset or make additions to it (not repairs), you should record those changes in the appropriate fixed asset subaccount.

Perennial crops

Perennial crops (such as vineyards, orchards, and berry bushes) have a development, or preproductive, phase and a productive phase. Development costs should be capitalized and depreciated over the useful life of the plant. Once the crop reaches the productive phase, expenses are tracked as usual in QuickBooks (you assign the expense to one of your expense accounts).

To track development costs of a perennial crop:

1.	Create a fixed asset account for your development phase expenses.

If you want to track each type of expense separately, you can create one fixed asset account called "Development Costs," with subaccounts for "Fertilizer," "Disease Control," "Soil Prep," and so on.

2.	As you write cheques for development period costs, assign the amount of the cheque to your fixed asset account (or the appropriate subaccount).

In the detail area of the Write Cheques window, choose the name of your fixed asset account in the Account field. QuickBooks then records an increase in your Development Costs asset account. During the development cycle, your costs accumulate in this fixed asset account.

3.	When the development phase is over, and the productive phase is reached:

You should begin taking depreciation on the development costs. Enter the depreciation transaction into the register of your fixed asset account. (Or, if you have a subaccount to track depreciation, enter the transaction in that register.)

Enter post-development expenses as usual in QuickBooks. (When you write a cheque, assign the expense to one of your regular expense accounts.)

Breeding livestock

Purchased breeding livestock are considered fixed assets, and are tracked with QuickBooks' fixed asset accounts. Because these are assets that need to be depreciated, you can create a fixed asset account for each type of purchased breeding livestock, with subaccounts to track cost and depreciation. For example:

Jersey Cows (fixed asset account)

Cost (subaccount of Jersey Cows)

Depreciation (subaccount of Jersey Cows)

According to current tax laws at the time of writing, raised breeding livestock have zero basis, and should not be depreciated. You should create fixed asset accounts for each type of raised breeding livestock, but you do not need to have subaccounts for cost and depreciation.

Tip: If you want to track your breeding livestock by type - for example, by gender, weight class, or breed -  you can set up separate fixed asset accounts for each type of livestock you want to track. You can use the Memo field in the asset account register to record any information about the animal you feel is important.

When you sell your breeding livestock, you should not enter the sale as described earlier in "Recording sales." Breeding livestock are capital assets, and you want your records to show a capital gain or loss when you sell.

For more information, see the:

"Asset accounts" chapter in the User's Guide

Tracking liabilities

Farmers and ranchers have long periods without income and periods of high expenses, so short- and long-term loans are common. QuickBooks lets you track your loans with two types of liability accounts:

Use an other current liability account for a loan of less than one year. For example, operating loans (lines of credit) are current liabilities.

Use a long term liability account for a loan of one year or more. For example, capital loans are long-term loans for fixed assets such as tractors or land.

To pull together the information a lender needs when you apply for a loan, see "Understanding income and profitability with reports" in this document.

Accounting for operating loans

Set up a QuickBooks current liability account for each operating loan (line of credit) you have. The balance of the account should be $0 until you dip into your line of credit. (This is because you haven't actually borrowed anything from the bank yet.) For example, suppose you take out $5,000 on a $100,000 line of credit. When you enter the deposit into your chequing account, assign the deposit to your Operating Loan account. This increases the balance of your debt to the bank by $5,000.

When you write a cheque to pay back the bank, assign the transaction to your Operating Loan account. This decreases the balance of the account because you are paying off your debt.

Accounting for capital loans

Set up long-term liability accounts in QuickBooks to track your capital loans. You should have separate accounts for each capital loan you have. For example, if you have a loan for a tractor and one for your land, you should have two separate long-term liability accounts.

When you write a cheque for payment on your loan, you will want to record both the interest and the principal payments. Get an amortization schedule from your lender, to see how much of each monthly payment is interest and how much is principal.

When you write your cheque in QuickBooks, you can use the detail area to assign the principal portion of the cheque to your long-term liability account, and the interest portion to your "Interest" expense account.

For more information, see the:

"Liability accounts" topic in the "Liability accounts" chapter

"Adding a loan in QuickBooks" topic in the "Liability accounts" chapter

Preparing and analyzing budgets

The need to budget goes hand-in-hand with borrowing money. You want to predict when you'll need to take out a loan, and how much money you'll need to request.

In QuickBooks, you can set up a different budget for each fiscal year. QuickBooks allows you to have numerous budgets for the same year if the budgets are for different accounts, customers or jobs, and classes. You may be especially interested in budgeting for income and expenses by class.

To budget for income and expenses by class:

1.	From the Activities menu, choose Set Up Budgets.

2.	Choose the fiscal year for which you want to set up a budget.

3.	In the Class field, choose the enterprise you want to budget for.

4.	In the Account field, choose the first income or expense account for which you want to set budgeted amounts.

5.	Enter the budgeted amounts next to the appropriate month.

6.	Click Save to save the data, and choose the next income or expense account in the Account field.

7.	Repeat Steps 4 through 6 until you have set up all your budgeted amounts. Then click OK to close the Set Up Budgets window.

If you set up budgets for classes, you won't see those budgeted numbers on the preset P&L Budget or Balance Sheet Budget reports. However, you can create a custom report:

To create a custom report to look at budget by class:

1.	Display the P&L Budget vs Actual by Job report.

2.	From the Columns drop-down list on the report buttonbar, choose Class.

If you want to set up multiple budgets for your business (maybe you want to analyze "what-if" scenarios such as, "What if we expand our herd? How much expense will that add, and how much income?"), you can export your budget report to a spreadsheet program and do some additional calculations.

To export budget data to a spreadsheet program:

1.	Set up your budget data. (To begin, choose Set Up Budget from the Activities menu.)

2.	Display the budget report you want, and customize it if necessary. (To begin, choose Budget Reports from the Reports menu.)

3.	With the Report window displayed, choose Print Report from the File menu.

4.	Depending on the type of spreadsheet program you plan to use, choose Tab-delimited or 123(.PRN) as the type of disk file. (Check your spreadsheet program's user manual to determine the type of file it requires.)

For more information, see the:

"Budgets" chapter of the User's Guide

Understanding income and profitability with reports

QuickBooks has approximately 70 preset reports, which you can customize to fit your needs. Here are some reports which ranchers and farmers may find especially useful, along with instructions on how to create them in QuickBooks from the Reports menu:

To create a balance sheet report

Choose Balance Sheet from the Reports menu. You can see a comparative balance sheet report (to see the difference between this year and last) by choosing Comparison from the Balance Sheet submenu.

To create a profit and loss report

Choose Profit & Loss from the Reports menu. You can see a comparative profit and loss report (to see the difference between this year and last) by choosing Prev Year Comparison from the Profit & Loss submenu.

To analyze the cost of production for a particular enterprise (if you are using classes to track enterprise profitability)

Choose Profit & Loss from the Reports menu, then choose By Class.

To see your total sales for some or all of your enterprises

Choose Sales Reports from the Reports menu, then choose By Item Detail. If you want to look at just one class (enterprise) or a specific group of classes: At the report window, click Filters and choose the classes (enterprises) you want to report on. If you want to filter the report just to look at certain items, then click Items and choose the items (products you sell) you want to report on.

To see your total sales for each customer

Create a Sales Report by Customer Detail: Choose Sales Reports from the Reports menu, then choose By Customer Detail. (If you want to see sales for only specific customers, click Filters from the report window. In the Name field, choose the customers you want to report on.)

To forecast how much cash you'll have

Create a cash flow forecast that automatically projects your future cash flow based on any future payables or receivables that you have entered. Choose Other Reports from the Reports menu, then choose Cash Flow Forecast.

To compare budgeted amounts for income and expense accounts with actual income and expenses (if you have set up budgeted amounts for your income and expense accounts)

Choose Budget reports from the Reports menu. Then choose P&L Budget vs Actual.

To compare budgeted balances for balance sheet accounts with actual balances (if you have set up budgeted amounts for your balance sheet accounts)

Choose Budget Reports from the Reports menu. Then choose Balance Sheet Budget vs Actual.

For more information, see the:

"Reports" chapter in the User's Guide

Issues for organic farmers

Farmers who are registered as organic producers must undergo special registration and inspections. QuickBooks can help you track your purchases of approved pest control items, as well as where you use those controlled substances. In addition, you can create a QuickBooks report to help you determine the amount of your periodic assessment.

To track pest control purchases:

1.	In your chart of accounts, set up an expense account for Pest Control, with subaccounts for each type of pest control item you purchase.

2.	When you purchase one of these controlled substances, assign the amount of the cheque to the appropriate Pest Control subaccount, and enter the quantity you are purchasing in the Memo field. If this substance is for use only on a specific crop, enter that enterprise's name in the Class field.

This requires that you turn on class tracking, and use QuickBooks classes to track your enterprises. See "Using 'classes' for enterprise accounting" in this document for details.

To determine the amount of your periodic assessment:

1.	From the Reports menu, choose Sales Reports.

2.	Choose By Item Detail.

This report gives you your total sales for all of your enterprises. Because most assessments are a certain percentage of gross sales, you can use the sales report to determine the total sales, and then calculate the percentage you owe.

For more information, see the:

"Adding new accounts" topic in the "Your chart of accounts" chapter of the User's Guide

Helping us help you

We'd like to know your special concerns and the problems you run into when trying to make QuickBooks work in your business. We also want to know how useful "Farming and ranching" was in helping you fit QuickBooks to your needs.

Please use this sheet to mail or fax us your comments. If possible, please also attach specific comments marked on the printed version of this document. Mail the completed form and any attachments to:

Intuit Canada, Ltd.

Industry Feedback

P.O.Box 4165

Edmonton, Alberta

Canada

Or fax your comments to us at 1-800-387-4285

Some information about your business

Name:

Business name:

Address:

Phone:

Number of employees:

My business is a: __ Sole proprietorship __ Partnership __ Corporation

What other needs do you have, specific to your type of business, that were not covered in this document?

Do you have any tips for other people in your field who use QuickBooks?

Which two or three topics did you find most useful in this document?

May we call you to discuss your comments?

___ yes    ___ no


Service businesses

Overview for service professionals

Before you begin

Setting up your QuickBooks company

Organizing your income, expenses, customers, and jobs

Customizing your Chart of Accounts

Setting up customers

Tracking jobs

Creating items

Using classes to track different segments of your business

Writing estimates

Tracking time

Billing for service fees and costs

Adjusting invoice appearance

Handling reimbursable expenses

Handling product sales

Understanding income and profitability with reports

Other QuickBooks tips for service professionals

Helping us help you

Overview for service professionals

For the purposes of this document, a service business is any business that primarily sells a service to its customers. The service sold can be anything from repair services to landscape services to housekeeping services. If you also sell products to your customers, you may want to read the document which describes how to use QuickBooks for product sales.

As a service professional in a sole proprietorship, partnership, or corporation, you have some basic needs from your accounting system. QuickBooks can help you meet many of those needs, including:

Sending your customers invoices that meet their requirements

Tracking reimbursable expenses and charging them back to customers

Running payroll cheques for your employees

Analyzing how your business is doing by creating detailed financial reports

We recommend QuickBooks Pro for service businesses that need automated time tracking and estimating

Although you can use QuickBooks to handle your accounting, QuickBooks Pro is particularly useful for service businesses that need time tracking and estimating features. QuickBooks Pro's additional features let you:

Write an estimate that you can send to customers and later turn into invoices

Track the billable and unbillable time you spend on each job

Create customer invoices based on billable time

Track time for each person in your office

Run payroll cheques based on employees' timesheets

Separate your costs for work done by subcontractors from the amount you charge your customers for that work

Get reports on actual time spent on jobs, versus time billed or unbilled

Before you begin

This document gives you information on how to use QuickBooks for your special needs - we won't repeat what's already in the standard information you receive with QuickBooks. Instead, you'll see references to show where you can find complete information and details on using QuickBooks features.

Printing your industry document

If you're looking at this document onscreen, you're now in a "QuickBooks and Your Industry" window.

To print this document:

From the File menu, choose Print... or Print Topic.

If you got to this Help window from the interview, close the Help window to return to the interview.

To see other industry documents:

Click any of the industries listed in the contents.

Understanding QuickBooks terms

QuickBooks uses a few special terms that you should be aware of:

Chart of accounts

A list of accounts that you use to track how much money your company has, how much money it owes, how much money is coming in, and how much is going out

Item

Anything you charge a customer for, such as a service or a product sale. In QuickBooks, any charges or discounts you want to include on an invoice should be entered on your Item list.

Service item

A specific type of item. Service businesses would set up service items for any services they provide to customers, such as repair services, landscape services, and so on.

Class

A way to categorize income and expenses. For example, you can use the Class field to track the profitability of each partner in a business.

Important

The information in this document was compiled from the experiences and suggestions of other QuickBooks users in your type of business. Your own needs may vary considerably, and only you and your accountant understand the unique needs of your business.  Ultimately, you are responsible for your own books.

Therefore, we encourage you to have your accountant look over the setup suggested in this document, and we suggest that you give QuickBooks a thorough "trial run" early in the process. The best way to ensure that you have set up QuickBooks optimally for your business, and that it will provide all the information you need, is to enter a small number of your standard transactions in QuickBooks. Then try running all the reports you may eventually need.

While we can give you technical support on how QuickBooks works, our technical support representatives are not industry experts and cannot give you specific accounting advice. If you have questions regarding accounting issues specifically related to your industry, we recommend you consult either an accountant, industry expert, or professional association.

Setting up your QuickBooks company

The QuickBooks EasyStep Interview asks you questions about your business, and uses your answers to help you set up your service business in QuickBooks. We recommend the interview as the easiest way to get started and to customize QuickBooks for your business.

If you choose not to use the EasyStep Interview, you should follow the setup directions in "Setting up a QuickBooks company" chapter of the Getting Started Guide.

Organizing your income, expenses, customers, and jobs

QuickBooks includes important features that let you analyze your service business in great detail:

Your Chart of accounts is a list of accounts that you use to track how much money your company has, how much money it owes, how much money is coming in, and how much is going out.

The Customer list, with optional customer types, lets you keep track of the types of customers you serve.

Job tracking lets you track the income and expenses for each job you do for a customer, while the use of job types (available in QuickBooks Pro) lets you track the scope of your jobs.

Items let you track the services and products you provide to your customers.

Classes let you track different segments of your business, and give you a way to break down your income and expenses for any customer or any job.

The following sections give you more information about these and other features.

Customizing your Chart of Accounts

In QuickBooks, an account represents a group of transactions and is used for tracking and reporting purposes.  The complete list of accounts for your company is called the Chart of Accounts.  When you set up your QuickBooks company, you can choose a preset chart of accounts designed especially for service businesses.  This preset chart of accounts gives you a head start in creating your balance sheet accounts, income account, and expense accounts.

You may find as you review the preset chart of accounts that you need to add, edit, or delete accounts from that list, or add subaccounts.

Important:	As a general rule, you should reserve the accounts on your Chart of Accounts for broad categories, and use items and subitems to see more detail about items you've sold or bought.

For more information, see the:

"Your chart of accounts" chapter in the User's Guide

Setting up customers

In QuickBooks, the list that holds information about your customers is called the Customer:Job list. It stores information about your customers and the individual jobs you want to track for each customer. You should set up each person who pays for your services as a customer in QuickBooks.

Customer types

If you choose, you can also categorize your customers by giving them a customer type.The customer type lets you keep track of the different types of customers you serve, and gives you the information you need to analyze your customer base. Knowing your customer base can help you make decisions on advertising, promotions, or special marketing campaigns. You can categorize each customer in a way that is meaningful and useful for your business.

The customer types do not appear on QuickBooks forms, but you can create reports based on the information. You can also print mailing labels and summary statements based on customer type.

Examples of customer types for service businesses

You can use QuickBooks' optional customer types to track the information that is most meaningful for your business. For example, you can set up customer types to:

Track the different types of customers you serve (for example, Corporate or Individual). This lets you create reports that show exactly where you generate the most revenue.

Track how a customer was referred (for example, Other Customer, Yellow Pages, or Direct Mail). Knowing the sources of customer referrals can help you decide how best to spend your marketing dollars.

If you want to further break down your customer types, you can add subtypes. For example, to the "Corporate" customer type, you can add "Local" and "Out of Province" as subtypes.

Important:	Don't use customer types for two different purposes. For example, don't create customer types for tracking customer categories (corporate versus individual) as well as your referral sources. Choose the type of customer information you want to track, and set up your customer types to suit that purpose.

For more information, see the:

"Customers and jobs" topic in the "More QuickBooks lists" chapter of the User's Guide

Tracking jobs

If you do more than one job for a customer, and you want to keep track of your income and expenses on a job-by-job basis, you may want the level of detail provided by job tracking. In QuickBooks you can track jobs for each customer by setting up the jobs in the Customer:Job list.

For example, if you're a landscape architect currently drawing up plans for Company A, but you know that you'll also be the landscape contractor who implements the plan, you can add two jobs for Company A on your Customer:Job list. This lets you track the income and expenses separately for each job.

If you never do more than one job for a customer (or you don't want to track each job's income and expenses), you don't have to enter job names on the Customer:Job list. In that case, your list will contain only customer names.

If you have QuickBooks Pro and you are using job tracking, you can also categorize your jobs by type by using the Type field in the New/Edit Job window. Tracking job types gives you an idea of the profitability of each kind of job you do. It can also help you determine what proportion of your time is spent on different types of jobs.

Examples of job types for service businesses (QuickBooks Pro)

You can use QuickBooks Pro's optional job types to track any information about your jobs that you think is important. Then, later, you can filter reports to show only the data for specific types of jobs (job types). For example, you can set up job types to:

Track what proportion of your jobs are for different types of services (for example, plumbing services versus electrical services). This is useful for service professionals who have one hourly rate (and who have set up one service item in their Item list), but who want to track the different types of services they offer to customers.

Distinguish between Fixed Fee and Time Billing jobs.

If you want to further break down your job types, you can add subtypes. For example, to the "Plumbing Svcs" job type, you can add "Rough-in" and "Final" as subtypes.

For more information, see the:

"Job types" topic in the "More QuickBooks lists" chapter of the User's Guide

Creating items

As a service professional, you sell mainly services. (Some service professionals also sell products to their customers.) Although you may have reimbursable expenses you pass through to the customer, most of your invoices actually bill for your time and expertise. The items on your QuickBooks Item list represent the services and products you provide to your customers.

QuickBooks items automate your billing. When you're writing an invoice and you choose an item from the Item list, QuickBooks prints the name of the item (for example, Repair Svcs), a description ("Repair laser printer"), and the item's cost per unit or rate per hour. When you enter a quantity for the item (for example, 3 hours of on-site time), QuickBooks also figures out the total, and assigns that total to the appropriate income account.

Each fee you plan to list on an invoice (each service you provide or product you sell) should be a separate item on QuickBooks' Item list. Create a QuickBooks "service" item for each type of work you do for customers, whether it's done by a partner, salaried employee, subcontractor, or hourly employee. When you set up items, you also designate an income account you want them assigned to. (You'll typically have many items assigned to the same income account.) You can set up your items all at once or "on the fly," as you're filling out an invoice.

If you are a service professional who also sells products, you can create "inventory" or "non-inventory" type items to track the products you buy and sell. See "Handling product sales" in this document for more information.

If you have outside expenses for which you want to be reimbursed (for example, you may have purchased a plumbing fixture for a customer), you don't need to create a QuickBooks item in order to include them on an invoice. For details, see "Handling reimbursable expenses" in this document.

Important:	The way you set up items depends on how you want to bill your customers, and the information you want to show on your invoices. Below are some sample uses of items in QuickBooks. "Billing for service fees and costs" in this document gives you more information on how to set up your Item list to handle specific billing needs.

Example uses of items for a service business

To charge customers for services

Create a "service" item for each type of service you provide to customers, such as Repair Svcs, Landscape Svcs, Plumbing Svcs. When you create the item, enter the rate you charge for that service.

If you bill at different hourly rates for different service professionals or if you bill in phases (before a job is complete), you can use a combination of QuickBooks items and subitems. For details, see "Billing for service fees and costs" in this document.

To charge customers for products you sell to them

Create an "inventory part" or "non-inventory part" item for each product you sell to customers.

Use an inventory type item if you keep products in stock and you want to track the products you sell as inventory (that is, you want to track quantities on hand, cost of goods sold, and inventory value). When you create the inventory type item, enter the amount you've paid for the product as well as the price you plan to charge customers for the product.

Use a non-inventory type item if you don't keep products in stock, or if you keep products in stock, but you don't want to track inventory (you don't need to know quantities on hand, cost of goods sold, and inventory value). When you create the non-inventory type item, enter the price you plan to charge customers for the product.

For more information, see "Handling product sales" in this document.

To track forgiven charges (billable hours for which you decide not to bill the customer)

Create a "discount" item called Courtesy. When you create the item, leave the rate at 0.00; you can enter the amount of the forgiven charge directly on the invoice. See "Forgiving charges" in this document for details.

(QuickBooks Pro) To track costs of services done by subcontractors as expenses, and revenue from those services (when the customer reimburses you) as income

Create "service" items for subcontractor services and select the "This service is performed by a subcontractor" checkbox. This lets you enter your cost and an expense account. You also enter what you charge your customers for the services, and an income account to record the reimbursement.

Setting up items specifically for subcontracted work helps you manage your books more effectively. When you use these items, QuickBooks Pro records expenses and income for subcontracted work in separate accounts. This lets you create reports that show the profitability of subcontracted work to your business.

For more information, see the:

"Items - your products and services" chapter of the User's Guide

Using classes to track different segments of your business

QuickBooks classes give you another way to track income and expenses in addition to customer type and (in QuickBooks Pro) job type.

Classes give you a way to track different segments of your business, and to break down your income and expenses for each segment. For example, if your firm does business in two different locations, you can use classes to track the proportion of your income and expenses related to those two locations.

How classes differ from customer types and job types

Classes can apply to all transactions, so they are not tied to any particular customer or job. However, a job type or a customer type is associated with only certain jobs or certain customers.

For example, a caterer might have "Corporate" and "Individual" customer types to categorize her customers, and "Appetizers," "Buffet," and "Dinner" job types to categorize each job for a customer. She can then get financial reports focused by type of customer or type of job.

But let's say she needs a third classification that spans any type of customer or job. In this case, she can use QuickBooks classes. For example, if she has a partner, she can create a class for herself and a class for her partner. She would then select one of those classes on each transaction in QuickBooks. Later, she could get reports on income and expenses by partner (class), regardless of which types of customers or jobs they both worked on.

Tips for when to use classes

Here are some tips for when to use classes:

Think of the ways you'd like to categorize portions of your business in terms of income and expenses for each portion. The classes you set up should correspond to those portions, and can be any meaningful breakdown of the business you do.

Set up classes on the basis of the type of reporting you want to do, and consider how you want to see your business segmented on reports. For example, if your business has three partners and you want to analyze the profitability of each partner's jobs, you can create a class for each partner. Later, you can create a report that looks at income and expenses by class (for each partner).

Classes are most useful when you can identify both income and expenses for each class you set up, because this makes the Profit and Loss By Class report more meaningful. For example, if you do business in two different offices or locations, you can make each location a class if you can identify both your income and expenses by location. That way, you can see a Profit and Loss report by location (class).

Don't use classes for two different purposes. For example, don't create classes for tracking office locations as well as for tracking partners.

Examples of classes for service businesses

You can use classes to:

Analyze the income and expenses related to each partner's customers, by setting up each partner as a separate class.

Analyze the income and expenses for each location, if you have offices in more than one location. Make each business office a separate class.

If you want to break down your income and expenses even further, you can create subclasses. If you decide to use classes, you can set them up all at once or "on the fly."

Writing estimates

Many service professionals submit estimates at the beginning of a job. You may need to create an estimate if:

the job is being "put out to bid" by a potential customer, who asks for estimates from interested service providers

you bill on a fixed-fee basis and the customer wants an estimate that specifies the work you agree to complete for the stated fee

you bill on an hourly basis, but the customer wants an estimate of how long it will take you to complete the job, and an approximate cost

If you have QuickBooks Pro, you can use the estimate form to create your estimate. If you have QuickBooks, you can use a pending invoice.

QuickBooks Pro automates estimates

If you have QuickBooks Pro, you can use the estimate form to create an estimate that you send to customers. Once you have all the job tasks entered on the estimate form, you can later turn the estimate into customer invoices. (See "Invoicing from a QuickBooks Pro estimate" in this document for details.)

You can also customize the estimate form to include only the columns and information you need. For example, depending on your needs, you can:

Change the name of the Item column to "Task" or "Service."

Change the name of the Quantity column to "Hours."

Change the name of the Cost column to "Rate" or "Fee."

Change the order the columns display on the form.

Eliminate a column entirely.

For more information, see the:

"Customizing your estimates" topic in the "Estimates" chapter of the User's Guide

Creating an estimate without QuickBooks Pro

If you don't have QuickBooks Pro, you can use a pending invoice to create an estimate. When the customer approves your estimate and you are ready to invoice for your work, you can invoice directly from your estimate. See "Invoicing from a QuickBooks pending invoice" in this document.

To create estimates in QuickBooks:

1.	Create an invoice that details the work you plan to do for the customer.

Enter the customer name and charges as usual. (If you don't have all your charges set up in your QuickBooks Item list, you can add them as you go.)

2.	Type the words "Pending Approval" in the Customer Message field.

3.	While the invoice is displayed, choose Mark Invoice as Pending from the Edit menu.

QuickBooks displays the word "Pending" on the onscreen invoice (it does not appear on the printed invoice).

4.	Change the title of this invoice to "Estimate" or "Proposal".

Select a customized invoice template on  which you have changed the default title to "Estimate" or "Proposal". (See the "Forms" chapter of the User's Guide.) When you wish to convert this estimate back to an invoice, simply display it on your screen and select your usual invoice template.

5.	(Optional) If you think you may create more than one invoice from this proposal (because you are billing in phases), memorize the proposal by choosing Memorize Invoice from the Edit menu.

Give the memorized invoice a name such as "Jones Estimate." Click the "Don't remind me" checkbox to select it.

By memorizing the estimate, you'll be able to easily convert it to an invoice later. (See "Invoicing from a QuickBooks pending invoice" in this document.)

6.	Print the estimate for the customer's review.

You can get a report listing all pending invoices by choosing Sales Reports from the Reports menu, then choosing Pending Sales.

Tracking time

A service professional sells time and expertise, so tracking time accurately and completely is of obvious importance. If you have QuickBooks Pro, you can track your time on QuickBooks Pro timesheets and transfer the hours directly to customer invoices. If you have QuickBooks, you can track your time on a pending invoice.

QuickBooks Pro automates time tracking

QuickBooks Pro lets you track your time on jobs, and analyze your time costs by customer or job, person who did the work, or by type of work done.

Important:	If you do your books on an accrual basis, time you enter in QuickBooks Pro is not considered revenue until you actually bill for it; similarly, it is not considered an expense until you actually run payroll.

Keeping track of time

You can enter time for an owner, partner, or employee. On the time entry form, you choose the customer and job for whom the work was done in the Customer:Job field. You then choose the "service item," which is the type of work you did (see "Creating 'items' for billable services" in this document). Later you can pass the charges to your customers on invoices.

You have the option of entering individual activities on separate forms or using a weekly timesheet format. In either case, be sure to enter as complete a time record as possible so QuickBooks Pro can translate those hours into billable hours on customer invoices or statements.

Which time entry form to use

QuickBooks Pro lets you track time using either the Single Activity window or the Weekly Timesheet window. The Single Activity window is for recording time spent by one person on a single activity for a single job on a single date. A weekly timesheet is a record of time spent by one person on any number of jobs within a seven-day period.

Individual time entries are convenient to use if you will be continuously running QuickBooks Pro, and entering each activity as you do it, rather than entering all your time at the end of the week from a paper timesheet.

The weekly timesheet in QuickBooks Pro is useful when you want to work from a paper form and enter time for all your jobs at once. If you want to continue using the timesheets you've been using in your business, you can transfer the data from them to QuickBooks Pro's weekly timesheet form before invoicing customers.

Transferring time data and notes to invoices

When you are invoicing a customer and have the invoice form displayed, you can click Time/Costs (and then click the Time tab) to see a list of the time entries you've recorded in QuickBooks Pro for that customer's job. Clicking next to a time entry transfers it directly to the invoice.

You may also want the notes you've entered for each activity to be included on the invoice.

To use your time entry notes on the invoice:

1.	Select the customer and job (Customer:Job), and click Time/Costs.

2.	Click the Time tab.

3.	If 'Transfer activity notes' does not appear under options, click the Change button, then click the "Transfer notes for each activity" box to select it, and click OK.

QuickBooks Pro has a limit on the number of characters you can enter in the notes field. That limit is the same on the weekly and individual time entry forms. If you transfer notes to invoices, you may have to manually adjust the appearance of the text on that form. (This is especially true if you entered your notes and pressed the Enter key at the end of each line. When you're entering notes, it's better to type without pressing the Enter key, so that QuickBooks Pro can automatically wrap each line.)

Tracking non-billable time

Some service professionals track their non-billable hours as well as their billable ones. For example, if you spend part of your day marketing your services, or presenting estimates to customers, you may want to track the total amount of time you spend on such activities.

QuickBooks Pro lets you track the actual number of hours you spend on jobs, not just the amount for which you bill customers. By tracking your non-billable hours, you can get a better idea of your business's profitability. If your business has employees, you may want to track each person's billable hours versus non-billable hours.

To keep track of non-billable time (for activities you never plan to bill customers for), you need to set up "service" type items for each of your non-billable activities. Then, on your time entry form in QuickBooks Pro, you can choose from your list of service items to fill out the form. If the activity is non-billable, just click the Billable checkbox (in the Single Activity window) or the Billable column (in the Weekly Timesheet window) to deselect it. QuickBooks Pro places an 'X' over non-billable items.

For example, if you spend four hours doing a job for one of your customers (a billable activity), and two hours working up an estimate for a new job for the same customer (a non-billable activity), you enter 4.0 for the Service Call item and 2.0 for the Marketing item on your time entry form. Because marketing activities are not billable, you can click next to the Marketing item on the time entry form, to mark that line with an 'X.' This tells QuickBooks Pro that you don't want to invoice the customer for that activity.

You can see how much of your time is spent in billable versus non-billable activities by creating a Time by Item report (one of the Project reports).

For more information, see the:

"Time tracking" chapter of the User's Guide

"Invoicing customers for time worked" topic in the "Time tracking" chapter of the User's Guide

"Charging for reimbursable expenses" topic  in the "Sales and sales forms" chapter of the User's Guide

"Charging for actual time and costs" topic in the "Sales and sales forms" chapter of the User's Guide (QuickBooks Pro)

Tracking time without QuickBooks Pro

If you don't have QuickBooks Pro, you can keep track of your time on a pending invoice. Use a separate invoice for each customer's job.

To keep track of time on a pending invoice:

1.	Create the invoice as usual, entering the customer name and job.

2.	While the invoice is displayed, choose Mark Invoice as Pending from the Edit menu.

QuickBooks displays the word "Pending" on the onscreen invoice (not on the printed version).

3.	Whenever you work on this job for this customer, enter the time and charges on the pending invoice.

4.	When you're ready to invoice for your time, display the invoice and choose Mark Invoice as Final from the Edit menu. Then print the invoice as usual.

Tip: When you're ready to mark the invoice as final, you can find the invoice quickly by creating a pending sales report and using QuickZoom to display the original invoice form. (To do so, choose Sales Reports from the Reports menu, then choose Pending Sales. In the report window, double-click the invoice you want to see.)

Billing for service fees and costs

When you fill out a QuickBooks invoice, you list each service you've provided for the customer, along with its associated fee. You may want your invoice to show some or all of these details:

the service you're invoicing for

the number of hours spent on each service

if you are billing by time and more than one service provider was involved, the total number of hours worked and the hourly rate for each person

if you sell products, the total amount (with sales tax, if applicable) you wish to charge for each product

expenses for which you want to be reimbursed (such as materials used on the job)

Service professionals typically bill their customers using a combination of these methods:

Time billing

Invoices based on time billing typically show the services provided, the number of hours spent on each service, the hourly rate, and the total fee. If you invoice customers using this method, see" Billing customers for time" and "Billing for work done by several service professionals" in this document.

Flat-fee billing

Invoices based on flat-fee billing typically show the service and the fee. If you invoice customers using this method, see "Billing customers for a fixed fee" in this document.

Once you set up your items for billing (as described below), you can customize the invoice to show only the information you need. See "Customizing invoice appearance" in this document for details.

Setting up items for billing

Each fee you include on an invoice (each service you provide or each product you sell) should be a separate item on QuickBooks' Item list. (See "Creating 'items' for billable services" in this document.) The way you set up your Item list depends on the services you provide and the information you want to show customers on an invoice. For example, suppose your landscaping firm provides these services:

Consultation

Landscape Architecture

Landscape Contracting

Within each of these general areas are specific tasks that need to be accomplished. For example, services for Landscape Architecture might be Consultation, Preliminary Design, and Final Plans. (Of course, the services you offer depend on the type of service business you have.)

If you want your invoices to show each main heading, as well as the time spent on individual services underneath that heading, you can use a combination of QuickBooks items and subitems - use items for each main heading and subitems for tasks underneath that heading. When creating your Item list, you should model it on the list of services your firm already uses.

To set up the Item list to show service headings with subservices:

1.	Create "service" type items for each main service heading, such as Consultation. Do not enter a Rate for the item.

2.	For each service item just created, create subitems for each service included in that heading.

For example, if one of the services underneath Consultation is "On-site consultation," you can create a subitem for Consultation called On-Site.

3.	Type a description that you want to appear on the invoice.

Because the item name usually requires abbreviation, you'll want to provide a complete description that will be understandable to your customers.

4.	Enter a Rate for the new subitem.

If you are charging by time (hours worked), enter your hourly fee for the Rate.

If you are charging by time, and your firm employs several service professionals, leave the Rate at 0.00. You'll want to create subitems underneath this task for each of your service providers, as described in "Billing for work done by several service professionals" in this document.

If you are charging according to a flat fee, enter your fee for this service in the Rate field.

On the invoice, when you choose Consultation:On-Site from the Item list, QuickBooks displays the item and subitem name (separated by a colon), the description, and the rate.

For more information, see the:

"Items - your products and services" chapter of the User's Guide

Billing customers for time

For a job charged on a time basis (number of hours worked), you'll want your Item list to include the hourly rate you charge for each service (see Step 4 in the previous section).

If you have QuickBooks Pro, you can track your time within QuickBooks Pro, and transfer that time directly to your invoices, as described earlier in "Tracking time."

If you have QuickBooks, you can track your time on a pending invoice and turn that into a final invoice when you're ready to bill, as described earlier in "Tracking time without QuickBooks Pro."

Billing for work done by several service professionals

If your jobs typically involve the work of more than one person, and you bill their time at different hourly rates, you'll want to set up your Item list to include those rates.

For example, suppose your firm has three service professionals, all with different hourly rates. If you want your invoices to show the time worked by each person, you can set up your Item list like this:

Consultation ("service" item with 0.00 rate)

On-Site (subitem of Consultation; 0.00 rate)

John (subitem of On-Site; 100.00 rate)

Ray (subitem of On-Site; 85.00 rate)

Adam (subitem of On-Site; 60.00 rate)

When you're ready to invoice, just choose the appropriate subitem from the list, and QuickBooks enters the service description and rate for you. All you have to do is enter the time worked by each person (or, if you have QuickBooks Pro, click Time/Costs and then click the Time tab).

Billing customers for a fixed fee

If you plan to charge a customer a fixed fee for a service (for example, on-site visit), create the invoice as usual. When you choose the service from the drop-down list in the Item column, you can edit the amount shown in the Rate column as necessary.

Invoicing from an estimate

If you created an estimate in QuickBooks or QuickBooks Pro (see "Writing estimates" in this document), you'll want to use that estimate as you invoice your customers.

Invoicing from a QuickBooks Pro estimate

If you have QuickBooks Pro, you can create an invoice from your estimate. Then you can modify the invoice if necessary.

To create an invoice from an estimate:

1.	Locate the estimate by displaying the Customer:Job list, selecting the job (or the customer, if there is no separate job for that customer), and clicking Activities, then View Estimate.

2.	Click Create Invoice at the bottom of the Create Estimates window.

3.	Delete all sections from the invoice that you don't plan to bill the customer for at this time, and add any other information as necessary.

You can edit the invoice by deleting lines, changing rates or hours, and adding new charges or services.

You can create multiple invoices from the same estimate (in order to bill for different phases of the job), by repeating the preceding steps.

For more information, see the:

"Turning an estimate into an invoice" topic in the "Estimates" chapter of the User's Guide

Invoicing from a QuickBooks pending invoice

If you created an estimate by using a pending invoice, the way you invoice from that estimate depends on whether you want to create one or multiple invoices from the same estimate.

To create one invoice from an estimate:

1.	Display the pending invoice that contains your estimate.

Tip: You can find the invoice quickly by creating a pending sales report and using QuickZoom to display the original invoice form. (To do so, choose Sales Reports from the Reports menu, then choose Pending Sales. In the report window, double-click the invoice you want to see.)

2.	Change the title from "Estimate" back to "Invoice" by selecting your regular invoice template.

3.	Edit the invoice as necessary to reflect the charges you want to bill.

4.	Choose Mark Invoice as Final from the Edit menu.

When you turn the proposal back into an invoice, the original proposal no longer exists in QuickBooks.

To create multiple invoices from an estimate:

1.	Follow the steps for creating an estimate using a pending invoice. (See "Creating an estimate without QuickBooks Pro" in this document.)

If you followed the steps listed in that section, you should have memorized your estimate.

2.	From the Lists menu, choose Memorized Transactions.

3.	Select the memorized estimate for your customer and click Enter Transaction.

QuickBooks displays the estimate in the Create Invoices window.

4.	Select your usual Invoice template from the Custom Template list to change the title from "Proposal" back to "Invoice."

5.	Edit the invoice as necessary to reflect the charges you want to bill.

Remember to change the Customer Message, if necessary.

The next time you're ready to bill the customer, you can repeat the preceding steps, beginning at Step 2.

Invoicing for partial hours (billing in phases)

Invoicing customers is an art, not a science. You sometimes change your mind about how and when to invoice for a billable service while you are in the midst of preparing your invoices.

Suppose you have spent 12 hours drawing a landscape plan for one of your customers. But as you prepare the invoice, you decide that, since the plan is not yet complete, you'll bill the customer for half the hours now, and the remaining hours on a future invoice.

If you recorded your hours in QuickBooks Pro, you just need to adjust your timesheet entry. If you recorded your hours on a pending invoice in QuickBooks, you'll need to create a second pending invoice.

To invoice for partial hours in QuickBooks Pro:

1.	Display the weekly timesheet page where you have the total hours entered.

Even if you originally entered the time on a single activity form, you can see the time entry by displaying the weekly timesheet.

2.	Edit the time to display the number of hours you want to bill for on this invoice.

3.	On the next line of the timesheet, enter the remaining hours.

Choose the same Customer:Job and the same item name.

If you need to insert a blank line, you can choose Insert Line from the Edit menu.

4.	Return to the invoice and click Time/Costs. Then click the Time tab.

QuickBooks shows you the two time entries related to that particular job.

5.	Click in the Use column next to the time entry you want to include on the current invoice.

To invoice for partial hours in QuickBooks:

1.	Display the pending invoice where you have the total hours entered.

2.	Edit the time to display the number of hours you want to bill for on this invoice.

3.	Choose Mark Invoice as Final from the Edit menu.

4.	Create a new pending invoice for the remaining hours.

See "Tracking time without QuickBooks Pro" in this document for information on how to create pending invoices.

Forgiving charges

When you invoice a customer, you may sometimes decide to "forgive" certain charges; that is, you decide not to bill the customer for a number of billable hours. For example, you may have estimated that a repair job would take four hours, but it actually took you six. For an important customer, you may decide to forgive the two extra hours, and only invoice for four hours of time. If you want to show this forgiven time on your invoice (some service professionals call this a "courtesy" item), you can handle it in one of two ways:

If you don't want to track forgiven charges for each of the services you perform, or if you perform only one kind of service (you have one "service" item set up on your Item list), you can create one "discount" item called Courtesy. For example, if you create an invoice for six hours of repair time (the Repair service item), you can choose the Courtesy discount item and subtract two hours of time off the customer's charges.

If you perform more than one kind of service (you have several "service" items set up on your Item list), you can use subitems that track your forgiven charges for each of your services. For example, you can create a "service" item called Courtesy, with a Rate of 0.00. Then you can create subitems for Service A and Service B. When you enter the amount of the forgiven charges on the invoice, you must enter a negative number.

You can see how many billable hours you've forgiven by creating a Sales by Item report (one of QuickBooks' Sales reports).

Billing retainer customers

You may have a contract with some of your customers to "be on retainer" - they pay you a set fee to perform certain services for them. For example, a business that provides gardening services may charge a monthly fee of $150 to mow and trim a property. You can automate the billing of these retainer customers by memorizing an invoice for them in QuickBooks.

To bill retainer customers:

1.	Create an invoice for the retainer customer, showing the service you agree to perform and the fee.

2.	While the invoice is displayed, choose Memorize Invoice from the Edit menu.

3.	In the Memorize Transaction window, click the "Remind Me" button or the "Automatically Enter" button. Choose Monthly in the "How Often" field.

If you click "Remind Me," QuickBooks reminds you when to invoice this customer. If you click "Automatically Enter," QuickBooks creates the invoice transaction for you automatically.

If you are on retainer, but have an agreement that you can charge for reimbursable expenses, you can add your expenses to the invoice before you print it, as described in "Tracking your own costs for reimbursement" in this document.

Tracking advance payments from retainer customers

If you have retainer customers from whom you receive an up-front or advance payment, the payment is considered a liability. (This is because you owe the service to the customer, and will be working off the liability.) You can track the liability in QuickBooks by setting up these three things:

a liability account for tracking retainers

an "other charges" type item, for showing the retainer on invoices

a "payment" type item, to show the original payment received

For more information, see the:

"Retainers" topic in the "Receiving and depositing payments" chapter  of the User's Guide

Sending summary statements to customers

As you enter invoices and customer payments day to day, QuickBooks tracks the information to create summary statements that you can send to your customers. Summary statements are like a mini-report of the charges and payments made on a customer's account; you just review them, decide whether to add finance charges, and print them.

Important:	Do not confuse summary statements with billing statements. A billing statement is a second method QuickBooks provides for you to bill your customers (invoices are the other billing method). You should choose whether to use invoices or billing statements and use that method consistently.

For more information, see the:

"Using billing statements" topic in the "Sales and sales forms" chapter of the User's Guide

Customizing invoice appearance

Depending on how you've done invoices in the past, you may want to remove or add information to QuickBooks' standard invoice forms. You can add or delete fields or columns, widen or change the order of columns, and include your own customized fields on the invoice. For example, depending on your needs, you can:

Remove the Item column from the printed invoice form (not from the onscreen form). If you provide a detailed description for each item you set up, you don't need to display the item name to customers.

Change the title of the Quantity column to "Hours."

Remove the Rate column, if you always bill according to a fixed fee. (The Amount column is all you need.)

Remove the shipping information from the invoice form (if you sell only services).

Add a customized field for a customer's pager number. (To do this, you must first add the field to your Customer:Job list. See "Tracking information about your customers" in this document for details.)

For more information, see the:

"Adding customized fields" topic in the "Working with lists" chapter of the User's Guide

"Customizing form content" topic in the "Forms" chapter  of the User's Guide

Adding multi-line descriptions

When you type text in the Description column, you can set exactly where your lines break by pressing Down Arrow to move to a new line.

To enter several lines of description:

1.	On the invoice form, position your cursor in the Description column.

2.	Type your lines of description, pressing Down Arrow to move to the next line of the description.

Each line has a limit of 99 characters. Although you can't see a line this long on the onscreen form, QuickBooks displays the entire line on the printed invoice. (You can click the Preview button to check how a line will print.)

Using a word processing program for customer billing

Some service businesses create letter-like invoices for their customers, rather than the form-based invoice used by QuickBooks. Using a word processing program to invoice is no problem. Just enter invoices in QuickBooks to keep your accounts receivable information up to date, but don't print the invoices.

To use a word processing program for invoices:

1.	Enter invoices into QuickBooks as usual, but clear the "To be printed" checkbox.

2.	Use your word processing program when it's time to invoice your customer.

For more information, see the:

"Sales form format" topic in the "Sales and sales forms" chapter of the User's Guide

Handling reimbursable expenses

Some service professionals incur expenses on behalf of customers while working on jobs. These expenses are called reimbursable expenses. This section tells you how to track your own and employees' reimbursable expenses in QuickBooks.

Tracking your own costs for reimbursement

When you incur expenses that you plan to pass along to clients, you pay for the expense by cheque, credit card, or cash. You can track these transactions as job costs in QuickBooks, and pass them along to your clients when it's time to bill them.

If you pay for items by cash, use the Splits feature in your Petty Cash account register to indicate the appropriate expense account and Customer:Job for this expense.  Enter any necessary memo information.

If you write a QuickBooks cheque or use the credit card form to pay for reimbursable expenses, select the appropriate expense account and Customer:Job for this expense. Enter a memo in the detail area of the cheque, also; this description will appear in the Description column of the invoice when you select that expense.

When you're ready to invoice the client, and you have the invoice form displayed, click the Time/Costs button, and then click the Expenses tab (in QuickBooks Pro) or click the Expenses button (in QuickBooks). QuickBooks shows you a list of expenses not yet invoiced. If you want to include the expense on the invoice, click in the Use column next to the reimbursable expense and click OK.

For more information, see the:

"Charging for reimbursable expenses" topic in the "Sales and sales forms" chapter of the User's Guide

"Charging for actual time and costs" topic in the "Sales and sales forms" chapter of the User's Guide (QuickBooks Pro)

Tracking costs and reimbursements for employees

You may have employees who incur expenses for clients. You need to reimburse those employees, then pass on the costs to the client. Here's how to handle this situation in QuickBooks.

To reimburse employees and bill clients:

1.	Have your employees track their expenses in expense reports.

You can use the paper forms you're already using.

2.	From the Activities menu, choose Write Cheques.

Write a reimbursement cheque to each employee (not a pay cheque).

In the cheque detail area, itemize each expense by client and project (Customer:Job).

Click OK to record the cheque.

4.	From the Activities menu, choose Create Invoices.

Write an invoice to the client.

If you have QuickBooks Pro, click Time/Costs, then the Expenses tab to choose the reimbursable expenses you want to include on the invoice. If you have QuickBooks, click the Expenses button to choose the reimbursable expenses you want to include on the invoice.

Click in the Use column next to the expenses you want included on the invoice, and click OK.

For more information, see the:

"Charging for reimbursable expenses" topic in the "Sales and sales forms" chapter of the User's Guide

"Charging for actual time and costs" topic in the "Sales and sales forms" chapter of the User's Guide (QuickBooks Pro)

Handling product sales

If you sell products as well as services, you may want to use QuickBooks' inventory feature to track the products you buy and sell. If you purchase items ready for resale, keep them in inventory, and then sell them, QuickBooks can track the current number in stock, your cost of goods sold, and the value of your inventory after every purchase and sale.

However, not all service professionals who keep products in stock want to track their products as inventory. If you don't need to know your quantities on hand and cost of goods sold, you can create "non-inventory part" items for each of the products you have in stock.

If you order products only as needed and do not keep them in stock (that is, you do not have inventory), you should create "non-inventory part" items for each of the products you sell.

Service professionals who sell products may want to look at two other industry documents, available in QuickBooks, that deal with product sales:

If you stock inventory, you may want to browse the document titled "Product sales businesses using QuickBooks inventory."

If you do not stock inventory, or you do not want to track your products as inventory, you may want to browse the document titled "Product sales businesses not using QuickBooks inventory."

For instructions on how to view these documents, see "Finding this and other industry documents" at the beginning of this document.

For more information, see the:

"Inventory" chapter of the User's Guide

"Non-inventory part items" topic in the "Items - your products and services" chapter of the User's Guide

Understanding income and profitability with reports

QuickBooks has over seventy preset reports (QuickBooks Pro has even more), which you can customize to fit your needs. The most important reports for any business, service businesses included, are the Profit and Loss reports and the Balance Sheet reports. To create these for your business, just choose from the Reports menu.

Here are some reports which service professionals may find especially useful, along with instructions on how to create them in QuickBooks from the Reports menu:

To determine amount billed for each item (each service item, other charges item, inventory part item, and so on) in a specific period

Choose Sales Reports, then choose By Item Detail, to see a report organized by service headings. At the report window, change the date range to cover the billing period you want to see.

To determine amount billed for each customer in a specific period

Choose Sales Reports, then choose By Customer Detail to see a report organized by customer and job. At the report window, change the date range to cover the billing period you want to see.

To determine job profitability for each of your jobs

Choose Profit & Loss, then By Job.

(If you have set up customer types) To see a report of sales by customer type

Choose Sales Reports, then choose By Customer Summary. At the report window, click the Filters button. In the Customer Type field, choose the customer type you want to report on.

(If you have set up classes) To determine the profitability of each segment of your business

Choose Profit & Loss, then By Class.

(QuickBooks Pro, if you have set up job types) To see a report of sales by job type

Choose Sales Reports, then choose By Customer Summary. At the report window, click the Filters button. In the Job Type field, choose the job type you want to report on.

(QuickBooks Pro) See billable versus non-billable hours by employee

Choose Project Reports, then Time Activity Detail.

(QuickBooks Pro) See hours spent for each type of service item

Choose Project Reports, then Time by Item. Filter the report to show columns for Billed, Unbilled, and Not Billable time (click Customize).

(QuickBooks Pro) See hours spent for each job.

Choose Project Reports, then Time by Job.

(QuickBooks Pro, if you have set up items to track subcontracted services) See a report on the profitability of your subcontracted services

Choose Project Reports, then Item Profitability. At the report window, click the Filters button. Then click the Invoice Opts button. In the Items field, choose the items you have set up for subcontracted services.

For more information, see the:

"Reports" chapter of the User's Guide

Other QuickBooks tips for service professionals

Here are some other QuickBooks features you may find useful in your service business.

Keeping track of conversations and tasks

Service professionals often make decisions with customers over the telephone. It's important to keep track of your conversations with customers, whether they occur in person or by phone. QuickBooks lets you enter notes for each customer in your Customer:Job list. The customer notes give you a quick way to jot down important details of a discussion.

To enter a note related to a specific customer:

1.	Display the Customer:Job list.

2.	Double-click in the Notes column to the right of the customer name.

QuickBooks displays the Notepad for that customer.

3.	Enter your notes.

You can use the To Do list in combination with the customer notes. Suppose your customer wants you to fax her an estimate for a new job, and you've agreed to send it to her in two days. You can enter a note about your conversation in your customer notes, and you can also have QuickBooks remind you of the due date by entering it in the To Do list.

To add a note to the To Do list:

1.	From the Lists menu, choose To Do Notes.

If you already have the Notepad displayed for that customer, you can click the New To Do button.

2.	Click the To Do button, then click New to add a new note.

3.	Enter the note and the date you want to be reminded.

If you have reminders turned on, QuickBooks displays your "to do" note in the Reminders window when you start QuickBooks.

Tracking information about your customers

The QuickBooks Customer list lets you add extra fields to each customer's record for any purpose. You can use these customized fields to track dates, personal information, and so on. Service professionals may want to add customized fields to track additional customer information such as:

How customer was referred

Customer's pager number

Name of customer's spouse

Name of customer's administrative assistant

Relevant personal information about customer (for example, a housekeeping services firm may want to keep track of which days a customer wants his house cleaned)

Region or area in which customer lives (for example, a service business that assigns each employee to a specific county would want to know the county in which the customer lives)

Information you enter into the fields can be just for your use (for example, you can look up a customer's record to see the name of his administrative assistant), or you can add the customized fields to your sales forms and have the information appear on your invoices and cash sales receipts.

If you want to add customized fields to a customer's record, see the steps below. If you want to then add the customized fields to your invoices, see "Customizing an invoice" earlier in this document.

To add customized fields to a customer's record:

1.	Select the customer's name in your Customer:Job list, click the Customer:Job button, then click Edit.

2.	At the Edit Customer window, click the Additional Info tab.

3.	Click the Define Fields button to specify the custom fields you want to add to each customer's record.

Enter the name of the field and where you want it to be used (you can have it displayed for your customers, vendors, and/or employees).

4.	(Optional) Fill in the fields for this customer, vendor, or employee.

You'll see the new fields on the Additional Info tab. If you fill in a field, and have added that field to your sales forms, the information you enter transfers automatically to any customized form where the field appears. For example, if the field is named "Region" and you've entered "Northtown" as the region for a particular customer, the Region field on your sales forms prefills to "Northtown" each time you enter a sale to the customer.

Leave a field blank if you'd prefer to fill it in at the time you make a sale.

5.	Click OK.

What's next

You can add customized fields you've set up for customers to any sales form and to the estimate form. If you want information you've entered in the customized fields to appear on a form, you must add the fields to the form. (For details on how to customize an invoice, see "Customizing an invoice" in this document.)

For more information, see the:

"Adding customized fields" topic in the "Working with lists" chapter of the User's Guide

"Creating custom forms overview" topic in the "Forms" chapter of the User's Guide

"Customizing form content" topic in the "Forms" chapter of the User's Guide

Helping us help you

We'd like to know your special concerns and the problems you run into when trying to make QuickBooks work in your business. We also want to know how useful "Service businesses" was in helping you fit QuickBooks to your needs.

Please use this sheet to mail or fax us your comments. If possible, please also attach specific comments marked on the printed version of this document. Mail the completed form and any attachments to:

Intuit Canada, Ltd.

Industry Feedback

P.O.Box 4165

Edmonton, Alberta

Canada

Or fax your comments to us at 1-800-387-4285

Some information about your business

Name:

Business name:

Address:

Phone:

Number of employees:

My business is a: __ Sole proprietorship __ Partnership __ Corporation

What other needs do you have, specific to your type of business, that were not covered in this document?

Do you have any tips for other people in your field who use QuickBooks?

Which two or three topics did you find most useful in this document?

May we call you to discuss your comments?

___ yes    ___ no


Legal firms

Overview for attorneys

Before you begin

Setting up your QuickBooks company

Organizing your income, expenses, clients, and cases

Creating items for billable services

Setting up clients as customers

Tracking cases or matters as jobs

Using classes to track segments of your business

Tracking time

Advanced costs

Retainers, client monies, and trust accounts

Billing for legal fees and costs

Customizing invoice appearance

Understanding income and profitability with reports

Are your contingency or speculative cases profitable?

Conflict checking and other QuickBooks tips for lawyers

Helping us help you

Overview for attorneys

As an attorney, you have some basic needs from your accounting system. QuickBooks can help you meet many of these needs, including:

Handling retainers and client trust monies

Tracking advanced costs or reimbursable expenses and charging them back to clients

Sending your clients statements and/or invoices that meet their requirements

Conflict checking and contact management

Analyzing how your business is doing by seeing your profitability in terms of income and expenses, types of cases, or types of services performed, and types of clients served

We recommend QuickBooks Pro for legal firms

While you can use QuickBooks to handle your accounting, QuickBooks Pro is particularly useful for attorneys. QuickBooks Pro has additional features that let you:

Track the time you or anyone in your office spends on each case or matter

Create client invoices or statements based on billable time

Get reports on actual time spent on cases versus time billed or unbilled

Get reports on how much billable and unbilled time you and each associate in your office is accumulating

Easily separate your costs for work done by subcontractors or consultants from the amount you charge your clients for that work

Before you begin

This document gives you information on how to use QuickBooks for your special needs - we won't repeat what's already in the standard information you receive with QuickBooks. Instead, you'll see references to show where you can find complete information and details on using QuickBooks features.

Printing your industry document

If you're looking at this document onscreen, you're now in a "QuickBooks and Your Industry" window.

To print this document:

From the File menu, choose Print... or Print Topic.

If you got to this Help window from the interview, close the Help window to return to the interview.

To see other industry documents:

Click any of the industries listed in the contents.

Understanding QuickBooks terminology

QuickBooks uses a few special terms that you should be aware of:

Chart of accounts

A list of accounts that you use to track how much money your company has, how much money it owes, how much money is coming in, and how much is going out.

Item

Legal service or charge (anything you charge for).

Some example items are: Research, Court Appearance, Office Charge, Advisory Session, Living Trust

Class

A way to categorize income and expenses. For example, you can use the Class field to track the profitability of each partner in a firm.

QuickBooks also uses some generic terms which you will need to match to the terms you use. Here are some legal  terms mapped to QuickBooks terms:

A client would be a customer in QuickBooks.

A case or matter would be a job in QuickBooks.

Advanced costs would be a reimbursable expenses or job costs in QuickBooks.

If you want to use QuickBooks for payroll

To use QuickBooks for your payroll, make sure the payroll preference is on, and follow the directions for setting up employees and payroll items in the EasyStep Interview or in the printed documentation.

For more information, see the:

" Set up payroll" topic in the "Setting up a QuickBooks company" chapter of the Getting Started Guide

Important

The information in this document was compiled from the experiences and suggestions of other QuickBooks users in your type of business. Your own needs may vary considerably, and only you and your accountant understand the unique needs of your business.  Ultimately, you are responsible for your own books.

Therefore, we encourage you to have your accountant look over the setup suggested in this document, and we suggest that you give QuickBooks a thorough "trial run" early in the process. The best way to ensure that you have set up QuickBooks optimally for your business, and that it will provide all the information you need, is to enter a small number of your standard transactions in QuickBooks. Then try running all the reports you may eventually need.

While we can give you technical support on how QuickBooks works, our technical support representatives are not industry experts and cannot give you specific accounting advice. If you have questions regarding accounting issues specifically related to your industry, we recommend you consult either an accountant, industry expert, professional association or law society.

Setting up your QuickBooks company

The QuickBooks EasyStep Interview asks you questions about your business, and uses your answers to help you set up your legal firm in QuickBooks. We recommend the interview as the easiest way to get started and to customize QuickBooks for your type of business.

If you choose not to use the EasyStep Interview, you should follow the setup directions in the "Setting up a QuickBooks company" chapter of the Getting Started Guide.

Organizing your income, expenses, clients, and cases

QuickBooks provides important features that let you analyze your business in different ways:

Your Chart of Accounts, including balance sheet, income and expense accounts, tracks all of your transactions.

Items let you track the services for which you charge fees.

The Customer list, with customer types, lets you keep track of your clients.

Job tracking, and the use of job types (QuickBooks Pro), lets you track the income and expenses for each case or project you do for a client and lets you categorize your cases (i.e., personal injury, dissolution, etc.).

Classes let you categorize income and expenses associated with any client or any case.

The following sections give you more information about these and other features.

Customizing your Chart of Accounts

In QuickBooks, an account represents a group of transactions and is used for tracking and reporting purposes.  The complete list of accounts for your company is called the Chart of Accounts.  When you set up your QuickBooks company, you can choose a preset chart of accounts designed especially for legal firms.  This preset chart of accounts gives you a head start in creating your balance sheet accounts, income account, and expense accounts.

You may find as you review the preset chart of accounts that you need to add, edit, or delete accounts from that list, or add subaccounts.

Important:	As a general rule, you should reserve the accounts on your Chart of Accounts for broad categories, and use items and subitems to see more detail about items you've sold or bought.

For more information, see the:

"Your chart of accounts" chapter in the User's Guide

Creating items

QuickBooks items automate your billing and time tracking. They also give you a useful way to analyze your business through reports.

Create service type items for each type of work you charge clients for, whether it's done by a partner, associate, subcontractor, or hourly employee. You can then use these items when filling in time entries (in QuickBooks Pro only), and creating invoices in QuickBooks. You'll also be able to see reports that split your revenue by the specific legal service (or item) you perform.

Example items for lawyers

Consultation

Research

Contracts

Court date

You can also create items for other charges. For example, if your office charges for use of fax machines or copiers, you can create an "other charge" type item. That way, on a report, you'll be able to see your legal services (service items) separately from office charges.

To set up an item:

1.	From the Lists menu, choose Items.

2.	When the item list appears, click the Item button at the bottom of the window. Then click New.

See "Example uses of items and subitems" later in this document for more information.

3.	(QuickBooks Pro, Optional) Click "This service is performed by a subcontractor" if you pay someone (other than an employee) to do the service and then charge your client.

This feature lets you track the subcontractor service as an expense. It also lets you charge your client a different rate than your cost, and track that charge as income. See "Example uses of items and subitems" following.

For more information, see the:

"Items - your products and services" chapter of the User's Guide

(QuickBooks Pro) "Services performed by subcontractors" topic in the "Items - your products and services" chapter of the User's Guide

Example uses of items and subitems

QuickBooks uses this format for items and subitems on forms (such as invoices):

item:subitem

You enter the item name on invoices and other QuickBooks forms to automate data entry.

Here are some example uses of items and subitems in QuickBooks.

Charge clients for legal fees

Create "service" type items with names of legal services you charge for, such as: Research, Phone Call, or Court Apprnce. Select these items when you invoice clients.

Charge a different rate depending on which attorney performs the work

Once you've created an item, it's easy to change the item rate (what you charge for it) on an invoice or any other QuickBooks form.

If you would like the different attorneys' rates to appear automatically, create "service" type items for the legal services performed, and for each item, add subitems for each attorney. Enter a different rate for each attorney's subitem. For subitem names, you can use the attorney's initials or title, for example:

Research:JB

Research:DS

OR, if you have many partners/associates--

Research:partner

Research:associate

Note:	You will not be able to get reports on each attorney's total work unless you have QuickBooks Pro.

Charge a different negotiated hourly rate for a particular client OR Choose from among several standard rates.

You can easily change what you normally charge for a service on an invoice, statement, or other QuickBooks form.

If you would like a special negotiated rate to appear automatically, create subitems under the main service items, for the client for whom you've negotiated a different hourly rate. For example:

Consultation:Negotiated

OR, if you have several standard rates for one service:

Consultation:Rate 1

Consultation:Rate 2

Consultation:Rate 3

Note:	This method and the one described previously (for different rates by attorney) should not be used simultaneously. Use only one method.

Charge for use of office computers, fax, copier

If you want to see these charges separately on reports, create "other charge" type items describing each of these charges.

Charge for time of office staff

Create "Service" type items. For example, you can create an item called Word Proc for word processing.

Track services done by subcontractors as expenses and charge your clients for those services.

In QuickBooks Pro:

Create "service" type items for subcontracted services and check the "this service is performed by a subcontractor" box. This lets you enter your cost per hour or per quantity, and an associated expense account. You also enter what you charge your clients for the services and an the associated income account.

If either your cost or fee varies, leave those fields blank and fill them in when you incur the expense or invoice your client.

Whenever you pay a subcontractor by check or enter a subcontractor bill in QuickBooks, you'll enter the subcontractor service item in the detail area, and you'll also select the client and case in the "Customer:Job" field. When you invoice the client, you click the Time/Costs button to see the subcontractor expenses incurred on behalf of that client and case.

See "Charging for actual time and costs" in the "Sales and sales forms" chapter of the User's Guide.

In QuickBooks:

Whenever you pay a subcontractor by check or enter a subcontractor bill in QuickBooks, also enter the client and case in the "Customer:Job" field. Then when you invoice the client, click the Expenses button to see the subcontractor expenses you incurred on behalf of that client and case.

See "Charging for reimbursable expenses" in the "Sales and sales forms" chapter of the User's Guide.

Change the rate you charge for something on a one-time basis

Edit the item rate directly on the invoice.

For more information, see the:

"Items - your products and services" chapter of the User's Guide

(QuickBooks Pro) "Services performed by subcontractors" topic in the "Items - your products and services" chapter of the User's Guide

Setting up clients as customers

Customers and jobs

In QuickBooks, your clients are "customers." If you have more than one case, matter, or project for a client, you can set those up by setting up "jobs" for that customer in QuickBooks.

Customer types

You may wish to categorize your clients by types. For instance you may want to divide clients into corporate or individual types. Other distinctions you may want to make could be based on sources of referrals, local or out-of-province clients, etc.

When you do this, you can get reports that filter out information for specific client types.

For more information, see the:

"Customers and jobs" topic in the "More QuickBooks lists" chapter of the User's Guide

"Customer types" topic in the "More QuickBooks lists" chapter of the User's Guide

Tracking cases or matters as jobs

If you work on more than one case for a client, and you want to keep track of your income and expenses on a case-by-case basis, you may want the level of detail provided by job tracking. In QuickBooks you can track cases for each client by setting the cases up as "jobs" in the Customer:Job list.

If you never work on more than one matter for a client, you don't have to enter job names on the Customer:Job list. Your list will then contain only client names.

If you have QuickBooks Pro, you can also categorize your cases (jobs) by type by using the Type field in the New/Edit Job window. Tracking job types gives you an idea of the profitability of each kind of case you take. It can also help you determine what proportion of your firm's time is spent on different types of cases.

Examples of job types for a legal firm (QuickBooks Pro)

You may wish to categorize your cases in various ways, such as:

product liability, tax cases, or trusts and estates cases

retainer, contingency, or fixed fee cases

or any distinction meaningful to your practice

To track jobs and classify them by type:

1.	Add one or more cases for each client on your Customer:Job list. (At the Customer:Job List window, select a customer, click the Customer:Job button,  and click Add Job.)

2.	(QuickBooks Pro) To set up a job type, choose Job Types from the Other Lists menu.

You can enter a job type for a specific case by choosing the project from your Customer:Job list, clicking the Customer:Job button, and then choosing Edit. Select the Job Info tab and enter the new job type.

3.	When you incur expenses for a job (case) or write an invoice, choose the job (case) from the drop-down list in the Customer:Job field.

For more information, see the:

(QuickBooks Pro) "Job types" topic in the "More QuickBooks lists" chapter of the User's Guide

If you use numbers for clients and cases

Some attorneys use numbers to identify clients, with cases being part of the number. For instance 100.5 may signify client 100, matter number 5. If you use such a system, we recommend you do not append the case number to the client ("customer") in QuickBooks, but rather set up a different "job" for each case you have with a particular client.

QuickBooks uses this format to denote a customer and job (client/case):

Customer:Job

(in this example, it would be 100:5).

When you set up cases in this way, you only have to enter the client's information once in QuickBooks (when you set the client up as a customer). Thereafter, every time you have a different case or matter for that client, you simply add a "job" to that client in QuickBooks. This also makes it much easier to get reports for all cases for a specific client.

Always choose the case name or number as well as the client name when entering any transactions in QuickBooks.

Using classes to track segments of your business

QuickBooks classes give you another way, in addition to customer type (and job type in QuickBooks Pro), to track income and expenses.

Classes give you a way to break down your income and expenses for different segments of your business. For example, if your firm practices corporate law as well as real estate law, you can use classes to track the proportion of your income and expenses related to those two types of services.

Examples of classes for a legal firm

You may wish to segment your business in several ways, such as:

by location

by partner or associate

by area of specialization such as real estate or corporate law

or any meaningful way for your practice

Important:	You should use classes for one purpose only. For example, don't mix using classes for partners with using classes for office locations.

How classes differ from customer types and job types

Classes can apply to all transactions, so they are not tied to any particular customer or job. However a job type or a customer type is associated with only certain customers.

For example, an attorney might have "corporate" and "individual" customer types to categorize her clients, and "mergers" and "product liability" job types to categorize each case or project for a client. She can then get financial reports focused by type of client and/or type of case.

But let's say she needs a third classification that spans any type of client or project. In this case, she can use QuickBooks classes. For example, if she has a partner, she can create a class for herself and class for her partner. She would then select one of those classes on each transaction in QuickBooks. Then she could get reports on income and expenses by partner (class) regardless of what types of clients or projects they worked on.

Tips for when to use classes

Think of the ways you'd like to categorize portions of your business in terms of income and expenses for each portion. The classes you set up should correspond to those portions, and can be any meaningful breakdown of the business you do.

Set up classes on the basis of how you'd like to see your entire business segmented on reports.

Classes are most useful when you can identify both income and expenses for each class you set up. This makes the Profit and Loss by Class report more meaningful. For example, if you do business in two different offices or locations, you could make each location a class. You then choose the class corresponding to a location in all QuickBooks transactions (income and expense) for that location.

If you forget to classify any transaction, QuickBooks reports will show that transaction as "unclassified." To distinguish a transaction you simply forgot to classify, from a transaction that doesn't fit into any of the classes you've created, create a class called "other" and use that on transactions that don't relate to any class.

For example, if you created classes for different locations and incur an expense that applies to neither location, classify that transaction in QuickBooks as "other." On reports, you can double-click the "unclassified" transactions to go to them and add the class.

To set up and use classes:

1.	Turn on class tracking. (From the File menu, select Preferences; from the preferences screen, choose Accounting and check "Use class tracking.")

2.	Add your classes to the Class list. (Begin by choosing Classes from the Lists menu.)

3.	When you enter sales, cheques, bills, credit card charges, or other transactions, choose the class from the drop-down list in the Class field.

If you want to break down your income and expenses even further, you can create subclasses.

For more information, see the:

"Classes" topic in the "More QuickBooks lists" chapter of the User's Guide

Tracking time

QuickBooks Pro automates timetracking

QuickBooks Pro lets you track billable and non-billable time, pass along billable time to your clients, and analyze your time costs by client or case, person who did the work, or by type of work done.

Keeping track of time

You can enter time for employees or others such as owner, partner, or subcontractor. On the time entry form, you choose the client and case for whom the work was done in the Customer:Job field. You then choose the "service item," which is the type of work you did (see "Create items"). Later you can pass the billable charges to your clients on invoices or statements.

You have the option of entering individual activities on separate forms or using a weekly timesheet format. In either case, be sure to enter as complete a record as possible so QuickBooks can translate those hours into billable hours on client invoices or statements.

For more information, see the:

(QuickBooks Pro) "Transferring time to pay cheques" topic in the "Time tracking" chapter of the User's Guide

Which time entry form to use

Single activity time entries are convenient to use if you will be continuously running QuickBooks, and entering each activity as you do it, rather than entering all your time at the end of the week from a paper timesheet. The weekly timesheet in QuickBooks is useful when you enter time at the end of a week or a certain period, working from a paper time record.

Also, although QuickBooks has the same character limit for the notes field on both time forms, you can see more of your notes on the single time entry form.

For more information, see the:

(QuickBooks Pro) "Filling in a weekly timesheet" topic in the "Time tracking" chapter of the User's Guide

(QuickBooks Pro) "Entering single activities" topic in the "Time tracking" chapter of the User's Guide

Transferring notes to invoices

When you invoice a client, you can click Job Costs to enter your billable time on the invoice.

To use your time entry notes on the invoice:

1.	Select the Customer:Job at the top of the invoice, and click Time/Costs.

2.	If 'Transfer activity notes' does not appear under options, click the Change button, then click the "Transfer notes for each activity" box to select it. Click OK.

QuickBooks has a limit on the number of characters you can enter in the notes field. That limit is the same on the weekly and individual time entry forms, but you can see more of the note on the individual time entry. If you transfer notes to invoices or statements, you may have to manually adjust the appearance of the text on those forms.

For more information, see the:

(QuickBooks Pro) On adjusting the lines on an invoice: "Entering item information" topic in the "Sales and sales forms" chapter of the User's Guide

(QuickBooks Pro) "Invoicing customers for time" topic in the "Time tracking" chapter of the User's Guide

Tracking time without QuickBooks Pro

If you don't have QuickBooks Pro, you can keep track of your time on a pending invoice. Use a separate invoice for each client's case.

To keep track of time on a pending invoice:

1.	Create the invoice as usual, entering the client name and project.

2.	While the invoice is displayed, choose Mark Invoice as Pending from the Edit menu.

QuickBooks displays the word "Pending" on the onscreen invoice (not on the printed version).

3.	Whenever you work on this project for this client, enter the time and charges on the pending invoice.

To bill clients for time from a pending invoice:

1.	Display the invoice and choose Mark Invoice as Final from the Edit menu. Then print the invoice as usual.

To display the invoice, create a Pending Sales report (Reports menu, Sales reports) and double click on the invoice to "QuickZoom" to it.

Advanced costs

Attorneys often incur expenses on behalf of clients while working on cases. These expenses are often referred to as advanced costs. QuickBooks refers to these costs as reimbursable expenses.

Important:	Each province or law society has a schedule of fees for standard expenses incurred on behalf of clients.  You should refer to your law society's rules prior to invoicing your client.

Tracking costs you've incurred for a client

When you advance costs to clients for certain cases, you write cheques, pay by cash or by credit. You can track these transactions as job costs or reimbursable expenses in QuickBooks, and pass them along to your client when it's time to bill that client.

Every time you write a QuickBooks cheque (you can also use a cheque form for petty cash) or use the credit card form for advanced costs, be sure to select the Customer and Job (client and case) in the detail area. Also select an expense account.

When you invoice that client, your costs will appear when you click the Time/Costs button in QuickBooks Pro or the Expenses button in QuickBooks. You can then transfer these costs to the invoice.

Tracking costs your associates or employees have incurred

You may have associates who incur expenses for clients. You need to reimburse those employees, then pass the costs on to the clients.

To track costs and reimburse associates:

1.	Have your employees track their expenses in expense reports.

You can use the paper forms you're already using.

2.	From the Activities menu, choose Write Cheques.

Write a reimbursement cheque to each employee (not a pay cheque).

In the cheque detail area, itemize each expense by client and project (Customer:Job).

Click OK to record the cheque.

3.	From the Activities menu, choose Create Invoices.

Write an invoice to the client.

If you have QuickBooks Pro, click Time/Costs, then the Expenses tab to choose the reimbursable expenses you want to include on the invoice. If you have QuickBooks, click the Expenses button to choose the reimbursable expenses you want to include on the invoice.

Click in the Use column next to the expenses you want included on the invoice, and click OK.

For more information, see the:

"Charging for actual time and costs" topic in the "Sales and sales forms" chapter of the User's Guide

Retainers, client monies, and trust accounts

If you hold retainers, settlements, escrow, or other client funds, you need to use client trust accounts in order to keep these funds separate from your general office funds. This section shows you how to do this with QuickBooks.

You can have one or more bank accounts designated as trust accounts for the purpose of holding funds belonging in whole or in part to clients.

Important:	Each law society has specific rules of professional and ethical conduct for handling client funds and the various accounts you might set up for those funds. Since failure to abide by those rules and practices could result in administrative, civil, or criminal sanctions, you should refer to your law society's rules prior to setting up your client accounts.

Setting up client trust accounts

To set up client trust accounts:

1.	Create a QuickBooks bank account called Trusts.

2.	If you have more than one bank account for trusts, create subaccounts in QuickBooks for each one, under Trusts.

"Trusts" in this case would be the "parent" account in QuickBooks for the actual bank accounts. This lets you see all your bank trust accounts together under one parent account on a QuickBooks balance sheet.

Don't do this step if you only have one actual bank account for client trusts.

3.	If you hold several clients' money in one bank account, create a QuickBooks subaccount for each client under the actual bank account.

This will let you see how much money each client has in trust separately on reports, even though the money is pooled with other clients'.

Here's an example. This attorney has two actual bank accounts for trusts. In one bank account, she has money from two clients. The other bank account has a large sum belonging to one client.

Both actual bank accounts are subaccounts under a parent account in QuickBooks. The bank account with more than one client's money, has a subaccount in QuickBooks for each client.

4.	Create a liability account in QuickBooks for the client monies you're holding in trust.

You can have just one liability account for trust monies even if you've opened several bank accounts for trust monies. QuickBooks will still be able to separate what you owe to each client and each client's fees and costs. You can call this account "client trust liability."

This liability account represents money you owe to your clients. The balance of this liability account should be the same as the total amount you have in your bank trust accounts (minus any of your own money you may have had to deposit as a minimum balance - see next step).

5.	If you had to deposit your own funds to maintain a minimum balance in the trust bank account, write a cheque to the bank from your own chequing account.

Select the trust bank account in the Account column in the cheque detail. Send the cheque to the bank or physically deposit it, but don't include it in QuickBooks Make Deposit window (because you've already transferred the money to the trust bank account on the cheque).

Depositing retainers and other client funds

To deposit trust monies:

1.	Select Make Deposits from the Activities menu and choose the client trust bank account in the "Deposit To" field.

Be sure to use the client's subaccount if you have several clients' money in one bank account. You'll then see each client's deposit separately on the transaction report for the trust account(s). See "Reports on client trusts" in this document.

2.	Enter the amount, and select the client trust liability account in the From Account column.

This increases your trust liability, that is, each time you take in money, you increase what you owe to clients.

3.	In the Memo field, you can enter "Deposit retainer."

4.	Enter the cheque number so that it will appear on the Client Ledger report.

5.	For each client whose money you're depositing, do a separate Make Deposits transaction.

6.	When you deposit the money at the bank, use separate deposit slips for each client's money.

Important:	You must do this in order for the QuickBooks reconciliation to work easily. Otherwise, when you get your bank statement, you'll see one lump sum deposit for all client money deposited, but in QuickBooks you'll see the deposit for each client separately. This would force you to do some math when you reconcile in QuickBooks.

For more information, see the:

"Depositing payments" topic in the "Receiving and depositing payments" chapter of the User's Guide

Paying client costs out of a trust account

To pay client costs out of a trust account:

1.	Write cheques for each client's costs or settlements out of the trust account.

If you have more than one client's money in the same bank account, be sure to select the client's subaccount in QuickBooks.

2.	Enter a description of the transaction in the cheque Memo field.

Important:	When writing a cheque, you can enter notes in two memo fields, one in the cheque part and one in the detail area. You should enter descriptions of the transactions in the cheque memo field. When you do so, you will be able to see the descriptions in reports for the chequing account. Since it's important to keep detailed records on client trust accounts, these memos will help explain transactions if there is ever a client dispute or an audit.

3.	Select the client trust liability account in the cheque detail.

4.	Select the customer and job (client and case).

Doing this decreases your liability to that client, that is, decreases the money you owe the client.

5.	If you don't print QuickBooks cheques (you write them by hand), clear the "To be printed" checkbox.

Enter the cheque number manually at the top of the cheque so that it will appear on reports.

For more information, see the:

"Writing a cheque" topic in the "Managing your chequebook" chapter of the User's Guide

Invoicing a retainer client

Invoice a retainer client as usual (see "Billing for legal fees and costs" in this document). However, you don't need to print the invoice, since a retainer client has given you fees in advance, so clear the "to be printed" box on the invoice.

You can use the transaction journal, described later in this section, to notify the client of the transactions using the retainer. See "Reports on client trusts" following.

Writing cheques for your legal services out of a trust account

After you've invoiced your retainer clients, you'll be able to see how much each client owes you by looking at the client's balance in the Customer:Job list. You then need to write a cheque to yourself for services and costs from the client trust bank account. Generally, an attorney has to obtain client approval before doing this. When you write a cheque to yourself out of the trust account, you will also reduce your liability to the client.

To write yourself a cheque:

1.	From the Activities menu, choose Write Cheques.

2.	In the Bank Account field, select the trust bank account, and the subaccount for the specific client if applicable.

3.	Write yourself a cheque.

In the cheque memo field (on the cheque face), you may wish to write a description of this transaction.

4.	Select the client trust liability account and the client and case (Customer:Job) in the cheque detail.

This will reduce your liability to that client.

5.	Receive Payment in QuickBooks.

Your invoice to the retainer client remains open on QuickBooks accounts receivable reports until you receive payment through QuickBooks. To do this, choose Receive Payments from the Activities menu, select the client and case in the Customer:Job field, and select the invoice you want to apply the payment to.

6.	In the Receive Payment window, click the "Deposit to" radio button and select your own chequing account in the "Deposit to" field.

For more information, see the:

"Recording an invoice or statement payment" topic in the "Receiving and depositing payments" chapter of the User's Guide

"Depositing payments" topic in the "Receiving and depositing payments" chapter of the User's Guide

Paying third parties from client trust accounts

You need to write cheques directly out of the trust chequing accounts to pay legal expenses, court costs, settlements to parties other than your client, or to subcontractors for services.

To pay third parties out of a trust account:

1.	Write a cheque to the third party out of the trust chequing account.

Be sure to select the client's subaccount if applicable.

2.	Choose the client trust liability account in the detail area.

3.	Select the client (and case if applicable) in the Customer:Job field.

In most provinces, you have to be sure that retainer or settlement cheques for funds belonging to your client, and deposited in a trust account, have actually cleared the bank. Otherwise you would be using another client's money if you write a cheque out of that same trust account.

You can use QuickBooks reconcile feature when you get the bank statement, or call the bank to check on a recent transaction.

Reconciling your trust bank account(s)

Reconcile your trust bank account(s) in QuickBooks the same way you would any other bank account. The most important thing you need to remember is that if you hold several clients' money in one account, and you created subaccounts in QuickBooks to represent each client's portion of the money held in the bank account, you must reconcile the actual bank account, not the subaccounts (see "To set up client trust accounts" earlier in this document).

For more information, see the:

"Depositing retainers and other client funds" in this document.

"Reconciling your chequing account statement" topic in the "Account reconciliation" chapter of the User's Guide

Reports on client trusts

There are three reports that account for your trust transactions, and that are useful in case of an audit:

Client Ledger

This report shows costs and legal fees paid out of the client's retainer or trust money, and the accumulated amount of retainer or trust transactions for each client, for a selected period of time. The report shows each client's funds separately even though they may be in the same bank account.

Transaction Journal

This report shows your trust account transactions in date order, and includes all clients' transactions. The report will give you the accumulated amount of all your trust transactions for a selected period of time.

Retainer Cash Balance

This report shows you the balance of each client's retainer, and the total of all your trust monies combined.

You can memorize these reports by following the procedures below. For more information on reports in QuickBooks, see "Understanding income and profitability with reports" later in this document.

To create a Client Ledger:

1.	From the Reports menu, choose Transaction Detail Reports, By Account.

2.	Click Customize.

3.	In the Columns field, make sure these choices are checked: Type, Date, Num, Name, Memo, Amount, Balance, then click OK.

You may want to limit the report to these columns only in order to fit the report on one page (or use the "fit to page" option when you print).

4.	Click Filters.

5.	In the Account field, choose Selected Accounts, check the client trust bank account(s), and click OK.

If you created parent and sub-bank accounts in QuickBooks, select them all.

6.	Click Header/Footer, and change the Report Title to "Client Ledger."

7.	Click Memorize, and name the report "Client Ledger - Trusts".

To create a Transaction Journal:

1.	From the Reports menu, choose Transaction Detail Reports, By Date.

2.	Click Customize.

3.	In the Columns field, check: Type, Date, Num, Name, Amount, Balance, then click OK.

You may want to limit the report to these columns only in order to fit the report on one page (or use the "fit to page" option when you print).

4.	Click Filters.

5.	In the Account field, choose Selected Accounts, check the client trust bank account(s), and click OK.

If you created parent and sub-bank accounts in QuickBooks, select them all.

6.	Click Header/Footer, and change the Report Title to "Transaction Journal for Trusts."

7.	Click Memorize, and name the report "Transaction Journal - Trusts".

To create a Retainer Cash Balance report:

1.	Open the Chart of Accounts window (from the Lists menu).

An easy way to see the balance of each client's retainer is to look at the Chart of Accounts in QuickBooks. It lists the balance of your trust account and any subaccounts you've set up for clients.

2.	Click the trust bank account or a subaccount you've set up for a specific client.

3.	From the Reports menu, choose QuickReport.

Billing for legal fees and costs

To bill your clients, use QuickBooks invoices. If you need to, you can also send statements to your clients to summarize your invoices during a given period.

If you prefer to use a word processor for client billing in conjunction with QuickBooks, see "Customizing invoice appearance" in this document.

To bill for time with QuickBooks Pro:

1.	On a QuickBooks invoice, select the client and case in the Customer:Job field.

2.	Click Time/Costs, then click the Time tab.

3.	Select the time you wish to charge the client for.

The hide column on the time tab lets you hide a billable time entry that you never intend to pass along to your client.

Even if you don't invoice the client for all billable time, you'll still be able to see reports showing billable hours worked versus billed.

For more information, see the:

(QuickBooks Pro) "Invoicing customers for time" topic in the "Time tracking" chapter of the User's Guide

To bill for time without QuickBooks Pro:

1.	Use a pending invoice to record fees for time spent, then convert the pending invoice to a final invoice.

See "Tracking time without QuickBooks Pro" earlier in this document.

To bill for advanced costs:

1.	On a QuickBooks invoice, select the client and case in the Customer:Job field.

2.	Click the Time/Costs button then the Expenses tab in QuickBooks Pro, or click the Expenses button in QuickBooks.

You'll see the expenses or advanced costs for that client listed. Choose the ones for which you want to be reimbursed.

For more information, see the:

"Charging for reimbursable expenses" topic in the "Sales and sales forms" chapter of the User's Guide

(QuickBooks Pro) "Charging for actual time and costs" topic in the "Sales and sales forms" chapter of the User's Guide

Customizing invoice appearance

For legal firms, invoicing or billing is an art that must demonstrate an effort on behalf of the client. There are several ways you can customize an invoice in QuickBooks. For example, you would probably want to change the "quantity" column to "hours," and you may want to add an extra column to show the attorney who worked on the case. Follow the procedures provided in QuickBooks documentation to customize your invoices as you wish.

However, you may also choose to use a word processor in conjunction with QuickBooks for invoices that need to be very descriptive or letter-like.

For more information, see the:

"Creating custom forms" topic in the "Forms" chapter of the User's Guide

"Customizing form content" topic in the "Forms" chapter of the User's Guide

Using a word processor for client billing

Using a word processor to invoice or send statements is no problem. Just enter invoices or statements in QuickBooks to keep your Accounts Receivable information up to date, but don't print the invoices.

To use a word processor for your invoices:

1.	Enter invoices into QuickBooks as usual, but clear the "to be printed" checkbox.

Entering invoices in QuickBooks allows you to see your receivables as well as get useful information from all the other QuickBooks reports that are based on invoice transactions.

2.	Use your word processor when it's time to invoice your client.

Understanding income and profitability with reports

QuickBooks has over 70 preset reports. You can customize the reports in a variety of ways and filter out the specific data that interests you. Once you tailor reports to your specific needs, you can memorize the ones you want to create regularly in your custom format.

Here are some examples of reports that would be useful in your legal practice, and how to create them from the Reports Menu.

See income by type of work performed

Sales Reports, Sales by Item. The item is the service item you set up for each service your firm charges fees for. See "Creating items for billable services" in this document.

QuickBooks Pro: Project Reports, Item Profitability.

See income by partner or associate

Profit and Loss, filtered by Rep, or Sales Reports, Sales by Rep. Use the Rep field on invoices to identify which attorney did the work you're invoicing for. This works as long as you only bill for one attorney's work on each invoice.

QuickBooks Pro: Project Reports, Time by Name. You can only see hours by name (attorney name), not dollars. To see income by partner, you have to multiply the hours by the rate for each service item.

(QuickBooks Pro) See billed and unbilled hours

QuickBooks Pro: Project Reports, Time by Name. Customize the report to show hours billed, unbilled, and not billable by clicking the Customize button on the report.

See outstanding client balances

A/R Reports, Open Invoices by Customer. You can also see open invoices for customers in the Customer list.

You can see balances of retainers and other client trust funds by running transaction reports on your retainer liability account(s). See "Retainers, client monies, and trust accounts" earlier in this document.

See how much money you're holding for each client's trust

Select the memorized Client Ledger report recommended under "Retainers, client monies, and trust accounts" earlier in this document. Memorized reports are under the Reports menu, Memorized Reports.

Show all transactions in your trust account(s)

Select the memorized Transaction Journal report recommended under "Retainers, client monies, and trust accounts" earlier in this document. Memorized reports are under the Reports menu, Memorized Reports.

For more information, see the:

"Reports" chapter of the User's Guide

Are your contingency or speculative cases profitable?

If your province allows you to take a contingency case, you get paid a fixed percentage of the recovery, settlement, or judgement amount. In a speculative case, your payment is also uncertain, but is not based on a legal settlement or judgement amount.  You may want to keep track of the hours you spend on such cases, even if you're not going to bill clients for them. You can then judge whether your percentage was worth the time you spent on the case.

Recommendation for handling contingency cases

To handle contingency cases in QuickBooks Pro:

1.	Set up a class called "contingency."

If class tracking is not on, activate it in the Accounting Preferences window (select Preferences from the file menu, then select the Accounting icon).

Enter the contingency class whenever you fill out time entries for contingency cases. This lets you see time reports by contingency type cases. To do this, you create a time report, and filter out the "contingency" class.

Note:	If you do payroll, you need to set a preference in order to see the class field on a timesheet. From the Preferences menu, Payroll and Employees, select "Assign one class per earnings item."

2.	When tracking time, clear the "Billable" box in the individual time entry, or cross out the billing icon on the weekly timesheet.

This prevents you from transferring the time to invoices or statements.

3.	Choose the contingency class on the time entry form.

4.	Choose the contingency class whenever you incur expenses for, or receive income from, contingency cases.

For more information, see the:

(QuickBooks Pro) "Reports about time" topic in the "Time tracking" chapter of the User's Guide

To handle contingency cases in QuickBooks:

1.	Set up a class called "contingency."

If class tracking is not on, activate it in the Accounting Preferences window (select Preferences from the file menu, then select the Accounting icon).

2.	Choose the contingency class whenever you incur expenses for, or receive income from, contingency cases.

3.	Track time spent on contingency cases using whatever method you normally use.

If you want to bill for some hours (QuickBooks Pro)

If your agreement with the client provides for partial billing in the event the case was lost, you can bill for part of your time.You have to go back to the time entries and make them billable.

To bill for some of the time spent on contingency cases:

1.	To find those time entries, create a Time Activity Detail report (Reports menu, Project Reports, Time Activity Detail).

2.	Filter this report to include only this particular Customer:Job.

3.	Double click a transaction on the report to go to the time entry form for that transaction.

4.	Select the Billable checkbox or icon and click OK.

To find out if your contingency cases are profitable

In QuickBooks Pro:

1.	Create a time report (Reports Menu, Project Reports) and filter it for the contingency class.

To get the cost of your time, you'll have to multiply the hours spent on these cases (shown in the report) by the rate you normally charge per hour.

2.	Create a Profit and Loss report filtering out the contingency class.

This will show you the income you received from contingency cases and the expenses you incurred (excluding time).

3.	Add the expenses part of the Profit and Loss report to the cost of your time (from Step 1).

This will let you compare your total cost, time and expenses, to your total income from contingency cases.

In QuickBooks:

1.	Calculate the cost of your time spent on contingency cases.

You'll need to use whatever method you normally use for tracking time on contingency cases.

2.	Create a Profit and Loss report filtering out the contingency class.

This will show you the income you received from contingency cases and the expenses you incurred (excluding time).

3.	Add the expenses part of the Profit and Loss report to the cost of your time (from Step 1).

This will let you compare your total cost, time and expenses, to your total income from contingency cases.

Conflict checking and other QuickBooks tips for lawyers

Using QuickBooks to check for conflicts of interests

Some insurance carriers may lower your malpractice insurance if you've established a computerized conflict checking procedure. You can use QuickBooks to do a simple conflict checking procedure using the Customer:Job list.

QuickBooks lets you add extra fields to each client's record (which you enter in the Customer:Job list) for any purpose. You can use these fields to track dates, personal information, etc. In this procedure, you'll use a custom field to enter the name of the opposing party.

To establish a simple conflict checking procedure:

1.	Add a custom field in your customer (client) record for the name of the opposing party.

You can call the field something such as "Versus."

2.	Whenever you add a new client to your Customer:Job list, enter the name of the opposing party in the "versus" field.

For example, if you represent John Smith against Jane Doe, in John Smith's customer record, enter Jane Doe in the "Versus" field.

3.	Also enter the opposing party as a customer with a recognizable prefix.

For example, if you represent John Smith against Jane Doe, after completing Step 2, enter Jane Doe as another customer on your list with a prefix: V-Doe, Jane.

Then enter your client, John Smith, in the "Versus" field on Jane Doe's customer record.

When you enter all opposing parties with the same prefix, it will cause all of them to be listed together in your Customer:Job list.

4.	When new clients come to you in the future, check for their names in your Customer:Job list.

In this example, you would open the Customer:Job list and type "v" to move down to the section of the list with all the opposing parties. Then scan the list to make sure the new client is not one of the parties you opposed in the past.

For more information, see the:

"Adding and using customized fields" topic in the "Working with lists" chapter of the User's Guide

Contact management with QuickBooks

QuickBooks has two features that will help you with contact management. You can use the customer Notepad to enter notes related to each client, with an optional date stamp. You can also use the To Do Notes list to track tasks and have QuickBooks remind you to do them.

These two tools are related in that you can enter a new "To Do" while entering notes in a customer's Notepad. This makes it easier for you to enter a task related to a note you're adding in the customer record.

For more information, see the:

"Keeping notes about a customer or job" topic in the "More QuickBooks lists" chapter of the User's Guide

"To Do notes" topic in the "More QuickBooks lists" chapter of the User's Guide

Creating a "Pre-Bill" for approval

You may need to have a client invoice or statement approved by a partner before you actually send it to the client.

To create "pre-bills" in QuickBooks:

1.	Create a pending invoice in QuickBooks.

Create an invoice as usual, and while on the invoice, choose Mark Invoice As Pending from the Edit menu.

You can enter "pending" in the customer message field at the bottom of the invoice to distinguish pending invoices from posting ones.

To get a report of pending invoices, create a Pending Sales report (Reports menu, Sales Reports, Pending Sales).

2.	When the pre-bill is approved, change the pending invoice to a posting invoice.

To do this, find the invoice and choose Mark Invoice as Final from the Edit menu.

To find the invoice, you can create a Pending Sales report (Reports menu, Sales reports) and double click on the invoice to "QuickZoom" to it.

Fee allocation

If your firm allocates a percentage of each payment to the attorney who first contacted the client, you can get information from QuickBooks to help do those calculations. To do this, you need to set up each attorney as an employee, and designate an attorney as a "Rep" each time you invoice a client.

To identify which attorney first contacted the client:

1.	Set up each attorney as an employee.

The attorney initials will automatically be included in the "Rep" list. (You can't access this list from the Lists menu.)

2.	Use the Rep field in the New or Edit Customer window ("Additional info" tab) to select the initials of the attorney who brought in the client.

Make sure you assign the attorney as the Rep in the customer record before you invoice this customer. Then when you select a customer on the invoice, the Rep will be entered automatically.

3.	Customize your invoices to include a Rep field. Each time you invoice a client, in the Rep field, select the initials of the attorney who brought in the client.

4.	Create a Sales Report by Rep Summary to see the revenue associated with the attorney (Rep) who brought in clients generating the revenue.

Get this reports through the Reports menu, Sales Reports, By Rep Summary.

For more information, see the:

"Setting up employee payroll information" topic in the "Setting up employee information" chapter of the User's Guide

"Creating custom forms" topic in the "Forms" chapter of the User's Guide

"Customizing form content" topic in the "Forms" chapter of the User's Guide

"Designing form layouts" topic in the "Forms" chapter of the User's Guide

Helping us help you

We'd like to know your special concerns and the problems you run into when trying to make QuickBooks work in your business. We also want to know how useful "Legal firms" was in helping you fit QuickBooks to your needs.

Please use this sheet to mail or fax us your comments. If possible, please also attach specific comments marked on the printed version of this document. Mail the completed form and any attachments to:

Intuit Canada, Ltd.

Industry Feedback

P.O.Box 4165

Edmonton, Alberta

Canada

Or fax your comments to us at 1-800-387-4285

Some information about your business

Name:

Business name:

Address:

Phone:

Number of employees:

My business is a: __ Sole proprietorship __ Partnership __ Corporation

What other needs do you have, specific to your type of business, that were not covered in this document?

Do you have any tips for other people in your field who use QuickBooks?

Which two or three topics did you find most useful in this document?

May we call you to discuss your comments?

___ yes    ___ no


Manufacturer's representatives
or sales representatives

Who should read this document

Overview for manufacturing and sales representatives

Before you begin

Organizing your income, expenses, customers, and product lines

Customizing your Chart of Accounts

Setting up customers

Using jobs as a way to track customer detail

Creating 'items' for your products

Using classes to track different segments of your business

If you use purchase orders

Customizing sales forms

Entering customer orders and sales

Recording payments

If you hire other sales representatives

Understanding income and profitability with reports

Other QuickBooks tips for manufacturing reps

Helping us help you

Who should read this document

For the purposes of this document, a "manufacturing representative" or "sales representative" is someone who:

Orders products for customers

Receives income from the commission or markup received on customer orders

May or may not take title to the products sold to customers

Does not need inventory tracking

Whether you call yourself a manufacturing representative, sales agent, sales representative, multi-level or consumer-direct marketing representative, broker, or direct seller, your business goal is the same: to bring buyers and sellers together.

The products sold by manufacturing representatives can range from large equipment to office furniture to cosmetics and vitamins. Depending on the business, customers may pay the rep for their orders, or they may write a cheque directly to the product manufacturer.

How high-volume is your business?

If you have an extremely high-volume business, you may not want to track your accounts receivable as recommended in this document. Instead, you may want to use the method you're currently using for accounts receivable, and use QuickBooks only for accounts payable and payroll. If you use this method, you will not be able to create reports that include income figures (such as the profit and loss report).

Another option if you have a high-volume business is to enter summary transactions of your sales (at the end of each day, for example), rather than recording each sale to a customer. You can create a QuickBooks customer for this purpose called something like "Daily Sales." This keeps your income figures up to date, so that you can at least create QuickBooks profit and loss reports. (Because you are not tracking income detail, however, certain reports will be less meaningful, such as the Sales by Customer report.)

Do you need inventory tracking?

If you take title to the products you sell, and you want to use QuickBooks' inventory feature (because you want QuickBooks to update your quantities on hand, cost of goods sold, and inventory value after each purchase and sale), this document is not for you. Instead, see the industry document titled, "Product sales businesses using QuickBooks inventory."

If you do take title to the products you sell, but you don't care about keeping updated quantities on hand and inventory value, you can apply the information in this document to your business.

Overview for manufacturing and sales representatives

As a manufacturing or sales representative, you have some basic needs from your accounting system. QuickBooks can help you meet many of those needs, including:

Tracking product sales and purchase orders

Issuing and receiving commission cheques

Keeping track of interactions with your customers

Tracking travel and entertainment expenses and associating them with the appropriate customers

Analyzing sales to see which customers and products are generating the most revenue

Before you begin

This document gives you information on how to use QuickBooks for your special needs - we won't repeat what's already in the standard information you receive with QuickBooks. Instead, you'll see references to show where you can find complete information and details on using QuickBooks features.

Printing your industry document

If you're looking at this document onscreen, you're now in a "QuickBooks and Your Industry" window.

To print this document:

From the File menu, choose Print... or Print Topic.

If you got to this Help window from the interview, close the Help window to return to the interview.

To see other industry documents:

Click any of the industries listed in the contents.

Understanding QuickBooks terms

QuickBooks uses terms you can readily understand, such as customers, vendors, and employees. But there are a few special terms you need to be aware of:

Job

An optional way to keep track of larger orders, such as those placed by different departments within the same organization.

Invoice

Sales forms (invoices or cash sales receipts) you give to your customers to confirm their orders. Even if you do not want to give your customers a QuickBooks invoice, you should still use the invoice or cash sales form to enter your sales into QuickBooks.

Item

Anything you want to include on an invoice or purchase order, such as products, shipping and handling charges, commissions, and discounts.

Class

A way to categorize income and expenses. For example, you can use the Class field to see how much you're earning and spending on each product line you handle.

Important

The information in this document was compiled from the experiences and suggestions of other QuickBooks users in your type of business. Your own needs may vary considerably, and only you and your accountant understand the unique needs of your business.  Ultimately, you are responsible for your own books.

Therefore, we encourage you to have your accountant look over the setup suggested in this document, and we suggest that you give QuickBooks a thorough "trial run" early in the process. The best way to ensure that you have set up QuickBooks optimally for your business, and that it will provide all the information you need, is to enter a small number of your standard transactions in QuickBooks. Then try running all the reports you may eventually need.

While we can give you technical support on how QuickBooks works, our technical support representatives are not industry experts and cannot give you specific accounting advice. If you have questions regarding accounting issues specifically related to your industry, we recommend you consult either an accountant, industry expert, or professional association.

Setting up your QuickBooks company

The QuickBooks EasyStep Interview asks you questions about your business, and uses your answers to help you set up your company in QuickBooks. We recommend the interview as the easiest way to get started and to customize QuickBooks for your type of business.

If you choose not to use the EasyStep Interview, follow the setup directions in the "Setting up a QuickBooks company" chapter of the Getting Started Guide.

Organizing your income, expenses, customers, and product lines

QuickBooks includes important features that let you analyze your business in great detail:

Your Chart of Accounts, including balance sheet, income and expense accounts, tracks all of your transactions.

The Customer:Job list, with customer types, lets you keep track of your customers or (in multi-level marketing plans) down-line sellers.

Items let you track the products you provide to your customers.

Classes let you track different segments of your business, and can be especially useful to manufacturing reps in tracking different product lines.

The following sections give you more information about these and other features.

Customizing your Chart of Accounts

In QuickBooks, an account represents a group of transactions and is used for tracking and reporting purposes.  The complete list of accounts for your company is called the Chart of Accounts.  When you set up your QuickBooks company, you can choose a preset chart of accounts designed especially for manufacturing representatives.  This preset chart of accounts gives you a head start in creating your balance sheet accounts, income accounts, and expense accounts.

You may find as you review the preset chart of accounts that you need to add, edit, or delete accounts from that list, or add subaccounts.

Important:	As a general rule, you should reserve the accounts on your Chart of Accounts for broad categories, and use items and subitems to see more detail about items you've sold or bought.

For more information, see the:

"Your chart of accounts" chapter in the User's Guide

Setting up customers

In QuickBooks, the list that holds information about your customers is called the Customer:Job list. It stores information about the people who buy your products.

Customer types

If you choose, you can also categorize your customers by giving them a customer type.The customer type lets you keep track of the different types of customers you serve, and gives you the information you need to analyze your customer base. Knowing your customers can help you make decisions on advertising, promotions, or special discounts. You can categorize each customer in a way that is meaningful and useful for your business.

The customer types do not appear on QuickBooks forms, but you can create reports based on the information. You can also print mailing labels and statements based on customer type.

Examples of customer types for manufacturer's reps and sales agents

You can use QuickBooks' optional customer types to track the information that is most meaningful for your business. For example, you can set up customer types to:

Track the industries represented by your customers (for example, Hospitals, Restaurants, and Schools). This lets you create reports that show exactly where you generate the most revenue.

Track how a customer was referred (for example, Other Customer or Advertisement). Knowing the sources of customer referrals can help you decide how best to spend your marketing dollars.

Track the level/position of sellers in multi-level marketing plans (if you set up your down-line sellers as customers). For sales organizations, this could be Marketing Executive, Director, or Senior Director.

If you want to further break down your customer types, you can add subtypes.

Important:	Don't use customer types for two different purposes. For example, don't create customer types for tracking customer industries (school versus hospital) as well as your referral sources. Choose the type of customer information you want to track, and set up your customer types to suit that purpose.

For more information, see the:

"Customers and jobs" topic in the "More QuickBooks lists" chapter of the User's Guide

"Customer types" topic in the "More QuickBooks lists" chapter of the User's Guide

Using jobs as a way to track customer detail

In QuickBooks, you can track jobs for each customer by setting them up in the Customer:Job list. As a manufacturing or sales representative, you probably don't need QuickBooks jobs to track each small order placed by a customer, but you may find it useful to track orders placed by several departments within a large organization. (In essence, you're using jobs as sub-customers, to track customer detail.)

For example, a manufacturing rep who sells office furniture to a Fortune 500 corporation may want to set up the corporation as the customer, and add separate QuickBooks jobs for each department she sells to within the corporation:

Acme Incorp. (customer)

Accts Payable (job for Acme Incorp)

Human Resrcs (job for Acme Incorp)

Whenever the rep incurs expenses related to a particular order, or writes invoices to that customer, she should choose the customer and job (for example, Acme:Accts Payable) from the drop-down list in the Customer:Job field.

You can track jobs for some or all of your customers by setting up the jobs in the Customer:Job list. If you never want to track income and expenses on a job (or sub-customer) basis, you don't have to enter job names on the Customer:Job list. In that case, your list will contain only customer names.

For more information, see the:

"Customers and jobs" topic in the "More QuickBooks lists" chapter of the User's Guide

Creating items

QuickBooks items represent the services or products that you buy, sell, or resell in your business.  For your business, the items on your QuickBooks Item list will primarily represent the products you buy and resell to customers. Each product you plan to list on an invoice should be a separate item on QuickBooks' Item list.

If you want to track your sales in more detail, you can use subitems. For example, if you are a manufacturing rep who has an item for Vitamins, you can create subitems for Multi Pak, B-Complex, and Anti-oxidants.

When you record a sale or a purchase, you use items from your Item list to fill out the form quickly.  When you choose an item in the Item column on the form, QuickBooks fills in the description, rate or price, tax code, and then calculates the amount.

QuickBooks uses information you've recorded about each item to assign the sale or purchase to the right income or expense accounts.  Reports and graphs can then give you valuable information, such as your greatest sources of income and which items you sell most.

Besides creating items for the products you sell, you can create items for other charges that appear on your sales forms. For example, if the customer is responsible for shipping charges, you can include an "other charges" item for Shipping/Freight.

Important:	The way you set up items depends on many factors: how you receive payment (product markup or commission), whether you want to print invoices for your customers, and what information you want to see on reports. Below are some sample uses of items in QuickBooks. For detailed information on how to set up your Item list to handle specific billing and reporting needs, see "Entering customer orders and sales" in this document.

Example use of items for manufacturing or sales representatives

For products you sell but do not take title to:

Create "non-inventory part" items for each product you sell. Enter the price customers pay for the product. Assign the item to your Commissions Income account.

For products you buy and then resell, but do not track as inventory:

Create "non-inventory part" items for each product you sell. Enter the price customers pay for the product. Assign the item to your Markup Income account.

To track commission income from products you sell:

For each level of commission you receive, create a "discount" item that you assign to your Commissions Income account. For the amount, enter the percentage you want deducted from the sales total, in order to arrive at your commission due. (If your commission is 10%, enter 90% as the amount of the discount.) For information on how to use this item on a customer invoice, see "Entering customer orders and sales" in this document.

To charge customers for other charges such as shipping and handling:

Create an "other charges" item called Freight. Because the amount varies depending on the shipment, do not enter an amount for the shipping charges. (You can enter the amount directly on the sales form.) Assign the item to your Freight Income account.

To give customer discounts:

Create a "discount" item for each type of discount you offer to customers. For example, if a special customer gets a 10% discount, create a discount item called Discount, with an amount of 10%.

If you have more than one type of discount, you can add a "discount" item called Discount, and then add subitems for each type of discount you offer.

You can add these discounts to your invoices, either beneath an individual line item, or after subtotaling all items on an invoice.

To enter volume pricing discounts:

The manufacturer may have set up various price levels for products, according to the volume bought by the customer. Generally, the higher the volume, the lower the price. Create an item for the product and then create subitems for each price level. For example, create the item called "Office Chairs" and then create the subitems called "Chairs 1-5," "Chairs 6-10," and so on.

To sell products packaged in various sizes:

If you sell one product packaged in different ways, create one item for the product name, and several subitems for the sizes of the product, such as 1 kg, 2kg., and so on.

For more information, see the:

"Items - your products and services" chapter in the User's Guide

Using classes to track different segments of your business

QuickBooks classes give you a way to break down your income and expenses for the products you sell. For example, if you sell different product lines or products from more than one manufacturer, you can use classes to track the proportion of your income and expenses related to those different product lines.

How classes differ from customer types

Classes can apply to all transactions, so they are not tied to any particular customer. However, a customer type is associated with only certain customers.

For example, a sales representative might have "Hospital" and "School" customer types to categorize her clients. She can then get financial reports focused by type of customer.

But suppose she needs another classification that spans any type of customer. In this case, she can use QuickBooks classes. For example, if she sells two product lines - one for cafeteria kitchen equipment and one for cafeteria dining-area equipment - she can create a class for kitchen equipment and a class for dining equipment. She would then select one of those classes on each transaction in QuickBooks. Later, she could get reports on income and expenses by type of equipment (class), regardless of which types of customers the equipment was purchased for.

Tips for when to use classes

Here are some tips for when to use classes:

Think of the ways you'd like to categorize portions of your business in terms of income and expenses for each portion. The classes you set up should correspond to those portions, and can be any meaningful breakdown of the business you do.

Set up classes on the basis of the type of reporting you want to do, and consider how you want to see your business segmented on reports. For example, if you want to analyze the profitability of each product line you sell, you can create a class for each type of product. Later, you can create a report that looks at income and expenses by class (for each product line).

Classes are most useful when you can identify both income and expenses for each class you set up, because this makes your Profit and Loss by Class report more meaningful.

Don't use classes for two different purposes. For example, don't create classes for tracking product lines as well as for tracking manufacturers you represent.

Examples of classes for manufacturer's reps and sales agents

You can use classes to:

Analyze the income and expenses for each product line you sell, by setting up each product line as a separate class.

Analyze the income and expenses for each manufacturer you represent, by setting up each manufacturer as a separate class.

If you want to break down your income and expenses even further, you can create subclasses. For example, if you sell for two different manufacturers, and each manufacturer carries two product lines, you can set up a class for the manufacturers and subclasses for their product lines. If you decide to use classes, you can set them up all at once or "on the fly."

For more information, see the:

"Classes" topic in the "More QuickBooks lists" chapter of the User's Guide

If you use purchase orders

QuickBooks' purchase order feature works best with products you track as inventory. If you are not tracking inventory, we recommend that you not use QuickBooks purchase orders. Instead, you should continue to place orders by your usual method, using your own forms.

Some manufacturing representatives use purchase orders because they want to track when products ship and how much they have purchased from each manufacturer. If you require this information, you can get it without using QuickBooks purchase orders:

Use the Ship Date field on the invoice to record when a manufacturer ships the products. (You can put an expected date until you know the actual date.)

You can see a report on when orders have been shipped by creating a Sales by Customer Summary report (one of QuickBooks' Sales reports). At the report window, click the Filters button. Then click Invoice Opts., and enter "From" and "To" dates (the date range you want to report on) in the Ship Date field.

Add a customized field called "Manufacturer" to your QuickBooks Item list. You can then add the new field to your QuickBooks invoices, and track the manufacturer of each item you sell. (See the next section, "Customizing sales forms," for details on how to add customized fields.)

You can see a report of what you've purchased from each manufacturer by creating a Sales by Customer Summary report (one of QuickBooks' Sales reports). At the report window, click the Filters button. Then click Custom Fields, and enter the name of the manufacturer you want to report on in the "Manufacturer" custom field.

Customizing sales forms

QuickBooks gives you several ways to adjust the appearance of your invoices. You can add or eliminate fields or columns to show the information that is important to you and your customers.

Customizing an invoice

Depending on how you've done invoices in the past, you may want to remove or add information to QuickBooks' standard invoice forms. You can add or delete fields or columns, widen or change the order of columns, and include your own customized fields on the invoice. For example, depending on your needs, you can:

Remove the Item column from the printed invoice form (not from the onscreen form). If you provide a detailed description for each item you set up, you don't need to display the item name to customers.

Add a customized field to your Item list, to show the manufacturer from whom you order the product.

Add a customized field to your Item list, to indicate the size or colour of the item.

To add a customized field to your Item list:

1.	Select the item name in your Item list, click the Item button at the bottom of the window, and click Edit. (If you are adding a new item, click New.)

2.	At the Edit Item window, click the Custom Fields button.

3.	Click the Define Fields button to specify the customized fields you want to add to each of your items.

Enter the name of the field and click the "Use" checkbox to select it.

4.	(Optional) Fill in the fields for this item.

If you fill in a field, and have added that field to your sales forms, the information you enter transfers automatically to any customized form where the field appears. For example, if the field is named "Manufacturer" and you've entered "Acme Chairs" as the manufacturer for a particular item, the Manufacturer field on your sales form prefills to "Acme Chairs" each time you enter a sale of that item.

Leave a field blank if you'd prefer to fill it in at the time you enter a customer order.

5.	Click OK.

What's next

You can add customized fields you've set up for items to any sales form (invoice or cash sales receipt). If you want information you've entered in the customized fields to appear on a form, you must add the fields to the form by customizing the invoice as described in the following steps.

To customize an invoice form:

1. 	From the Lists menu, choose Templates. Click the Template button and select New.

2. 	Select the type of template you wish to customize (in this case, "Invoice"). Click OK.

3.	Click the tab corresponding to the area of the invoice form you want to change, then modify the information as necessary.

If you have added a customized field to your Customer or Employee list, you can click the Fields tab to include the field on your invoice.

If you have added a customized field to your Item list, you can click the Columns tab to include the information as a column on your invoice.

For more information, see the:

"Creating custom forms overview" topic in the "Forms" chapter of the User's Guide

"Customizing form content" topic in the "Forms" chapter of the User's Guide

Adding multi-line descriptions

When you type text in the Description column, QuickBooks automatically wraps lines for you. However, you can also set exactly where your lines break by pressing Down Arrow to move to a new line.

To enter several lines of description:

1.	On the invoice form, position your cursor in the Description column.

2.	Type your lines of description, pressing Down Arrow to move to the next line of the description.

Each line has a limit of 99 characters. Although you can't see a line this long on the onscreen form, QuickBooks displays the entire line on the printed invoice. (You can click the Preview button to check how a line will print.)

Creating sales forms outside of QuickBooks

Some manufacturing reps may want their invoices or sales receipts to project a certain image, and do not want to use the form-based invoice provided by QuickBooks. In this case, you can use QuickBooks to calculate subtotals and totals for your invoices or sales receipts and then create the sales form in a word processing program outside of QuickBooks.

To use another program for creating sales forms:

1.	Enter invoices or sales receipts into QuickBooks as usual, but clear the "To be printed" checkbox.

2.	Create the invoice or sales receipt outside of QuickBooks with your word processing or desktop publishing software.

For more information, see the:

"Sales and sales forms" chapter of the User's Guide

Entering customer orders and sales

Most accountants recommend that you should not record a customer order as a receivable until the product has actually shipped. (Until it ships, you don't know for sure that the product is available, so it is not a true receivable.)

When you receive an order from a customer, you should enter it as a pending invoice in QuickBooks. Then, when you receive word that the product has shipped, you can go back to the pending invoice and mark it as final.

Setting up items based on how you receive income

Some manufacturing or sales representatives receive their income based on product markup: If the product wholesales at $10, for example, and they sell the product for $18, they receive the amount of the markup, or $8. Many sales reps paid on this basis actually take title to the products they sell, but not all do.

Other manufacturing representatives are paid on commission - each time they sell a particular product, they receive a percentage on the sale. For example, if they receive a five-percent commission, and sell a product for $100, their revenue on the sale is $5.

If your income is based on product markup

If your income is based on product markup, you can use QuickBooks' invoices to record the exact amount you are due to receive.

To track product markup revenue:

1.	Enter each product you sell as a "non-inventory part" item on QuickBooks' Item list.

In the New Item window, enter the price you charge customers for the product.

Assign the item to your Markup Income account.

2.	Create an invoice for the customer, listing each product ordered.

3.	Choose Mark Invoice as Pending from the Edit menu.

QuickBooks displays the word "Pending" on the onscreen invoice (not on the printed form).

4.	(Optional) Print the invoice for the customer. (You may also want to print a copy for your records.)

5.	Go back to the invoice, and replace each product price with the actual amount you are due to receive (the product markup).

For example, if you sell a product for $25, but the wholesale price of that product is $15, you would change the price on the invoice to $10 (the amount of product markup).

If you sell a large number of products, you may need to keep a list of product prices you can refer to.

6.	After you have changed all the prices to reflect the amounts you are due to receive, record the invoice.

7.	When you receive notice that the products have shipped, display the invoice and complete these steps:

Enter the date the products shipped in the Ship Date field.

Choose Mark Invoice as Final from the Edit menu.

Tip: You can find the invoice quickly by creating a pending sales report and using QuickZoom to display the original invoice form. (To do so, choose Sales Reports from the Reports menu, then choose Pending Sales. In the report window, double-click the invoice you want to see.)

By following this procedure, you ensure that your accounts receivable always gives a true picture of your expected revenue. In addition, the income shown on your profit and loss report matches your accounts receivable.

If your income is based on commission

If your income is based on commission, you can create invoices that show exactly the income you are due to receive.

1.	Enter each product you sell as a "non-inventory part" item on QuickBooks' Item list.

In the New Item window, enter the price you charge customers for the product.

Assign the item to your Commissions Income account.

2.	Create an invoice for the customer, listing each product ordered.

3.	Choose Mark Invoice as Pending from the Edit menu.

QuickBooks displays the word "Pending" on the onscreen form (not on the printed form).

4.	(Optional) Print the invoice for the customer. (You may also want to print a copy for your records.)

5.	Create a "discount" type item that subtracts from the sales total to reflect the actual commission you should receive on the sale.

Give the "discount" type item a name such as "Commission."

Assign the item to your Commissions Income account.

For the amount, enter the percentage you want deducted from the sales total, in order to arrive at your commission due. (If your commission is 10%, enter 90% as the amount of the discount.)

For example, if you receive a 10% commission on product sales, enter 90% as the Amount for the discount item; if you receive a 5% commission, enter 95% as the Amount.

6.	Go back to the invoice, and enter a Commission "discount" line item after each "non-inventory" line item.

If you need to insert the Commission line item between two other lines on the invoice, select the line that is directly below where you want to insert, and choose Insert Line from the Edit menu.

7.	When the total amount of the invoice reflects the commission you are due to receive, record the invoice.

8.	When you receive notice that the products have shipped, display the invoice and complete these steps:

Enter the date the products shipped in the Ship Date field.

Choose Mark Invoice as Final from the Edit menu.

Tip: You can find the invoice quickly by creating a pending sales report and using QuickZoom to display the original invoice form. (To do so, choose Sales Reports from the Reports menu, then choose Pending Sales. In the report window, double-click the invoice you want to see.)

By following this procedure, you ensure that your accounts receivable always gives a true picture of your expected revenue. In addition, the income shown on your profit and loss report matches your accounts receivable.

Recording payments

Some manufacturing representatives receive payment directly from their customers, while others receive payment from the manufacturer they represent. You record payments from customers or manufacturers by using the Receive Payments window in QuickBooks.

If you receive payment from customers

If you receive payment directly from customers, you record the payment as described in the standard information you received with QuickBooks.

For more information, see the:

"Receiving payments overview" topic in the "Receiving and depositing payments" chapter of the User's Guide

If you receive payment from manufacturers

If you receive a cheque from a manufacturer which applies to more than one customer invoice, it is very important that you go to the Receive Payments window and receive on each invoice for each customer.

For example, suppose you sold the same product to two different customers. Your commission on each sale is $30, so the manufacturer sends you one cheque for $60. When you receive the payment in QuickBooks, you should enter the name of the first customer and apply a $30 payment for his invoice. Then you should enter the second customer name and apply a $30 payment to that invoice.

If you have one invoice that includes products from two manufacturers (so you have received two cheques), you'll need to use the Receive Payments window twice: once to receive the first payment and again to receive the second manufacturer payment.

For more information, see the:

"Receiving and depositing payments" chapter in the User's Guide

If you hire other sales representatives

If you hire other individuals to work for you as manufacturing or sales representatives, you need to track their sales and pay their commissions on a periodic basis. The way you do this depends on whether the reps are employees or independent contractors.

If your sales reps are employees, you can enter their initials in your Employee list. Then, on your sales forms, you can choose the initials of the sales rep responsible for the sale from the drop-down list in the Rep field.

If your sales reps are independent contractors, you can add a customized field called "Initials" to your Item list. Then you can add the field to your sales forms, and use it to enter the initials of the rep responsible for the sale. ("Customizing sales forms" in this document tells you how to add a customized field to your Item list and how to add that field to your invoice form.)

To track sales of your employee representatives:

1.	Set up each sales rep as an employee in QuickBooks.

For each employee entered on the Employee list, QuickBooks has a field called "Initials," which stores the initials of that employee.

2.	On every customer invoice or cash sales receipt, choose the initials of the person who made the sale from the drop-down list in the "Rep" field.

3.	See how much each of your reps has sold by creating a Sales by Rep Summary report (one of QuickBooks' Sales reports).

4.	Using the figures from your Sales by Rep Summary report, figure the commission due each of your representatives.

5.	Write a QuickBooks payroll cheque to pay the commissions you owe.

If the sales representative is an employee, you can pay the commission through the payroll cheque. You need to set up a special commission payroll item in QuickBooks, and then you can add the commission information to your employee template.

For more information, see the:

"Adding Employees" topic in the the "Setting up employee information" chapter of the User's Guide

"Commission payroll items" topic in the "Payroll items" chapter of the User's Guide

"Adding adjustments that affect employees" topic in the "Setting up employee information" chapter of the User's Guide

To track sales of contract sales representatives:

1.	Add each sales rep to your QuickBooks Vendor list.

2.	Create a customized field for your Item list, called "Initials." Then customize your invoice and cash sales receipt forms to display the "Initials" field.

See "Customizing sales forms" in this document for details on how to create customized fields and add them to the invoice.

If you do not hire employees, you can delete the "Rep" field from your sales forms. (If you have employees as well as contract reps, you can display both the Rep and Initials fields on your sales forms.)

3.	On every customer invoice or cash sales receipt, enter the initials of the person who made the sale in the "Initials" field (or in the "Rep" field, if the rep is an employee).

4.	See how much each of your independent reps has sold by creating a Sales by Item Summary report (one of QuickBooks' Sales reports), and customizing the report to show sales only for that rep:

From the Reports menu, choose Sales Reports. Then choose By Item Summary.

At the report window, click the Filters button.

Click the Custom Fields button.

In the Initials field, enter the initials of the sales rep you want to report on.

Click OK to display a report that shows sales totals for that independent rep.

5.	Using the figures from your Sales reports, figure the commission due each of your representatives.

6.	Write a QuickBooks cheque to pay the commissions you owe.

For more information, see the:

"Adding and using customized fields" topic in the "Working with lists" chapter of the User's Guide

"Creating custom forms" topic in the "Forms" chapter of the User's Guide

"Reports" chapter of the User's Guide

Understanding income and profitability with reports

QuickBooks has approximately 70 preset reports, which you can customize to fit your needs. The most important reports for any business are the Profit and Loss reports and the Balance Sheet reports. To create these for your business, just choose from the Reports menu.

Here are some reports which manufacturing reps and sales agents may find especially useful, along with instructions on how to create them in QuickBooks from the Reports menu:

To see revenue figures for each of your customers

Choose Sales Reports, then By Customer Summary, to see revenue you are due to receive (either through commission or product markup). Choose By Customer Detail to see the individual transactions that make up the customer sales figures. To report on only certain customers, click Filters from the report window, and choose the customers you want in the Name field.

To see revenue figures for each product you sell

Choose Sales Reports, then By Item Summary, to see revenue you are due to receive (either through commission or product markup). If you want to see product sales figures for only certain products, click the Filters button from the report window. Then click the Invoice Opts. button. In the Items field, choose the items (products) you want to report on.

(If you added a customized field to track manufacturers) To see how much you've purchased from each manufacturer

Choose Sales Reports, then choose By Customer Summary. At the report window, click the Filters button. Then click Custom Fields, and enter the name of the manufacturer you want to report on in the "Manufacturer" custom field.

(If you entered shipping dates in the Ship Date field) To see when orders have been shipped

Choose Sales Reports, then choose By Customer Summary. At the report window, click the Filters button. Then click Invoice Opts., and enter "From" and "To" dates (the date range you want to report on) in the Ship Date field.

(If you have sales reps who work for you) To see how much each of your sales reps has sold (requires that you enter the name of the sales rep on each invoice)

Choose Sales Reports, then choose By Rep Summary.

For more information, see the:

"Reports" chapter of the User's Guide

Other QuickBooks tips for manufacturing reps

Here are some other QuickBooks features that manufacturing reps and sales agents may find useful.

Keeping track of conversations and tasks

Sales agents sometimes make decisions with customers over the telephone. It is important to keep track of your conversations with customers, whether they occur in person or by phone. QuickBooks lets you enter notes for each customer in your Customer:Job list. The customer notes give you a quick way to jot down important details of a meeting.

To enter a note related to a specific customer:

1.	Display the Customer:Job list.

2.	Double-click in the Notes column to the right of the customer name.

QuickBooks displays the Notepad for that customer.

3.	Enter your notes.

You can use the To Do list in combination with the customer notes. Suppose your customer wants you to fax her an estimate for several products she wants to order, and you've agreed to send it to her in three days. You can enter a note about your conversation in your customer notes, and you can also have QuickBooks remind you of the due date by entering it in the To Do list.

To add a note to the To Do list:

1.	From the Lists menu, choose To Do Notes.

If you already have the Notepad displayed for that customer, you can click the New To Do button.

2.	Click the To Do button, then click New to add a new note.

3.	Enter the note and the date you want to be reminded.

If you have reminders turned on, QuickBooks displays your "to do" note in the Reminders window when you start QuickBooks.

Tracking information about your customers

The QuickBooks Customer list lets you add extra fields to each of your customer records for any purpose. You can use these customized fields to track dates, personal information, and so on. Manufacturing representatives may want to add customized fields to track additional customer information such as:

How customer was referred

Relevant personal information about customer (for example, days/times when a customer can receive deliveries)

Region in which customer lives

Name of administrative assistant

Other product lines the customer sells or uses in his business (potential future business)

Information you enter into the fields can be just for your use (for example, you can look up a customer record to see the name of his administrative assistant), or you can add the customized fields to your sales forms and have the information appear on your invoices and cash sales receipts.

If you want to add customized fields to a customer record, see the steps below. If you want to then add the customized fields to your invoices, see "Customizing sales forms" earlier in this document.

To add customized fields to a customer's record:

1.	Select the customer's name in your Customer:Job list, click the Customer:Job button, then click Edit.

2.	At the Edit Customer window, click the Additional Info tab.

3.	Click the Define Fields button to specify the custom fields you want to add to each customer's record.

Enter the name of the field and where you want it to be used (you can have it displayed for your customers, vendors, and/or employees).

4.	(Optional) Fill in the fields for this customer.

You'll see the new fields on the Additional Info tab. If you fill in a field, and have added that field to your sales forms, the information you enter transfers automatically to any customized form where the field appears.

Leave a field blank if you'd prefer to fill it in at the time you make a sale.

5.	Click OK.

For more information, see the:

"Adding and using customized fields" topic in the "Working with lists" chapter of the User's Guide

Helping us help you

We'd like to know your special concerns and the problems you run into when trying to make QuickBooks work in your business. We also want to know how useful "Manufacturer's representatives or sales representatives" was in helping you fit QuickBooks to your needs.

Please use this sheet to mail or fax us your comments. If possible, please also attach specific comments marked on the printed version of this document. Mail the completed form and any attachments to:

Intuit Canada, Ltd.

Industry Feedback

P.O.Box 4165

Edmonton, Alberta

Canada

Or fax your comments to us at 1-800-387-4285

Some information about your business

Name:

Business name:

Address:

Phone:

Number of employees:

My business is a: __ Sole proprietorship __ Partnership __ Corporation

What other needs do you have, specific to your type of business, that were not covered in this document?

Do you have any tips for other people in your field who use QuickBooks?

Which two or three topics did you find most useful in this document?

May we call you to discuss your comments?

___ yes    ___ no


Non profit organizations

Overview for nonprofit organizations

Before you begin

Setting up your QuickBooks company

Organizing your income, expenses, donors, and funds

Customizing your Chart of Accounts

Setting up members, donors, or clients as customers

Creating items for your products or services

Tracking funds with 'classes'

How to handle some typical fund transactions

Checking your fund balances periodically

Other uses for classes (besides fund tracking)

Receiving a donation or grant

Tracking pledges

Tracking and collecting membership dues

Creating budgets

Finding out how you're doing through reports

Other QuickBooks tips for nonprofit organizations

Helping us help you

Some of the information in this document was provided by William Jeffrey of Jeffrey & Associates, San Jose, California.

Overview for nonprofit organizations

Nonprofit organizations include a wide range of organizations, including professional associations, churches, charities, and community organizations.

QuickBooks can help nonprofit organizations meet most of their financial management needs, including:

Tracking fund balances and income and expenses for each fund

Collecting dues from your members, clients, or customers

Tracking pledges

Creating budgets

Running payroll

Doing your day-to-day accounting such as writing cheques, paying bills, and tracking payables and receivables

Showing how your organization is doing through reports, using either cash-basis or accrual reporting

Before you begin

This document gives you information on how to use QuickBooks for your special needs - we won't repeat what's already in the standard information you receive with QuickBooks. Instead, you'll see references to show where you can find complete information and details on using QuickBooks features.

Printing your industry document

If you're looking at this document onscreen, you're now in a "QuickBooks and Your Industry" window.

To print this document:

From the File menu, choose Print... or Print Topic.

If you got to this Help window from the interview, close the Help window to return to the interview.

To see other industry documents:

Click any of the industries listed in the contents.

Understanding QuickBooks terms

QuickBooks uses terms you can readily understand: accounts payable/receivable, vendors, and employees. But there are a few special terms you need to be aware of:

Chart of accounts

A list of accounts that you use to track how much money your organization has, how much money it owes, how much money is coming in, and how much is going out.

Customer

A donor, patron, member, client, or sponsor.

Item list

A list of items that includes what your organization charges for or collects (for example, membership, unspecified donations, publications, seminars), miscellaneous charges and discounts.

Service item

A service item represent services you charge for or collect. In nonprofit organizations, you'll set up service items for membership dues, publications, seminars, activity fees, and so on.

Bill

A bill is what you receive from your vendor or subcontractor, from which you will pay that vendor or subcontractor.

Invoice

An invoice is what you might send your members or donors. You can rename the invoice to pledge, donation, or dues.

Class

A way to categorize income and expenses. For example, you can categorize income and expense by a class that you define, such as by restricted or unrestricted activities, etc.

Important

The information in this document was compiled from the experiences and suggestions of other QuickBooks users in your type of business. Your own needs may vary considerably, and only you and your accountant understand the unique needs of your business.  Ultimately, you are responsible for your own books.

Therefore, we encourage you to have your accountant look over the setup suggested in this document, and we suggest that you give QuickBooks a thorough "trial run" early in the process. The best way to ensure that you have set up QuickBooks optimally for your business, and that it will provide all the information you need, is to enter a small number of your standard transactions in QuickBooks. Then try running all the reports you may eventually need.

While we can give you technical support on how QuickBooks works, our technical support representatives are not industry experts and cannot give you specific accounting advice. If you have questions regarding accounting issues specifically related to your industry, we recommend you consult either an accountant, industry expert, or professional association.

Setting up your QuickBooks company

The QuickBooks EasyStep Interview asks you questions about your business, and uses your answers to help you set up your non-profit organization in QuickBooks. We recommend the interview as the easiest way to get started and to customize QuickBooks for your type of business.

If you choose not to use the EasyStep Interview, you should follow the setup directions in the "Setting up a QuickBooks company" chapter of the Getting Started Guide.

Organizing your income, expenses, donors, and funds

QuickBooks has important features that let you analyze your business in great detail:

Your Chart of Accounts, including balance sheet, income and expense accounts, tracks all of your transactions.

The Customer:Job list, with customer types, lets you keep track of your customers, members, or donors.

Items let you track your income and expenses, such as membership dues, donations, newsletter subscriptions, and so on.

Classes let you track different segments of your business, and can be especially useful to nonprofit organizations in tracking different funds.

The following sections give you more information about these and other features.

Customizing your Chart of Accounts

Your chart of accounts is your most important list. When you set up books for your nonprofit organization, you want to track where your income comes from, where you keep it, what your expenses are, and what you use to pay them. You track this flow of money though a list of accounts called the chart of accounts.

You will probably choose the preset chart of accounts designed especially for nonprofit organizations. Before you customize your chart of accounts, it's helpful to print the current chart of accounts for nonprofit organizations and then determine which accounts you want to add, edit, or delete.

Note:	You might want to show the chart of accounts to your accountant before you set up your QuickBooks company.

For more information, see the:

"Your chart of accounts" chapter of the User's Guide

Setting up members, donors, or clients as customers

Customers and customer types

Most nonprofit organizations serve some kind of community. In some nonprofit organizations, people in this community may pay dues and become members. Or they may pay fees for a service, wherein you treat them as clients or customers.

In other nonprofit organizations, there may be no "paying members," but there may be a group of people who are "donors" to the nonprofit organization. Donors can include patrons, corporate sponsors, and institutions, such as government agencies or universities that provide money to the nonprofit organization.

In QuickBooks, you would set up donors, members, or clients as customers. You can then get useful reports such as revenue and expenses for a given member, donor, or client. Optionally, you can categorize customers by type so you could get reports on a given type of member, donor, or client.

Examples of customer types

If you receive contributions or grants, here are some examples of customer types that you might set up:

Donor

Patron

Corporate Sponsor

Subscriber.

On the other hand, you may provide services to clients or customers. For example, you may run a daycare center, with the following customer types:

Monthly

Weekly

Drop-in

For more information, see the:

"Customers and jobs" topic in the "More QuickBooks lists" chapter of the User's Guide

"Customer types" topic in the "More QuickBooks lists" chapter of the User's Guide

Creating items

QuickBooks items represent the services or products that you buy, sell, or resell in your business.

You use items on sales forms, such as invoices, cash sales, or statements in order to charge your clients, donors, or members. For instance, if you collect dues from your members, you could set up a membership dues item, and use that on an invoice (or cash sale receipt) to the member.

On the invoice form, you'd choose an item from the Item list. QuickBooks prints the name of the item, a description, and the item's cost per unit or rate per hour (if the item has a standard cost or rate). When you enter a quantity for the item (for example, two newsletter subscriptions), QuickBooks also figures out the total, and assigns that total to the appropriate income account.

QuickBooks uses information you've recorded about each item to assign the sale or purchase to the right income or expense accounts.  Reports and graphs can then give you valuable information, such as your greatest sources of income and which items you sell most.

You can also create subitems to further subdivide your charges and track them in greater detail.

Here are some example items and subitems for nonprofit organizations

Example items for things you might charge for:

Membership dues - with subitems: Full, Student, Family

Publications - with subitems: Newsletter subscription, Proceedings

Conference - with subitems: Member, Non-member

Dinner meeting - with subitems: Dinner, Dessert only

Product sales - with subitems: Books, Tapes, Videos

Example items for grants or donations you might receive:

Pledge

Donation

Corporate sponsorship

For more information, see the:

"Creating items" topic in the "Items - your products and services" chapter

"Using subitems" topic in the "Items - your products and services" chapter

Creating items vs. accounts

You might be wondering when you would create an item rather than creating a new account in the chart of accounts.

You'd create an account in your chart of accounts if you want to see the account listed on your Profit and Loss Statement or on your Balance Sheet. Accounts are broad categories of income and expense (for your Profit and Loss statements) or assets, liabilities, or equity (for Balance Sheets). A nonprofit organization might have three income accounts, such as Membership income, Activities income, and Fund-raising income.

Most businesses want to track more detailed income information than these broad categories. Instead of creating more accounts on your chart of accounts, you can create items to track more information on your income. For instance, the Membership income account would have associated items, such as, Full membership dues, Associate membership dues, Student membership dues, and so on. By using items, you'll also make creating invoices or statements faster and easier.

Tracking funds with classes

If you want to track one or more funds in your nonprofit organization, QuickBooks classes give you a convenient way to separate income and expenses for each fund, including your general fund. (The general fund consists of the unrestricted money that the organization can spend as it wishes.)

When you set up each fund as a class, you'll be able to see a Profit and Loss report by fund, as well as detailed transaction reports. QuickBooks also allows you to see how much money you have in each fund, or several funds together. This is in addition to reports on your overall organization.

Using this method, you'll also be able to see expenses from the general fund (that is, your overhead), for any period of time, as a percentage of other fund expenses. This is often a "magic number" that nonprofit organizations have to report to their funders.

See "How to handle some typical fund transactions" and "Checking your fund balances periodically" later in this document for details on how to track your funds.

You can use subclasses to designate restricted and unrestricted money

You may have funds that have a portion of their money restricted, or temporarily restricted. If you need to track what portion of a fund is restricted and what portion is unrestricted, you can create a class for the fund, and subclasses underneath it called "restricted" and "unrestricted."

Some QuickBooks limitations in fund tracking

Although we provide you with a procedure later in this document for determining your fund balances, QuickBooks cannot give you a balance sheet by class (that is, by fund). Also, although QuickBooks can give you the necessary reports to account for your funds, it cannot give you the exact format of the reports you may need to submit to the government.

Important:	If you use classes to track funds, in order to be able to see your fund balances in a report, you can't use the condense data feature in QuickBooks. See the "Condensing data" topic in the "Maintaining your data" chapter of the User's Guide.

To set up and use classes for funds:

1.	Make sure class tracking is turned on.

From the File menu, select Preferences. Choose Accounting and check "Use class tracking."

2.	Create a class for each of your funds, including the general fund.

For example, your classes could be "building fund", "outreach fund", and "general fund." (The general fund consists of the unrestricted money that the organization can spend.)

3.	(Optional) Create subclasses for funds that have a portion of their balance restricted.

You can call the subclasses "restricted" and "unrestricted."

4.	Whenever you enter sales, cheques, bills, credit card charges, or other transactions in QuickBooks, choose the appropriate class (or subclass) from the drop-down list in the Class field.

For example, if you write a cheque for building repairs and want that charged to the building fund, you might choose a class called "Building fund" in the class field.

For more information, see the:

"Classes" topic in the "More QuickBooks lists" chapter of the User's Guide

How to handle some typical fund transactions

Entering beginning balances for funds

A beginning balance for a fund is the total amount of money available to spend for the purpose of that fund. It does not necessarily correspond to a bank account balance, because you may have one fund's money split among two or more actual bank accounts. This section deals with fund balances regardless of how many bank accounts actually contain the money.

Important:	You should know the correct fund balances before proceeding. Be sure to include in each fund's balance any accounts receivable or payable for that fund. Accounts receivable would increase the fund's balance, and accounts payable would decrease the balance.

To enter beginning balances for your funds:

1.	Do the following steps after you've set up your bank accounts with the correct beginning balances for those accounts in QuickBooks.

See the "Enter opening balances" topic in the "Setting up a QuickBooks company" chapter of the Getting Started Guide.

2.	Calculate the beginning balances for all your funds.

The total amount should equal the amount you have in your bank accounts plus any outstanding accounts payable or receivable for all funds.

3.	Create an income account called "fund transfer income" and an expense account called "fund transfer expense."

These accounts will only be used in general journal entries to enter or adjust fund balances, but they will always cancel each other out.

4.	From the Activities menu, choose Make Journal Entry.

This allows you to make a General Journal entry.

5.	In the Account field, select the "fund transfer income" account, enter the total for the first fund under Credit, and select the fund under Class.

6.	Repeat Step 5 for each fund you have.

7.	After you've entered the last fund balance, press Tab. You'll see a balancing entry on the next line under Debit, equal to the total for all your funds (which you entered in the Credit column).

8.	Choose the "fund transfer expense" account on the last line (where you see the balancing entry under Debit).

Do not select a class on this line.

To check your beginning balance entry, you can create a Custom Report. See "Checking your fund balances periodically" below.

Transferring amounts from one fund to another

Also a way to transfer between restricted and unrestricted money

One example of why you might transfer money from one fund or subfund to another is if some temporarily restricted money in a fund became unrestricted. Let's say you created a class called "Acme fund" with subclasses called "restricted" and "unrestricted." You would transfer the amount that just became unrestricted from the "restricted" subclass to the "unrestricted" subclass.

Transferring amounts from one fund to another is similar to entering beginning balances.

To transfer amounts between funds:

1.	From the Activities menu, choose Make Journal Entry.

2.	In the Account column, select the "fund transfer income" account, and Credit the fund you want to increase.

Under Credit, enter the amount of the increase to the fund, and select the fund you're increasing in the Class column.

Remember, if you're transferring money between subfunds, such as "restricted" or "unrestricted," choose the appropriate subclass.

3.	On the next line, select the "fund transfer expense" account, and Debit the fund you want to decrease (the one you're transferring "from.")

There will be a balancing entry on this line in the Debit column, equal to the amount you entered on the previous line. Select the fund you're decreasing in the Class column.

Spending money from a specific fund

Keeping track of expenses by fund is easy when you're tracking funds with classes. Whenever you write a cheque, enter a bill or credit card transaction in QuickBooks, also select the class corresponding to the particular fund you're spending the money from. Also select an expense account. You'll be able to see those expenses by fund when you create a Profit and Loss by Class report.

Important:	To get an accurate picture of your funds, you must classify every transaction in QuickBooks. If a transaction doesn't apply to the general fund, or to any other fund, classify it as "other." When you create reports, any transaction you forgot to classify will be listed as "unclassified," and you can easily go back and correct it by double clicking it on the report.

For more information, see the:

"Entering a bill" topic in the "Bills" chapter of the User's Guide

"Writing a cheque" topic in the "Managing your chequebook" chapter of the User's Guide

Creating a profit and loss report by fund

A profit and loss report lets you see income and expenses for any and all funds including your general fund, sometimes referred to as overhead. Nonprofit groups may also need to report the amount they spend on overhead as a percentage of their total expenses. Here's how to meet these two needs in QuickBooks.

To see your profit and loss by fund:

1.	From the Reports menu, choose Profit and Loss, By Class.

2.	Click Filters, and choose Class. Choose Selected classes in the Class field.

3.	Select all your classes (funds) including the class for your general fund, and click OK.

4.	(Optional) If you created subclasses for restricted and unrestricted money within funds, you can choose those subclasses as well.

To see overhead as a percentage of total expenses:

1.	Create a Profit and Loss by Class report as described above.

2.	Click Customize, and check "% of Row."

This report shows you income and expenses for each fund as a percent of total income and expenses for each fund. Look at the Total Expense figure in the column for your general fund. This should show your general fund expenses as a percentage of your total expenses.

Checking your fund balances periodically

If you've used classes to track funds as recommended in this document, use this method to see your fund balances in a report at any time.

Although you can name the report as you wish, QuickBooks cannot give you the exact format you might need for government reporting purposes. But you can use the information in this report to fill out forms specific to your type of nonprofit organization.

To create a report on fund balances:

1.	From the Reports menu, choose Custom Report.

2.	In the Dates field (top left), select All.

In order to get the correct balances, you must select All (even if you want to see the balances just for this month).

3.	Click Customize, select Class in the Row Axis field, and click OK.

4.	Click Filters.

5.	Choose Class, then from the Class field, click Selected classes. Select all of your funds, and click OK.

You should see balances for each of your funds. The total should equal the amount you have in the bank.

6.	Memorize this report by clicking Memorize and naming the report as "Fund Balances."

7.	(Optional) Click Header/Footer to customize the title of the report as you wish.

A method for double checking your fund balances

The fund balances report described above shows you the current balance for any and all funds. You may want to check these balances against your total cash and liquid assets. You'll be able to see your cash and liquid assets by creating a balance sheet.

To check fund balances against your balance sheet:

1.	From the Reports menu, choose Balance Sheet, Standard.

2.	Add up the totals for all your liquid assets.

This includes chequing, money market, savings accounts, etc.

3.	Check to make sure the total of your liquid assets equals the totals of your funds, including your general fund.

In some cases, you may also have non-liquid assets, such as property, donated vehicles, or investments, dedicated to certain funds. You should also account for these assets when calculating the total value of funds.

4.	If the two figures don't match, you'll need to correct discrepancies.

A good way to look for mistakes is to create a Transaction Detail report:

From the Reports menu, choose Transaction Detail Reports, By Date. In the Dates field, select All. In the Total By field, select Class. This gives you all transactions for each fund. You can double-click any transaction on the report to go to it and make any corrections.

Other uses for classes (besides fund tracking)

Important:	If you're using classes to track funds, do not use classes for any other purpose.

If you don't need to track funds, you can use QuickBooks classes for other purposes. Classes give you another way to track income and expenses in addition to customer type. Classes are more global than customer types because they give you a way to break down income and expenses for different segments of your organization, regardless of type of customer or client served.

For example, if your organization provides on-site training as well as off-site training, and you need to track income and expenses for each of those areas separately, you can create a class for each one. You would then select the appropriate class in all QuickBooks transactions, such as writing cheques or invoicing. You can then see the proportion of your income and expenses related to those two types of services on a Profit and Loss Report by Class.

Other examples of classes for nonprofits

You may wish to classify or track your income and expenses by:

location or branch

fundraiser or sales person

type of service or product you sell

any meaningful breakdown of your organization

Important:	You should use classes for one purpose only. For example, don't mix using classes for locations with using classes for fundraisers.

Tips for using classes (other than for funds)

Think of the ways you'd like to categorize portions of your nonprofit group in terms of income and expenses for each portion. The classes you set up should correspond to those portions, and can be any meaningful breakdown of the business you do.

Set up classes on the basis of the type of reporting you want to do, and consider how you want to see your finances segmented on reports. For example, if your nonprofit group has three fundraisers and you want to analyze the profitability of each fundraiser's activities, you can create a class for each fundraiser. Later, you can create a Profit and Loss Report by Class to look at income and expenses for each fundraiser.

Classes are most useful when you can identify both income and expenses for each class you set up, because this makes your Profit and Loss by Class report more meaningful.

Set up a class such as "other" that you can use to deliberately classify transactions that don't fit into any specific class that you've defined. This eliminates confusion between transactions that you forget to classify and those that do not fit into one of your defined classes - on reports, transactions that you forget to classify will be listed as "unclassified."

If you want to break down your income and expenses even further, you can create subclasses.

Receiving a donation or grant

If you receive contributions, donations, or grants, there are two ways to handle them in QuickBooks:

Method 1 - Making a deposit

The simpler way to receive money is to deposit the money using QuickBooks Make Deposits. For example, you might deposit the money into an income account called "Grants" or "Contributions." And if you're tracking funds with classes, you would also select a class for that sum of money, for example, "Building Fund."

You can't create a receipt from QuickBooks, but you can create donor reports periodically to show how much money you received from whom, and for what fund if applicable.

Method 2 - Creating a cash sale

You would use this method if you want to give a receipt to the donor (instead of, or in addition to, a periodic report) from QuickBooks. In this case, you would create a Cash Sale in QuickBooks, which you could customize to say "Donation Receipt."

In order to use a Cash Sale, you'll need to create an item in QuickBooks such as "Donation." Using an item still associates the money received with an income account such as "Grants," but it involves an extra step compared to Method 1.

If you're tracking funds with classes, be sure to select the appropriate class, or enter "other." If a donation is earmarked for more than one fund, calculate the amount of the donation for each fund. Then enter those amounts on separate lines of the cash sale and choose the class for the appropriate fund on each line.

For more information, see the:

"Depositing payments" topic in the "Receiving and depositing payments" chapter of the User's Guide

"Types of QuickBooks sales forms" topic in the "Sales and sales forms" chapter of the User's Guide

Getting a donor report in QuickBooks

You may need to send a year-end or periodic report to each donor. It's easy to customize a report in QuickBooks to give you donation information on all donors. From there, you can double click on any donor line in the report to get a report on that donor.

This report will work whether you use the Make Deposit method for receiving money, or the Cash Sale method.

To create a custom donor report:

1.	From the Reports menu, choose Custom Report.

2.	If you're tracking funds with classes, select Class in the Columns field, and Customer in the Row Axis field.

The class column will show which funds each donor gave to.

3.	If you're not tracking funds with classes, select Customer in the Row Axis field, and select another criterion for Columns.

For example, "Total only" will give you the total donation per customer, and "Account list" will give you totals and the accounts the donations went into, such as "Grant Income."

Note:	If you entered opening balances for funds, you'll have some transactions on this report with "no name" for the customer and "unclassified" for the class. To avoid this, click Filters, and in the Name field, click "Selected names." Then select the names of all your donors.

4.	Click Memorize to save the settings for this report.

You may wish to change the title before you memorize the report by clicking Header/Footer. For example, you can use the title "Donors Report."

To find your report later, choose Memorized Reports from the Reports menu.

5.	To get figures for a specific donor, double-click the line with the donor's name on the report.

When your mouse pointer turns into a magnifying glass on any QuickBooks report, you can double-click to "QuickZoom" to details for those figures.

Remember you can change the title. For example, you may call it "Donor Report for Jane Smith."

For more information, see the:

"Customizing a report" topic in the "Reports" chapter of the User's Guide

Tracking pledges

If you report on a cash basis

Most nonprofit organizations use cash basis reporting. If you use cash basis reporting, you can record pledges using QuickBooks invoices. Since invoice amounts do not appear on cash basis income reports, the pledges will not show up on your books until they are paid.

The advantage of using invoices is that you'll be able to send reminder statements easily to people who have pledged money to your organization. You can also change the statement title to something such as "Pledge Reminder."

To track pledges and send reminders:

1.	Enter pledges on QuickBooks invoices.

Enter the name of the donor in the Customer:Job field.

2.	If you use invoices for another purpose, distinguish pledge invoices by typing "P" in the Memo field.

This will allow you to create reports just on pledge invoices.

Note:	As an alternative, you can set up a customer type for people who pledge money. This would work well only if your donors would not fall into any other customer type you've created.

3.	To send pledge reminders, from the File menu, choose Print Forms, Print Statements.

You can print statements for selected customers, or all customers.

If you use customer type to distinguish your pledges, you can print statements for that customer type only.

4.	When you receive the pledges, use Receive Payments (Activities menu).

To create a report on your pledges:

1.	From the Reports menu, choose A/R Reports, Open Invoices.

If you distinguish your pledge invoices by typing "P" in the memo field, click Filters and type "P" in the Memo field.

If you use customer type to distinguish pledge donors, click Filters and choose that customer type in the Customer Type field.

If you report on an accrual basis

If you use accrual basis reports, you should track pledges using invoices in a separate QuickBooks company. This is to avoid counting pledges as income in your "real" QuickBooks company.

Use the same procedure for tracking pledges as described above, but do it in a separate QuickBooks company (File menu, New Company).

Important:	When you receive pledges, you must receive payment in both QuickBooks companies. This will make your books accurate in the "real" company, and let you create reminder statements and reports for pledges you have not yet received in the "pledges" company.

For more information, see the:

"Creating custom forms" topic in the "Forms" chapter of the User's Guide

"Customizing form content" topic in the "Forms" chapter of the User's Guide

"Recording an invoice or statement payment" topic in the "Receiving and depositing payments" chapter of the User's Guide

"Filtering report data" topic in the "Reports" chapter of the User's Guide

"Create your new QuickBooks company" topic in the "Setting up a QuickBooks company" chapter of the Getting Started Guide

Tracking and collecting membership dues

Organizations with memberships can choose a variety of ways to charge dues. Some use a rolling calendar for membership. This means that if a member signs up in June, the membership is good until June of the next year.

Others use a calendar year membership and may want to pro-rate membership according to what month a member joined. If a member joins in August, the member pays 1/3 of regular membership.

Each of these ways of charging membership would require different procedures in QuickBooks.

To charge for rolling calendar membership:

1.	From the Activities menu, choose Create Invoices.

2.	Select the Customer name in the Customer:Job drop-down list.

If you haven't set up the customer name, you can set one up by typing the name in the field. QuickBooks prompts you from there.

3.	Select the membership item.

4.	Memorize the transaction.

From the Edit menu, choose Memorize.

In the Memorize Transaction window, click Remind Me.

In the How Often drop-down list, select Annually.

Click OK.

Note:	Make sure your Reminder preferences are set up correctly. From the Preferences menu, choose Reminders. For Memorized Transactions, click either Show Summary or Show List.

To charge pro-rated membership:

1.	Set up service items for membership for each month of the year.

For example, if dues are $120 per year ($10 per month) set up January membership as $120. Set up February membership as $110 and so on.

Note:	If you set up items for each month of the year, you will also be able to see how many members joined in certain months. This could help you track the effectiveness of recruiting drives.

2.	When you create an invoice for a member who joins in a certain month, select the item that represents that month's membership.

You can also memorize an invoice for membership charges for each month.

3.	In December, send reminder notices to all members to renew their membership.

You can use To Do Notes to remind yourself to send renewal notices.

You can group your memorized transactions

If you have a type of organization that bills all or groups of members at once (for example, all June renewals), you can put your memorized transactions into groups. QuickBooks can remind you to enter those groups of transactions, or enter them for you.

If your organization mainly does periodic billing, you should read the industry document for periodic billing businesses. See "Finding this and other industry documents" at the beginning of this document.

For more information, see the:

"Memorized transactions" topic in the "More QuickBooks lists" chapter

"To Do notes" topic in the "More QuickBooks lists" chapter

Creating budgets

Because nonprofit organizations often depend on memberships, grants, or fund-raising for their survival, budgets planning your financial future could be critical. By setting up a budget, you can get an understanding of your financial future as well as the costs you have committed for the fiscal year.

You can set up budgets that show your projected income and expenses and your projected account balances. You can then can compare your actual income and expenses or your actual account balances against your plan by using budget reports.

Here are some hints on setting up budgets:

If you're tracking funds, you can create a budget by class (instead of month by month). In the Set Up Budgets window, enter the budget for the entire fiscal year in the field for the first month of the fiscal year. Be sure to choose the class you are using to track the fund. If you don't want a breakdown by account, don't choose any account.

Budgets that extend across two fiscal years need to have the date adjusted on the report to cover two years, for example, from 1/1/97 to 1/1/98.

For more information, see the:

"Setting up budgets" topic in the "Budgets" chapter

Finding out how you're doing through reports

Nonprofit organizations are often required to produce reports on their financial activities. These reports could be required by members or corporate sponsors, who want to see where their dues are going, by directors who are responsible for the finances of the nonprofit organizations, or by Revenue Canada to audit the tax status of the nonprofit organization.

QuickBooks has over 70 preset reports. In addition, QuickBooks gives you a lot of flexibility to customize and sort reports, and filter out only the data you need to see.

Here are some QuickBooks reports that might be of interest to nonprofit organizations:

Pledge reports

See "Tracking pledges" earlier in this document

Donor reports

See "Receiving a donation or grant" earlier in this document

Fund balance reports

See "Tracking funds with 'classes'" and "Checking your fund balances periodically" earlier in this document

Balance Sheet

From the Reports menu, choose Balance Sheet, Standard.

Profit and Loss

From the Reports menu, choose Profit and Loss, Standard.

Accounts Receivable

From the Reports menu, choose A/R Reports, Aging Summary.

For more information, see the:

"Description of each preset report" topic in the "Reports" chapter

"Customizing a report" topic in the "Reports" chapter

Other QuickBooks tips for nonprofit organizations

Printing mailing labels

QuickBooks will print mailing labels (and Rolodex cards) for all your customers according to the criteria you set. You can sort by name or postal code and select which customers and customer types to include.

For more information, see the:

"Printing labels" topic in the "Printing" chapter

Contact management with QuickBooks

QuickBooks has two features that will help you with contact management. You can use the customer Notepad to enter notes related to each client, with an optional date stamp. You can also use the To Do Notes list to track tasks and have QuickBooks remind you to do them.

These two tools are related in that you can enter a new "To Do" while entering notes in a customer's Notepad. This makes it easier for you to enter a task related to a note you're adding in the customer record.

For more information, see these topics:

"Keeping notes about a customer or job" topic in the "More QuickBooks lists" chapter of the User's Guide

"To Do notes" topic in the "More QuickBooks lists" chapter of the User's Guide

Tracking information about customers, vendors, employees

You can set up custom fields to track additional information about customers, employees, vendors, and items. For example, a nonprofit organization might want to add custom fields such as these:

Membership category based on size or type of business

Membership or sponsorship level depending on size of donation

Volunteering status or ability

Birthdays

Cellular phone or pager numbers, E-mail addresses

For more information, see the:

"Adding and using customized fields" topic in the "Working with lists" chapter

Helping us help you

We'd like to know your special concerns and the problems you run into when trying to make QuickBooks work in your organization. We also want to know how useful "Nonprofit organizations" was in helping you fit QuickBooks to your needs.

Please use this sheet to mail or fax us your comments. If possible, please also attach specific comments marked on the printed version of this document. Mail the completed form and any attachments to:

Intuit Canada, Ltd.

Industry Feedback

P.O.Box 4165

Edmonton, Alberta

Canada

Or fax your comments to us at 1-800-387-4285

Some information about your business

Name:

Business name:

Address:

Phone:

Number of employees:

My business is a: __ Sole proprietorship __ Partnership __ Corporation

What other needs do you have, specific to your type of business, that were not covered in this document?

Do you have any tips for other people in your field who use QuickBooks?

Which two or three topics did you find most useful in this document?

May we call you to discuss your comments?

___ yes    ___ no


Periodic billing businesses

Overview for periodic billing businesses

Before you begin

Setting up your QuickBooks company

Organizing your income, expenses, customers and jobs

Customizing your Chart of Accounts

Creating items

Setting up customers or clients

Using 'classes' to see how different parts of your business are doing

Billing for your services

Customizing an invoice or statement

Handling overdue amounts

Recording payments you receive from customers

Handling cash sales

Handling refundable deposits

Creating budgets

Understanding income and profitability with reports

Other QuickBooks tips for periodic billing businesses

Helping us help you

Overview for periodic billing businesses

Some examples of types of companies that bill periodically are day care centres, nursing homes, landscape businesses, health clubs, and newsletters. Regardless of the type of service that your business or organization provides, as a business that bills periodically, you have some basic needs from your accounting system. These needs include:

Collecting money from your customers or members

Keeping track of customers' balances and monitoring overdue amounts

Keeping track of when renewals such as membership renewals and subscription renewals are due

Analyzing what your business is doing by seeing the types of customers or members you are dealing with and the types of services you are providing

Tracking your income and expenses in various ways to analyze profitability

Creating budgets and monitoring your business' activities against the budget

Whether your business is a sole proprietorship, partnership, or corporation, QuickBooks meets these needs. With QuickBooks, keeping track of your finances becomes easy.

Before you begin

This document gives you information on how to use QuickBooks for your special needs - we won't repeat what's already in the standard information you receive with QuickBooks. Instead, you'll see references to show where you can find complete information and details on using QuickBooks features.

Printing your industry document

If you're looking at this document onscreen, you're now in a "QuickBooks and Your Industry" window.

To print this document:

From the File menu, choose Print... or Print Topic.

If you got to this Help window from the interview, close the Help window to return to the interview.

To see other industry documents:

Click any of the industries listed in the contents.

Important

The information in this document was compiled from the experiences and suggestions of other QuickBooks users in your type of business. Your own needs may vary considerably, and only you and your accountant understand the unique needs of your business.  Ultimately, you are responsible for your own books.

Therefore, we encourage you to have your accountant look over the setup suggested in this document, and we suggest that you give QuickBooks a thorough "trial run" early in the process. The best way to ensure that you have set up QuickBooks optimally for your business, and that it will provide all the information you need, is to enter a small number of your standard transactions in QuickBooks. Then try running all the reports you may eventually need.

While we can give you technical support on how QuickBooks works, our technical support representatives are not industry experts and cannot give you specific accounting advice. If you have questions regarding accounting issues specifically related to your industry, we recommend you consult either an accountant, industry expert, or professional association.

Understanding QuickBooks terminology

QuickBooks uses terms you can readily understand: customers, jobs, accounts payable, accounts receivable, vendors, employees and so on. There are a few special terms you need to be aware of.

Chart of accounts

You want to track how much money your business has, how much money it owes, how much money is coming in, and how much is going out. You track this flow of money through a list of accounts called the chart of accounts.

Item

You can set up each service or product your business buys or sells, miscellaneous charges and discount items.

Service item

A service item is the type of item that you'll be using most often. In periodic billing businesses, you'll set up a service item for each type of service you perform. For example, a landscape business may set up service items for "grass cutting" and "hedge trimming." A day care centre may set up service items for "weekly rate for toddlers" and "weekly rate for after school kids."

Bill

A bill is what you receive from a vendor or supplier, from which you will pay that vendor or supplier.

Statement

You can use a QuickBooks statement for two purposes:

-	As a billing method, to bill customers for charges accumulated over a certain time period

-	As a reminder, to summarize invoices already sent to customers over a certain time period.

Which purpose you use statements for depends on whether you decide to use the statement or the invoice as your billing method. You may choose to use either statements or invoices as your billing method (but not both).

If you choose to use statements to bill your customers, you enter charges as they occur into each customer's register. Then you print and send statements periodically to your customers.

See "Billing for your services" later in this document for information to help you decide whether to use statements or invoices.

Invoice

You can use invoices to bill your customers. You may choose to use these in a periodic billing business, or you may choose to use statements instead.

If you choose to use invoices, you enter charges in QuickBooks' invoice form. If you invoice your customers, you can use statements only to summarize invoices already sent, but not to bill customers.

Setting up your QuickBooks company

The QuickBooks EasyStep Interview asks you questions about your business, and uses your answers to help you set up your periodic billing business in QuickBooks. We recommend the interview as the easiest way to get started and to customize QuickBooks for your type of business.

If you choose not to use the EasyStep Interview, you should follow the setup directions in the "Setting up a QuickBooks company" chapter of the Getting Started Guide.

Organizing your income, expenses, customers and jobs

QuickBooks provides powerful features that let you analyze your business in great detail:

Your Chart of Accounts, including balance sheet, income and expense accounts, tracks all of your transactions.

Items let you track the services and products you sell and purchase.

The Customer:Job list, with customer types, lets you keep track of your customer base and the "jobs" you perform for each customer. For example, a janitorial business that cleans two different office buildings for the same customer, may want to list each building as a separate "job" in QuickBooks.

Job tracking lets you track the income and expenses for each individual job you do for a customer.

Classes let you separate the income and expenses associated with different parts of your business.

The following sections give you more information about these and other features.

Customizing your Chart of Accounts

In QuickBooks, an account represents a group of transactions and is used for tracking and reporting purposes.  The complete list of accounts for your company is called the Chart of Accounts.  When you set up your QuickBooks company, you can choose a preset chart of accounts designed especially for periodic billing businesses.  This preset chart of accounts gives you a head start in creating your balance sheet accounts, income accounts, and expense accounts.

You may find as you review the preset chart of accounts that you need to add, edit, or delete accounts from that list, or add subaccounts.

Important:	As a general rule, you should reserve the accounts on your Chart of Accounts for broad categories.

For more information, see the:

"Your chart of accounts" chapter in the User's Guide

Creating items

QuickBooks items represent the services or products that you buy, sell, or resell in your business.

When you record a sale or a purchase, you use items from your Item list to fill out the form quickly.  When you choose an item in the Item column on the form, QuickBooks fills in the description, rate or price, and then calculates the amount.

QuickBooks uses information you've recorded about each item to assign the sale or purchase to the right income or expense accounts.  Reports and graphs can then give you valuable information, such as your greatest sources of income and which items you sell most.

Using Service items

Service items represent the services that you sell to your customers or members. Each service you plan to list on an invoice or statement should be a separate item on QuickBooks' Item list. Create a service item for each type of work you do for your customers, whether it's done by a salaried employee, hourly employee, or owner.

Service items are explained later in more detail.

Examples of service items for different businesses

Day care centre: hourly rate, weekly rate, monthly rate, sick care rate

Fitness club: sign-up fee, monthly fee

Landscaping services: lawn care, tree maintenance

Newsletter: subscription, weekly ad, monthly ad

Non-inventory items

If you sell products as a sideline to your business, you probably do not want to use QuickBooks' inventory feature. For example, you run a weight loss counseling center and most of your income comes from subscribers who pay monthly, but you also sell cookbooks to your subscribers. Therefore, you would create non-inventory items for the cookbooks.

If however, you sell products as a large part of your business and you want use QuickBooks to track detailed information about your inventory, create inventory items instead. Then QuickBooks keeps track of how many items you have in stock, how many you have on order, your cost of goods sold, and the value of your inventory.

Examples of non-inventory part type items

Fitness club: water bottles, sweat shirts

Landscaping service: fertilizer, flower pots

Day care centre: photos, diapers

For more information, see the:

"Non-inventory part items" topic in the "Items - your products and services" chapter of the User's Guide

"Inventory part items" topic in the "Items - your products and services" chapter of the User's Guide

Use subitems to get even more details

If you want more detail than items will give you, you can also use subitems. For example, a landscaping business may use a "parent" item called "Lawn Services." This business may want to break this down further into subitems such as "mowing," "seeding," and "aerating."

When displaying items and subitems on forms, QuickBooks uses a colon between the item name and subitem name. For example, Lawn Service:Mowing and Lawn Service:Reseeding. QuickBooks knows that the words before the colon are the item and the words after the colon are the subitem.

For more information, see the:

"Creating items" topic in the "Items - your products and services" chapter of the User's Guide

"Using subitems" topic in the "Items - your products and services" chapter of the User's Guide

Setting up customers or clients

In QuickBooks, the Customer:Job list stores information about your customers, whom you may refer to as clients, members, etc. Before setting up specific customers, you should take a look at how you might want to categorize your customers into different "types."

Customer types

Customer types let you classify your customer in any way that is meaningful and useful for your business. For example, if your business provides security services, you might want to classify your customers as "residential" or "commercial." Or if your business is a nursing home you might want to classify your customers as "private pay" and "medicaid."

Customer types let you keep track of the different types of customers you deal with. By setting up customer types, you can track your income and expenses by customer type. You can create reports, mailing labels and statements based on customer type.

You can further classify your customers by adding "subtypes." For example, if you are using customer type to record what industry your customers represent, you could add a subtype indicating their geographic location.

Examples of customer types for periodic billing businesses

Nursing home: private payment or Insurance customers

Alarm business: residential or commercial customers

Lawn service: full service or grass cutting only customers

Janitorial service: movie theatres, residential, or office building customers

For more information, see the:

"Customer types" topic in the "More QuickBooks lists" chapter of the User's Guide

Do you want to track individual jobs

Some periodic billing businesses may want to track separate jobs they do for customers. For example, a janitorial business may clean two different office buildings for the same customer and want to keep the income and expenses separate for each job. In this case, you can add two jobs for the customer on your Customer:Job list.

QuickBooks uses this format to denote a customer and job:

Customer:Job

For example a landscaper may set up two jobs to correspond to two locations for one client, such as:

First Bank:Main St. and First Bank:High St.

When you set up jobs in this way, you only have to enter the customer's information once in QuickBooks (when you set the customer up). From then on, every time you have a different job for that customer, you simply add a job to that customer in QuickBooks. This also makes it much easier to get reports for all jobs for a specific customer.

Once you set up jobs, whenever you write an invoice or incur expenses for a job, always choose the job name as well as the customer name.

For more information, see the:

"Customers and jobs" topic in the "More QuickBooks lists" chapter of the User's Guide.

"Customer types" topic in the "More QuickBooks lists" chapter of the User's Guide.

"Adding a new customer" topic in the "More QuickBooks lists" chapter of the User's Guide.

"Adding a new job" topic in the "More QuickBooks lists" chapter of the User's Guide.

Using classes to see how different parts of your business are doing

QuickBooks classes give you another way, in addition to customer type, to track income and expenses. Classes give you a way to break down your income and expenses for different segments of your business, regardless of the customer.

Classes can apply to all transactions, so they are not tied to any particular customer. However a customer type is associated with only certain customers.

For example, you might use customer types to classify your customers into "residential" and "commercial." But let's say you need another classification that spans any type of customer. In this case, you can use QuickBooks classes. For example, if you're a day care centre and you have two locations, you can create a class for each location. You would then select one of those classes on each transaction in QuickBooks. Then you could get reports on income and expenses for the services that you provide at each location, regardless of what types of customers you are dealing with.

Examples uses of classes for some periodic billing businesses

Day care centre:  may use to track 131 Main St. and 224 Walnut Rd. locations.

Nursing home: may use to track department expenses - pharmacy, medical, administrative, as well as overhead.

Important:	You should use classes for one purpose only. For example, don't mix using classes for departments with using classes for locations.

Tips for when to use classes

Think of the ways you'd like to categorize portions of your business in terms of income and expenses for each portion. The classes you set up should correspond to those portions, and can be any meaningful breakdown of the business you do. Some typical questions business people might ask themselves to decide how to use classes are: "Do I want to see income and expense by location? by department? by sales person?"

Set up classes on the basis of how you'd like to see your entire business segmented on reports. For example, if your business is a partnership in which each owner brings in work to the business and you want to analyze the profitability of each partner's projects, you can create a class for each partner.

Classes are most useful when you can identify both income and expenses for each class you set up. This makes a Profit and Loss By Class report more meaningful. For example, if you do business in two different offices or locations, you could make each location a class and designate both your income and expense transactions in QuickBooks by location.

Set up a class such as "other" that you can use to deliberately classify transactions that don't fit into any specific class that you've defined. This eliminates confusion between transactions that you forget to classify and those that do not fit into one of your defined classes - on reports, transactions that you forget to classify will be listed as "unclassified."

If you want to break down your income and expenses even further, you can create subclasses.

For more information, see the:

"Classes" topic in the "More QuickBooks lists" chapter of the User's Guide.

Billing for your services

As a periodic billing business, you are billing your customer at regular intervals, such as monthly or perhaps even quarterly. When billing your customers, you can use one of two methods in QuickBooks:

Billing statements

Invoices (with optional "reminder" statements)

The following summarizes the main differences between invoices and statements.

Important:	Choose whether you want to use invoices or statements as your billing method, then use only one of these methods when you bill your customer. For example, if you bill your customer using an invoice, do not enter statement charges also - this will result in double-billing.

Using billing statements

QuickBooks' statements let you summarize activity for a customer during a specified time period. By using a statement, you can carry forward a balance from a previous time period and list balances that are past due. Statements would work well for companies with very simple charges.

Entering statement charges differs from the way you enter invoice charges in QuickBooks. As with invoices, you use items for each charge. But instead of entering the charges on an invoice form, you enter charges through a customer register. The customer register displays all transactions for a customer. Each transaction is listed as a separate register entry and is associated with a separate date.

Main features of statements

Statements:

Let you carry forward past due balances

Summarize services for a specified time period

List aging information for the customer (30, 60, 90 days, past due, etc.)

But if you use statements, you can't include items that calculate along with other charges. So you can't use discount items (that calculate percentages), or subtotal items. For example, if you wanted to include a discount on a statement, you would have to enter a flat amount, not a percentage.

For more information, see the:

"Sales and sales forms" chapter of the User's Guide

Using invoices to bill your customers

When you fill out a QuickBooks invoice, you list the service you've provided for the customer, along with its associated fee. Each fee you include in an invoice (each service you provide) should be a separate item on QuickBooks' Item list. (See "Creating items" in this document.) The way you set up your Item list depends on how you want to show information to your customers on an invoice.

Main features of invoices

Can include calculating items such as discounts, markups, and subtotals

Can include GST and PST calculations

Let you adjust the description field and include multi-line descriptive information

Let you add custom fields and change the order and width of fields

Note:	When you invoice your customers, you can optionally send reminder statements summarizing invoices already sent. Reminder statements and billing statements are accessed the same way in QuickBooks, but are used for two different purposes.

Entering a time period on the invoice

As a business that provides services that you bill for periodically, you may want to include the time period associated with the service. For example, if you are a day care center and you are billing monthly using invoices, you may also want the invoice to clearly indicate the period of time for which you provided the service.

You can add the time period by customizing the invoice as described later in this document under the heading "Customizing an invoice or statement."

Describing your services in detail on an invoice

On an invoice, you can add to, or change, an item's description to provide your customers with more details.

To add information to an item's description:

1.	On the invoice form, position your cursor in the Description column.

2.	Type your lines of description, pressing Down Arrow to move to the next line of the description.

For more information, see the:

"Sales and sales forms" chapter of the User's Guide.

Billing your customers automatically

As a periodic billing business, you are preparing invoices or statements for your customers on a regular basis. Therefore, you may want to have QuickBooks memorize your invoicing transactions and then remind you when to use these memorized transactions. You can also have QuickBooks enter the memorized transaction automatically.

You can combine numerous memorized invoices or statement charges into a memorized transaction group. This is useful if you send invoices or statements to certain groups of clients or all your clients at once. For example, if you have a fitness club and you invoice every member for membership dues twice a year, you could memorize each member's invoice then group them all together on your Memorized Transaction list.

Another example is a club that sends yearly renewal notices to groups of members depending on which month they joined. They would have a memorized group of transactions for their January renewals, February renewals, and so on. QuickBooks can remind you when it's time to recall and print all the membership renewals. In this example, you can also change the title of the invoice or statement to "renewal notice."

If you want to group your memorized transactions, its a good idea to create the memorized transaction groups first and then create your memorized transactions. Then you can select the group into which the transaction you are creating belongs.

To create a memorized transaction group:

1.	From the Lists menu, choose Memorized Transactions.

2.	Click the Memorized Transaction button, then click New Group.

3.	Enter the name of the new group (for example, annual dues).

4.	In the How Often field, choose how often you want to use the memorized transaction group.

5.	Choose how you want QuickBooks to treat your transaction group.

If you selected Automatically Enter, you need to indicate the next date on which you want QuickBooks to enter the transaction group, the number of transactions that are remaining to be entered, and how many days in advance you want QuickBooks to enter the transaction.

6.	Click OK.

QuickBooks adds the group to the Memorized Transaction list.

To memorize the invoices or statement charges you want in the group:

1.	Create an invoice or statement charge for a customer.

2.	From the Edit menu, choose Memorize.

3.	Enter the name of the transaction (for example Invoice to Ray Jones).

4.	Choose With Transactions in Group.

5.	Select a group name from the list, or type in the name of a new group.

6.	Click OK.

7.	QuickBooks memorizes the transaction and adds it to the Memorized Transactions list under the transaction group that you specified.

8.	Repeat Steps 1 through 7 for each invoice or statement charge that you want to include in the group.

To use a group of memorized invoices or statement charges:

1.	From the Lists menu, choose Memorized Transactions.

2.	From the Memorized Transaction list, select a transaction group and click Enter Transactions.

3.	Enter the date you want to use for the transactions that will be entered and click OK.

QuickBooks enters the transactions. Depending on how many transactions are in your group, this may take a minute or two. QuickBooks puts an invoice or statement charge for each customer into your receivables account and updates each customer's outstanding balance.

For more information, see the:

"Memorized transactions" topic in the "More QuickBooks lists" chapter of the User's Guide.

Customizing an invoice or statement

You may want to remove or add information to QuickBooks' standard invoice or statement forms. If you are using invoices to bill your customers, you have more flexibility in the types of changes you can make.

Here's a list of some of the changes you may want to make:

Remove the item column from the printed invoice form (not from the onscreen form). If you provide a detailed description of each item you set up, you don't need to display the item name to your customers.

Remove the quantity and rate columns if you are billing a fixed fee. The amount column is all you need.

You may want to remove several other fields you don't need such as shipping and purchase order information.

Rename the "Quantity" column to "Hours" if you bill on an hourly basis.

You may also want to add fields such as Service Date to specify for what time period you provided the service.

In addition to customizing the fields and columns that appear on your invoices or statements, you can also adjust printer settings for these forms. For example, you can align the printing on your forms, change the fonts that are used and add your logo.

For more information, see the:

"Creating custom forms overview" topic in the "Forms" chapter of the User's Guide

"Customizing form contents" topic in the "Forms" chapter of the User's Guide

"Designing form layouts" topic in the "Forms" chapter of the User's Guide

"Printer setups" topic in the "Printing" chapter of the User's Guide

Handling overdue amounts

Charging fixed late fees

Note:	If you wish to use assess finance charges instead of charging a fixed fee, see "Charging interest on late payments" below.

As a periodic billing business, you may want to keep track of outstanding balances and inform your customers of these balances. By looking at your Customer:Job list, you can see what each of your customers owe you.

You can print one of the A/R Aging Reports to see, in detail, unpaid balances. These reports tell you how many days a payment is overdue. QuickBooks uses the terms that you specified when you entered the customer information to calculate when a customer's payment is due.

To charge a fixed late fee, create an "other charge" item for the fee. You can then use this item to charge your customers any fixed amount by using it as a statement charge in the customer's register, or as a line item on an invoice.

Remember, you can send a reminder statement or reprint an invoice as a late notice. You can customize the statement or invoice title to "Late Notice" if you wish.

Charging interest on late payments

QuickBooks can assess finance charges for any customers whose payments are late. When you assess finance charges, QuickBooks creates an invoice for each customer's finance charge, and increases the accounts receivable for that customer. You can send the finance charge invoice separately, or add on to it the next time you invoice the customer.

If you only use statements for billing customers, don't print the finance charge invoice that QuickBooks creates. When you send your next statement after assessing finance charges, the finance charges will be reflected on the statement along with any other statement charges.

Note:	If you've eliminated invoicing from your activities menu because you don't need it, QuickBooks will still create a finance charge invoice. When you look at the customer's register, you'll see the finance charge entry with an "INV" in the Type field. If you need to edit the finance charge, just double click this entry in the customer's register.

For more information, see the:

"Accounts receivable management" chapter of the User's Guide

"Other Charge items" topic in the "Items - your products and services chapter" of the User's Guide

"Setting up and assessing finance charges" topic in the "Sales and sales forms" chapter of the User's Guide

Recording payments you receive from customers

When you receive payments from your customers, you use the Receive Payments window. As soon as you enter the customer's name, you see the customer's current balance and a complete list of outstanding invoices or statement charges. You can then assign the payment to any invoice or statement charge, or have QuickBooks apply the payment automatically.

For more information, see the:

"Receiving and depositing payments" chapter of the User's Guide

Handling cash sales

The cash sales receipt is useful if some of your customers need a service on a one-time-only basis. For example, most of your customers in a health club have long-term memberships. However, you may have customers that use the club on a drop-in basis. For these customers, you can record the money you receive from them as a cash sale and you don't need to add their name to your customer list.

Cash sales can be payments of cash, credit card or cheque. The difference between a cash sale and those that you record on invoices or statements is that cash sales do not involve Accounts Receivable, and do not require that you enter a customer name.

For more information, see the:

"Sales overview" topic in the "Sales and sales forms" chapter of the User's Guide

Handling refundable deposits

Some periodic billing businesses require a refundable deposit from members or customers. For example, a day care center may require a deposit from parents that, at the end of a period, is returned to them.

To track refundable deposits that you receive from your customers, you need to create a separate bank account to hold the money. You also need to create a liability account because you owe this money to your customers.

To set up deposit accounts:

1.	Create a QuickBooks bank account called "Customer Deposits."

2.	Create an Other Current Liability account in QuickBooks for the customer deposits you are holding.

You can have just one liability account for deposits. QuickBooks will still be able to separate what you owe to each customer. You can call this account "deposit liability."

This liability account represents money you owe your customers. The balance of this liability account should be the same as the total amount you have in your bank account called Customer Deposits (minus any of your own money you may have had to deposit as a minimum balance - see next step).

3.	If you had to deposit your own funds to maintain a minimum balance in your Customer Deposits bank account, write a cheque to the Customer Deposits account from your own chequing account.

Write a cheque to the bank from your own chequing account.

Select the Customer Deposits account in the Account column in the cheque detail.

Send the cheque to the bank or physically deposit it, but don't include it in QuickBooks Make Deposit window (because you've already transferred the money to the Customer Deposits account on the cheque).

To receive deposits from customers:

1.	Deposit the money you receive from your customers by selecting Make Deposits from the Activities menu.

Use a different Make Deposit window for each customer's money that you deposit. Also, when you go to the bank, use separate deposit slips for each customer as well. Doing this will make reconciling the Customer Deposits bank account easier. (Otherwise, you'll have to do some math when you reconcile, because QuickBooks will show separate deposits for each customer, but the bank will group them together on a bank statement.)

2.	Make sure the "Customer Deposits" bank account is selected.

3.	Select the customer in the Received From field.

4.	Select the "Deposit Liability" account in the From Account column.

This increases your security deposit liability, that is, each time you receive deposit money from your customers, you increase what you owe to them. To see a liability report showing what you owe each customer, print the General Ledger Report, filtered by the "Deposit Liability" account.

To pay customers out of the deposit account:

1.	Write cheques to customers out of the Deposit account.

Select the deposit liability account in the cheque detail. Be sure to select the customer. Doing this decreases your liability to that customer, that is, decreases the money you owe the customer.

Important:	When writing a cheque, you can enter notes in two memo fields, one in the cheque face and one in the detail area. You should enter descriptions of the transaction in the cheque memo field. When you do so, you will be able to see the descriptions on reports for the chequing account.

Creating budgets

As a periodic billing business, you have regular customers and therefore you likely have a relatively clear idea of how much money you can expect to receive. This makes it easy for you to use QuickBooks to create a budget that shows your projected income and expenses. You can then compare your actual income and expenses against this plan by printing budget reports or creating budget graphics.This can be very helpful in finding investors or getting bank financing. By setting up a budget, you can also get an understanding of the costs you have committed for the fiscal year.

For more information, see the:

"Budgets" chapter of the User's Guide

Understanding income and profitability with reports

QuickBooks has over 70 preset reports that you can customize to fit your needs. The most important reports for any business are the Profit and Loss reports and the Balance Sheet reports.

The following are examples of applying reports for various purposes that periodic billing businesses might find useful. To create the reports mentioned below, choose them from the Reports menu.

Compare actual income and expenses to budgeted income and expenses.

Budget Reports, Profit & Loss Budget vs. Actual (assuming that you've created a budget in QuickBooks)

See service or product sales by customer.

Sales Report by Customer, Summary or Detail

See your projected income on a monthly basis.

Budget Reports, P&L Budget Overview (assuming that you've created a monthly budget in QuickBooks)

See outstanding customer balances.

Outstanding customer balances are displayed in the Customer:Job list. Double click any customer to see charges and a running balance for that customer.

QuickBooks also lets you print various types of accounts receivable reports. For example, you can print a customer balance summary report for a list of customers with unpaid balances as of a specific date.

You can also list each unpaid invoice by customer by choosing A/R Reports, Open Invoices. To list only the overdue invoices for a customer, you can print one of the aging reports.

See your general ledger showing deposits you received from your customers or members.

Create a General Ledger Report filtered by the account you use for customer deposits.

For more information, see the:

"Reports" chapter in the User's Guide

Other QuickBooks tips for periodic billing businesses

Here are some other QuickBooks features that you may find useful in your periodic billing business.

Printing Mailing Labels

QuickBooks will print mailing labels (and also Rolodex cards) of all your customers according to criteria that you set. You can sort by name or postal code, and select which customers or customer types to include.

For more information, see the:

"Printing labels" topic in the "Printing" chapter of the User's Guide

Keeping track of conversations

It may be important for you to keep track of your conversations with your customers, whether they occur in person or by phone. QuickBooks provides a "note pad" that you can use as a quick way to jot down important details of a conversation or keep a reminder of a customer's special needs and requests.

You can enter or read notes directly from the Customer:Job window. You simply double-click in the Notes column next to the customer you're interested in.

For more information, see the:

"Keeping notes about a customer or job" topic in the "More QuickBooks lists" chapter of the User's Guide

Keeping track of things you need to do

You can use the To Do list in combination with the customer notes. You can have QuickBooks remind you of important due dates by entering To Do information in the To Do list. If you have reminders turned on, QuickBooks displays your "to do" note in the Reminders window when you start QuickBooks.

For more information, see the:

"To Do notes" topic in the "More QuickBooks lists" chapter of the User's Guide

Using custom fields to track information about your customers

You can create custom fields to add additional information about your customers, vendors or employees. You can use these fields to track dates, personal information, and so on. For example, if you have a day care center, you might want to add a custom field for birthdays. Here are some more examples:

A newsletter might use custom fields for subscription start and end dates.

A health club might use a custom field to record the name of a member's personal trainer.

A cleaning service might use a custom field to record the name of a client's assigned housekeeper.

Note:	If you're using invoices for billing customers, you can add these custom field to your invoice, and get reports on any invoice transactions that contain these fields.

For more information, see the:

"Adding and using customized fields" topic in the "Working with lists" chapter of the User's Guide

Helping us help you

We'd like to know your special concerns and the problems you run into when trying to make QuickBooks work in your business. We also want to know how useful "Periodic billing businesses" was in helping you fit QuickBooks to your needs.

Please use this sheet to mail or fax us your comments. If possible, please also attach specific comments marked on the printed version of this document. Mail the completed form and any attachments to:

Intuit Canada, Ltd.

Industry Feedback

P.O.Box 4165

Edmonton, Alberta

Canada

Or fax your comments to us at 1-800-387-4285

Some information about your business

Name:

Business name:

Address:

Phone:

Number of employees:

My business is a: __ Sole proprietorship __ Partnership __ Corporation

What other needs do you have, specific to your type of business, that were not covered in this document?

Do you have any tips for other people in your field who use QuickBooks?

Which two or three topics did you find most useful in this document?

May we call you to discuss your comments?

___ yes    ___ no


Advertising and PR firms

Overview for advertising or public relations firms

Before you begin

Setting up your QuickBooks company

Organizing your income, expenses, clients, and projects

Customizing your Chart of Accounts

Setting up clients as customers

Tracking projects as jobs

Creating items

Using classes to track different segments of your business

Setting up your vendors and subcontractors

Creating project quotes

Tracking time

Billing clients for your fees and costs

Customizing invoice appearance

Handling reimbursable expenses and employee advances

Creating budgets

Understanding income and profitability with reports

Other QuickBooks tips for public relations and advertising firms

Helping us help you

Overview for advertising or public relations firms

As the owner of an advertising or public relations firm, you have some special needs you want met by your accounting system. QuickBooks can help you meet many of those needs, including:

Sending your clients invoices that meet their requirements

Tracking reimbursable expenses and charging them back to clients

Running payroll cheques for your employees

Analyzing how your business is doing by creating detailed financial reports

We recommend QuickBooks Pro for advertising and PR firms

Although you can use QuickBooks to handle your accounting, QuickBooks Pro is particularly useful for advertising and public relations professionals. QuickBooks Pro has additional features that let you:

Track the billable and unbillable time you spend on each project

Create client invoices based on billable time

Track time for each person in your office

Write estimates or quotes that you can send to clients and later turn into an invoice

Run payroll cheques based on employees' timesheets

Separate your costs for work done by subcontractors from the amount you charge your clients for that work

Get reports on actual time spent on projects, versus time billed or unbilled

Before you begin

This document gives you information on how to use QuickBooks for your special needs - we won't repeat what's already in the standard information you receive with QuickBooks. Instead, you'll see references to show where you can find complete information and details on using QuickBooks features.

Printing your industry document

If you're looking at this document onscreen, you're now in a "QuickBooks and Your Industry" window.

To print this document:

From the File menu, choose Print... or Print Topic.

If you got to this Help window from the interview, close the Help window to return to the interview.

To see other industry documents:

Click any of the industries listed in the contents.

Understanding QuickBooks terms

QuickBooks uses a few special terms that you should be aware of:

Chart of accounts

A list of accounts that you use to track how much money your company has, how much money it owes, how much money is coming in, and how much is going out.

Item

Advertising/public relations services or charges (anything you bill a client for). In QuickBooks, any charges or discounts you want to include on an invoice should be entered on your Item list.

Service item

A specific type of item. Public relations or advertising firms would set up service items for copywriting, design, art direction, press releases, and so on.

Class

A way to categorize income and expenses. For example, you can use the Class field to track the profitability of each partner in a firm.

QuickBooks uses some generic terms which you will need to match to the terms you use. Here are some advertising and public relations terms mapped to QuickBooks terms:

A client would be a Customer in QuickBooks.

A project would be a Job in QuickBooks.

A quote would be an Estimate in QuickBooks Pro.

Important

The information in this document was compiled from the experiences and suggestions of other QuickBooks users in your type of business. Your own needs may vary considerably, and only you and your accountant understand the unique needs of your business.  Ultimately, you are responsible for your own books.

Therefore, we encourage you to have your accountant look over the setup suggested in this document, and we suggest that you give QuickBooks a thorough "trial run" early in the process. The best way to ensure that you have set up QuickBooks optimally for your business, and that it will provide all the information you need, is to enter a small number of your standard transactions in QuickBooks. Then try running all the reports you may eventually need.

While we can give you technical support on how QuickBooks works, our technical support representatives are not industry experts and cannot give you specific accounting advice. If you have questions regarding accounting issues specifically related to your industry, we recommend you consult either an accountant, industry expert, or professional association.

Setting up your QuickBooks company

The QuickBooks EasyStep Interview asks you questions about your business, and uses your answers to help you set up your public relations or advertisting firm in QuickBooks. We recommend the interview as the easiest way to get started and to customize QuickBooks for your type of business.

If you choose not to use the EasyStep Interview, you should follow the setup directions in the "Setting up a QuickBooks company" chapter of the Getting Started Guide.

Organizing your income, expenses, clients, and projects

QuickBooks includes important features that let you analyze your advertising or public relations business in great detail:

Your Chart of Accounts, including balance sheet, income and expense accounts, tracks all of your transactions.

The Customer list, with optional customer types, lets you keep track of the types of clients you serve.

Job tracking lets you track the income and expenses for each project you do for a client, while the use of job types (available in QuickBooks Pro) lets you track the scope of your projects.

Items let you track the services and products you provide to your clients.

Classes let you track different segments of your business, and give you a way to break down your income and expenses for any client or any project.

The following sections give you more information about these and other features.

Customizing your Chart of Accounts

In QuickBooks, an account represents a group of transactions and is used for tracking and reporting purposes.  The complete list of accounts for your company is called the Chart of Accounts.  When you set up your QuickBooks company, you can choose a preset chart of accounts designed especially for public relations and advertising firms.  This preset chart of accounts gives you a head start in creating your balance sheet accounts, income account, and expense accounts.

You may find as you review the preset chart of accounts that you need to add, edit, or delete accounts from that list, or add subaccounts.

Important:	As a general rule, you should reserve the accounts on your Chart of Accounts for broad categories, and use items and subitems to see more detail about items you've sold or bought.

For more information, see the:

"Your chart of accounts" chapter in the User's Guide

Setting up clients as customers

In QuickBooks, the Customer:Job list stores information about your clients and the individual projects you want to track for each client. You should set up each client as a customer in QuickBooks.

Customer types

 If you choose, you can also categorize your clients by giving them a customer type. The customer type lets you keep track of the different types of clients you serve and gives you the information you need to analyze your client base. Knowing your clients can help you make decisions on advertising, promotions, or special marketing campaigns. You can categorize each client in a way that is meaningful and useful for your business.

The customer types do not appear on QuickBooks forms, but you can create reports based on the information. You can also print mailing labels and summary statements based on customer type.

Examples of customer types for public relations/advertising firms

You can use QuickBooks' optional customer types to track the information that is most meaningful for your business. For example, you can set up customer types to:

track clients by industry. If you do work for clients from several industries, you might want to categorize your clients by their industry, such as book publishing, manufacturing, energy, financial, high tech, and so on.

If you have customer types set up by industry, you can do special mailings targeted to specific industries. (For example, you may want to publicize a project you completed for a similar firm in the same industry.)

track the different types of clients you serve (for example, Corporate, Individual, and Non-Profit). This lets you create reports that show exactly where you generate the most revenue.

track how a client was referred (for example, Other Client, Advertising, and Colleague). Knowing the sources of client referrals can help you decide how best to spend your marketing dollars.

If you want to further break down your customer types, you can add subtypes.

For more information, see the:

"Customers and jobs" topic in the "More QuickBooks lists" chapter of the User's Guide

"Customer types" topic in the "More QuickBooks lists" chapter of the User's Guide

Tracking projects as jobs

If you do more than one project for a client, and you want to keep track of your income and expenses on a project-by-project basis, you may want the level of detail provided by job tracking. In QuickBooks you can track projects for each client by setting up the projects as "jobs" in the Customer:Job list.

For example, suppose you're organizing the press coordination for the release of a new book from Sheba Press, but you know that you'll later be organizing the press coordination for another book. You can add two jobs for Sheba Press on your Customer:Job list. This lets you track the income and expenses separately for each project.

If you never do more than one project for a client (or you don't want to track each project's income and expenses), you don't have to enter job names on the Customer:Job list. In that case, your list will contain only client names.

If you use numbers for clients and projects

Some firms use numbers to identify clients, with projects being part of the number. For example, 100.5 may signify client 100, project number 5. If you use such a system, we recommend you don't append the project number to the client name in QuickBooks. Instead, set up a different QuickBooks job for each project you have with a particular client.

On forms, QuickBooks displays the customer name, a colon (:), and the job name. If you use numbers for clients and projects, you'll see the client and project displayed as 100:5 (using the previous example).

Categorizing projects by type

If you have QuickBooks Pro and you are using jobs to track projects, you can also categorize your projects (jobs) by type by using the Type field in the New/Edit Job window. Tracking job types gives you an idea of the profitability of each kind of project you do. It can also help you determine what proportion of your firm's time is spent on different types of projects.

Examples of job types for advertising or public relations firms (QuickBooks Pro)

You can use QuickBooks Pro's optional job types to track any information about your projects that you think is important. Then, later, you can filter reports to show only the data for specific types of projects (job types). For example, you can set up job types to:

track what proportion of your projects are for different types of services. For example, an advertising/PR firm that provides market research services may want to distinguish between projects that utilize focus groups and those that utilize consumer surveys.

distinguish between Retainer and Time Billing projects.

If you want to further break down your job types, you can add subtypes. For example, to the "Survey" job type, you could add "Telephone" and "Written" as subtypes.

For more information, see the:

"Job types" topic in the "More QuickBooks lists" chapter of the User's Guide

Creating items

QuickBooks items represent the services or products that you buy, sell, or resell in your business. As an advertising or public relations professional, you sell mainly services.

When you record a sale or a purchase, you use items from your Item list to fill out the form quickly.  When you choose an item in the Item column on the form, QuickBooks fills in the description, rate or price, and then calculates the amount.

QuickBooks uses information you've recorded about each item to assign the sale or purchase to the right income or expense accounts.  Reports and graphs can then give you valuable information, such as your greatest sources of income and which items you sell most.

If you have outside expenses for which you want to be reimbursed (such as courier charges or travel expenses), you don't need to create a QuickBooks item in order to include them on an invoice. For details, see "Handling reimbursable expenses and employee advances" in this document.

Important:	The way you set up items depends on how you want to bill your clients, and the information you want to show on your invoices. Below are some sample uses of items in QuickBooks. "Billing clients for your fees and costs" in this document gives you more information on how to set up your Item list to handle specific billing needs.

Using Service items

Create a service item for each type of work you do for clients, whether it's done by a partner, salaried employee, subcontractor, or hourly employee.

You can set up your items all at once or as you're filling out an invoice.  When you create the item, enter the rate you charge for that service.  If items are charged on a percentage basis, leave the Rate field blank.

Using subitems

The way you set up your Item list depends on the information you want to show clients on the invoice.  If you want your invoices to show each phase of a project, as well as the time spent on individual tasks (or the percentage of completion for phases or tasks), you should model your Item list on the list of tasks your company already uses.

Examples of items used in advertising or public relations firms

To charge clients for advertising or public relations services

Create a "service" item for each type of service you provide to clients, such as Account Svcs, Art Direction, Copywriting, Event Coord, Market Resrch, and so on. When you create the item, enter the rate you charge for that service.

If you bill at different hourly rates for different staff members, or if you bill in phases (before a project is complete), you can use a combination of QuickBooks items and subitems. For details, see "Billing clients for your fees and costs" in this document.

To track forgiven charges (billable hours for which you decide not to bill the client)

Create a "discount" item called Courtesy. When you create the item, leave the rate at 0.00; you can enter the amount of the forgiven charge directly on the invoice. See "Forgiving charges" in this document for details.

To charge clients for non-advertising/PR services, such as administrative fees

Create an "other charge" item for each of the administrative services you provide to clients. When you create the item, enter the rate you charge for that service.

(QuickBooks Pro) To track costs of services done by subcontractors as expenses, and revenue from those services (when the client reimburses you) as income

Create "service" items for subcontractor services and select the "This service is performed by a contractor" checkbox. This lets you enter your cost and an expense account. You also enter what you charge your clients for the services, and an income account to record the reimbursement.

Setting up items specifically for subcontracted work helps you manage your books more effectively. When you use these items, QuickBooks Pro records expenses and income for subcontracted work in separate accounts. This lets you create reports that show the profitability of subcontracted work to your business.

For more information, see the:

"Items - your products and services" chapter of the User's Guide

When to set up items versus accounts

Using a combination of items and subitems to track income detail is a better solution than adding several income subaccounts to your chart of accounts. As a general rule, you should reserve the accounts on your chart of accounts for broad categories of income. Use subitems on your Item list when you want to see more detail about what you've sold. You can see reports on the items you sold (total sales subtotaled by item or subitem) by creating a Sales by Item report (one of QuickBooks' Sales reports).

Using classes to track different segments of your business

QuickBooks classes give you another way to track income and expenses in addition to customer type and (in QuickBooks Pro) job type.

Classes give you a way to track different segments of your business, and to break down your income and expenses for each segment. For example, if your firm does business in two different locations, you can use classes to track the proportion of your income and expenses related to those two locations.

How classes differ from customer types and job types

Classes can apply to all transactions, so they are not tied to any particular client or project. However, a job type or a customer type is associated with only certain projects or clients.

For example, you might have "High-tech" and "Publishing" customer types to categorize your clients, and "Retainer" and "Non-retainer" job types to categorize each project for a client. You can then get financial reports focused by type of client or type of project.

But let's say you need a third classification that spans any type of client or project. In this case, you can use QuickBooks classes. For example, if you have two account executives, you can create a class for each account executive. You would then select one of those classes on each transaction in QuickBooks. Later, you could get reports on income and expenses by account executive (class), regardless of which types of clients or projects they worked on.

Tips for when to use classes

Think of the ways you'd like to categorize portions of your business in terms of income and expenses for each portion. The classes you set up should correspond to those portions, and can be any meaningful breakdown of the business you do.

Set up classes on the basis of the type of reporting you want to do, and consider how you want to see your business segmented on reports. For example, if your firm has three public relations professionals and you want to analyze the profitability of each person's projects, you can create a class for each PR professional. Later, you can create a report that looks at income and expenses by class (for each person).

Classes are most useful when you can identify both income and expenses for each class you set up, because this lets you create a Profit and Loss report by class. For example, if you do business in two different offices or locations, you can make each location a class if you can identify both your income and expenses by location. That way, you can see a Profit and Loss report by location (class).

Don't use classes for two different purposes. For example, don't create classes for tracking office locations as well as for tracking account executives.

Examples of classes for advertising or public relations firms

You can use classes to:

analyze the income and expenses for each account executive's projects, by setting up each account executive as a separate class.

analyze the income and expense for each location, if you have offices in more than one location. Make each business office a separate class.

If you decide to use classes, you can set them up all at once or "on the fly."

For more information, see the:

"Classes" topic in the "More QuickBooks lists" chapter of the Getting Started Guide

Setting up your vendors and subcontractors

You keep information about your vendors and subcontractors in QuickBooks' Vendor list. A Vendor list for public relations or advertising firms may include freelance copywriters, graphic designers, photographic suppliers, art supply stores, and general business vendors (office supplies, insurance, and so on).

For more information, see the:

"Vendors" topic in the "More QuickBooks lists" chapter of the Getting Started Guide

Creating project quotes

Quotes are an important part of winning business for public relations and advertising firms. You may need to create a quote if:

the project is being "put out to bid" by a potential client, who asks for quotes from interested professionals.

you bill on a fixed-fee basis and the client wants a quote that specifies the work you agree to complete for the stated fee.

you bill on an hourly basis, but the client wants an estimate of how long (how many hours) it will take you to complete the project.

If you have QuickBooks Pro, you can use the estimate form to create your quote. If you have QuickBooks, you can use a pending invoice.

QuickBooks Pro automates quotes

If you have QuickBooks Pro, you can use the estimate form to create a quote. You can create one quote for each project. Once you have all the project tasks entered on the estimate form, you can later turn the estimate (quote) into client invoices. (See "Invoicing from a QuickBooks Pro estimate" in this document for details.)

You can also customize the estimate form to include only the columns and information you need. Here are some of the changes and/or additions you might want to make to QuickBooks Pro's estimate form:

Change the title of the form from "Estimate" to "Quote."

Change the name of the "Estimate No." field to "Quote No."

Change the name of the Item column to "Task" or "Phase."

Change the name of the Quantity column to "Hours."

Change the name of the Cost column to "Rate" or "Fee."

For more information, see the:

"Customizing your estimates" topic in the "Estimates" chapter of the User's Guide

Creating a quote without QuickBooks Pro

If you don't have QuickBooks Pro, you can use a pending invoice to create a quote. When the client approves your quote and you are ready to invoice for your work, you can invoice directly from your quote. See "Invoicing from a QuickBooks pending invoice" in this document.

To create quotes without QuickBooks Pro:

1.	Create an invoice that details the work you plan to do for the client.

Enter the client name and charges as usual. (If you don't have all your charges set up in your QuickBooks Item list, you can add them as you go.)

2.	Type the words "Pending Approval" in the Customer Message field.

3.	While the invoice is displayed, choose Mark Invoice as Pending from the Edit menu.

QuickBooks displays the word "Pending" on the onscreen invoice (it does not appear on the printed invoice).

4.	Change the title of this invoice to "Quote" or "Estimate".

Select a customized invoice template on  which you have changed the default title to "Quote" or "Estimate". (See the "Customizing forms" topic in the "Forms" chapter of the User's Guide.) When you wish to convert this estimate back to an invoice, simply display it on your screen and select your usual invoice template.

5.	(Optional) If you think you may create more than one invoice from this quote (because you are billing in phases), memorize the invoice by choosing Memorize Invoice from the Edit menu.

Give the memorized invoice a name such as "Company A Proposal." Click the "Don't remind me" checkbox to select it.

6.	Print the quote for the client's review.

You can get a report listing all pending invoices by choosing A/R Reports from the Reports menu, then choosing Pending Invoices.

Tracking time

An advertising/public relations professional sells time and expertise, so tracking time accurately and completely is of obvious importance. If you have QuickBooks Pro, you can track your time on QuickBooks Pro timesheets and transfer the hours directly to client invoices. If you have QuickBooks, you can track your time on a pending invoice.

QuickBooks Pro automates time tracking

QuickBooks Pro lets you track your time on projects, and analyze your time costs by client or project, person who did the work, or by type of work done.

Important:	If you do your books on an accrual basis, time you enter in QuickBooks Pro is not considered revenue until you actually bill for it; similarly, it is not considered an expense until you actually run payroll.

Keeping track of time

You can enter time for an owner, partner, or employee. On the time entry form, you choose the client and project for whom the work was done in the Customer:Job field. You then choose the service item which represents the type of work you did (see "Creating items" in this document). Later you can pass the charges to your clients on invoices or statements.

You have the option of entering individual activities on separate forms or using a weekly timesheet format. In either case, be sure to enter as complete a time record as possible so QuickBooks Pro can translate those hours into billable hours on client invoices or statements.

Important:	Do not use QuickBooks Pro to enter time for a subcontractor. To track and invoice for actual costs of services performed by outside subcontractors, see "Services performed by subcontractors" topic in the "Items - your products and services" chapter of the User's Guide

Which time entry form to use

QuickBooks Pro lets you track time using either the Single Activity window or the Weekly Timesheet window. The Single Activity window is for recording time spent by one person on a single activity for a single project on a single date. A weekly timesheet is a record of time spent by one person on any number of projects within a seven-day period.

Individual time entries are better for advertising and public relations professionals who must keep detailed notes on each activity, because you can see more of your notes without scrolling. Also, they are convenient to use if you will be continuously running QuickBooks, and entering each activity as you do it, rather than entering all your time at the end of the week from a paper timesheet.

The weekly timesheet in QuickBooks is useful when you want to work from a paper form and enter time for all your projects at once. If you want to continue using the timesheets you've been using in your firm, you can transfer the data from them to QuickBooks Pro's weekly timesheet form before invoicing clients.

Transferring time data and notes to invoices

When you are invoicing a client and have the invoice form displayed, you can click Time/Costs (and then click the Time tab) to see a list of the time entries you've recorded in QuickBooks Pro for that client's project. Clicking next to a time entry transfers it directly to the invoice.

You may also want the notes you've entered for each activity to be included on the invoice.

To use your time entry notes on the invoice:

1.	On the invoice form, select the client and project (Customer:Job), and click Time/Costs.

2.	Click the Time tab.

3.	If 'Transfer activity notes' does not appear under options, click the Change button, then click the "Transfer notes for each activity" box to select it, and click OK.

QuickBooks Pro has a limit on the number of characters you can enter in the notes field. That limit is the same on the weekly and individual time entry forms. If you transfer notes to invoices, you may have to manually adjust the appearance of the text on those forms. (This is especially true if you entered your notes and pressed the Enter key at the end of each line. When you're entering notes, it's better to type without pressing the Enter key, so that QuickBooks Pro can automatically wrap each line.)

Tracking non-billable time

Some advertising and public relations professionals track their non-billable hours as well as their billable ones. For example, if you spend part of your day marketing your services, or presenting quotes to clients, you may want to track the total amount of time you spend on such activities.

QuickBooks Pro lets you track the actual number of hours you spend on projects, not just the amount for which you bill clients. By tracking your non-billable hours, you can get a better idea of your business's profitability. If your firm has several staff members, you may want to track each person's billable hours versus non-billable hours.

To keep track of non-billable time (for activities you never plan to bill clients for), you need to set up "service" type items for each of your non-billable activities. Then, on your time entry form in QuickBooks Pro, you can choose from your list of service items to fill out the form. If the activity is non-billable, just click the Billable checkbox (in the Single Activity window) or the Billable column (in the Weekly Timesheet window) to deselect it. QuickBooks Pro places an 'X' over non-billable items.

For example, if you spend four hours doing market research (a billable activity) and two hours following up on client leads (a non-billable activity), you enter 4.0 for the Research item and 2.0 for the Marketing item on your time entry form. Because marketing activities are not billable, you can click next to the Marketing item on the time entry form, to mark that line with an 'X.' This tells QuickBooks Pro that you don't want to invoice the client for that activity.

You can see how much of your time is spent in billable versus non-billable activities by creating a Time by Item report (one of the Project reports).

For more information, see the:

"Time tracking" chapter of the User's Guide

"Invoicing customers for time"  topic in the "Time tracking" chapter of the User's Guide

Tracking time without QuickBooks Pro

If you don't have QuickBooks Pro, you can keep track of your time on a pending invoice. Use a separate invoice for each client's project.

To keep track of time on a pending invoice:

1.	Create the invoice as usual, entering the client name and project.

2.	While the invoice is displayed, choose Mark Invoice as Pending from the Edit menu.

QuickBooks displays the word "Pending" on the onscreen invoice (not on the printed version).

3.	Whenever you work on this project for this client, enter the time and charges on the pending invoice.

4.	When you're ready to invoice for your time, display the invoice and choose Mark Invoice as Final from the Edit menu. Then print the invoice as usual.

Tip: When you're ready to mark the invoice as final, you can find the invoice quickly by creating a pending sales report and using QuickZoom to display the original invoice form. (To do so, choose Sales Reports from the Reports menu, then choose Pending Sales. In the report window, double-click the invoice you want to see.)

Billing clients for your fees and costs

Public relations and advertising firms typically invoice for work based on time and expenses. The public relations or advertising firm pays for the project expenses and then passes the expenses and time costs to the client.

You may want your invoice to show some or all of these details:

the service you're invoicing for (for example, art direction or copywriting)

the number of hours spent on each service

if you are billing by time and more than one person was involved, the total number of hours worked and the hourly rate for each person (for example, graphic designer, writer, account executive)

expenses for which you want to be reimbursed (such as media costs)

Advertising and public relations professionals typically bill their clients using a combination of these methods:

Time billing

Invoices based on time billing typically show the services provided, the number of hours spent on each service, the hourly rate, and the total fee. If you invoice clients using this method, see "Billing clients for time" and "Billing for work done by several advertising/PR professionals" in this document.

Flat-fee billing

Invoices based on flat-fee billing typically show the service and the fee. If you invoice clients using this method, see "Billing clients for a fixed fee" in this document.

Setting up items for billing

Each fee you include on an invoice (each service you provide or each product you sell) should be a separate item on QuickBooks' Item list. (See "Creating items" in this document.) The way you set up your Item list depends on the services you provide and the information you want to show clients on an invoice. For example, suppose your advertising firm provides these services:

Account Services

Art Direction

Copywriting

Media Placement

Within each of these general areas are specific tasks that need to be accomplished. For example, services underneath Media Placement are Radio, TV, and Print. (Of course, your own task list will depend on the type of business you have and the services you offer.)

If you want your invoices to show each main heading, as well as the time spent on individual services underneath that heading, you can use a combination of QuickBooks items and subitems - use items for each main heading and subitems for tasks underneath that heading. When creating your Item list, you should model it on the list of services your firm already uses.

To set up the Item list to show service headings with subservices:

1.	Create "service" type items for each main service heading, such as Media Placemt. Do not enter a Rate for the item.

2.	For each service item just created, create subitems for each service included in that heading.

For example, if one of the services underneath Media Placemt is "Radio," you can create a subitem for Media Placemt called Radio.

3.	Type a description that you want to appear on the invoice.

Because the item name usually requires abbreviation, you'll want to provide a complete description that will be understandable to your clients.

4.	Enter a Rate for the new subitem.

If you are charging by time (hours worked), enter your hourly fee for the Rate.

If you are charging by time, and your firm employs several advertising/PR professionals, leave the Rate at 0.00. You'll want to create subitems underneath this task for each of your staff members, as described in "Billing for work done by several advertising/PR professionals" in this document.

If you are charging according to a flat fee, enter your fee for this service in the Rate field.

On the invoice, when you choose "Media Placemt:Radio" from the Item list, QuickBooks displays the item and subitem name (separated by a colon), the description, and the rate.

For more information, see the:

"Items - your products and services" chapter of the User's Guide

Billing clients for time

For a project charged on a time basis (number of hours worked), you'll want your Item list to include the hourly rate you charge for each service (see Step 4 in the previous section).

If you have QuickBooks Pro, you can track your time within QuickBooks Pro, and transfer that time directly to your invoices, as described earlier in "Tracking time."

If you have QuickBooks, you can track your time on a pending invoice and turn that into a final invoice when you're ready to bill, as described earlier in "Tracking time without QuickBooks Pro."

Billing for work done by several advertising/PR professionals

If your projects typically involve the work of more than one staff member, and you bill their time at different hourly rates, you'll want to set up your Item list to include those rates.

For example, suppose your firm provides in-house photographic services. You employ three photographers, all with different hourly rates. If you want your invoices to show the time worked by each photographer, you can set up your Item list like this:

Photography ("service" item with 0.00 rate)

Smith (subitem of Photography; 100.00 rate)

Jones (subitem of Photography; 85.00 rate)

Adams (subitem of Photography; 75.00 rate)

When you're ready to invoice, just choose the appropriate subitem from the drop-down list in the Item column, and QuickBooks enters the service description and rate for you. All you have to do is enter the time worked by each person (or, if you have QuickBooks Pro, click Time/Costs to transfer your time data to the invoice).

Billing clients for a fixed fee

If you plan to charge a client a fixed fee for a service (for example, writing the copy for a marketing brochure), create the invoice as usual. When you choose the service from the drop-down list in the Item column, you can edit the amount shown in the Rate column as necessary.

Invoicing from a proposal or estimate

If you created a quote in QuickBooks or QuickBooks Pro (see "Creating project quotes" in this document), you'll want to use that estimate as you invoice your clients.

Invoicing from a QuickBooks Pro estimate

If you have QuickBooks Pro, you can convert your entire quote into an invoice. Then you can modify the invoice if necessary.

To convert a quote into an invoice:

1.	Locate the estimate by displaying the Customer:Job list, selecting the project (or the client, if there is no separate project for that client), clicking Activities, then clicking View Estimate.

2.	Click Create Invoice at the bottom of the Create Estimates window.

You can edit the invoice by deleting lines, changing rates or hours, and adding new charges or services.

3.	Delete all sections from the invoice that you don't plan to bill the client for at this time, and add any other information as necessary.

You can create multiple invoices from the same quote (in order to bill for different phases of the project), by repeating the preceding steps.

For more information, see the:

"Turning an estimate into an invoice" topic in the "Estimates" chapter of the User's Guide

Invoicing from a QuickBooks pending invoice

If you created a quote by using a pending invoice, the way you invoice from that quote depends on whether you want to create one or multiple invoices from the same quote.

To create one invoice from a quote:

1.	Display the pending invoice that contains your quote.

Tip: You can find the invoice quickly by creating a pending sales report and using QuickZoom to display the original invoice form. (To do so, choose Sales Reports from the Reports menu, then choose Pending Sales. In the report window, double-click the invoice you want to see.)

2. 	Change the title from "Quote" back to "Invoice" by selecting your regular invoice template.

3. 	Edit the invoice as necessary to reflect the charges you want to bill.

Remember to change the Customer Message, if necessary.

4.	Choose Mark Invoice as Final from the Edit menu.

When you turn the quote back into an invoice, the original quote no longer exists in QuickBooks.

To create multiple invoices from a quote:

1.	Follow the steps for creating a quote using a pending invoice. (See "Creating a quote without QuickBooks Pro" in this document.)

If you followed the steps listed in that section, you should have memorized your quote.

2.	From the Lists menu, choose Memorized Transactions.

3.	Select the memorized quote for your client and click Enter Transaction.

QuickBooks displays the quote in the Create Invoices window.

4.	Select your usual Invoice template from the Custom Template list to change the title from "Quote" back to "Invoice."

5.	Edit the invoice as necessary to reflect the charges you want to bill.

Remember to change the customer message, if necessary.

The next time you're ready to bill the client, you can repeat the preceding steps, beginning at Step 2.

Billing retainer clients

You may have a contract with some of your clients to perform the same services each month. For example, if you have clients for whom you provide clipping services, you probably charge them the same amount each month. You can automate the billing of these retainer clients by memorizing an invoice for them in QuickBooks.

To bill retainer clients:

1.	Create an invoice for the retainer client, showing the service you agree to perform and the fee.

2.	While the invoice is displayed, choose Memorize Invoice from the Edit menu.

3.	In the Memorize Transaction window, click the "Remind Me" button or the "Automatically Enter" button. Choose Monthly in the "How Often" field.

If you click "Remind Me," QuickBooks reminds you when to invoice this client. If you click "Automatically Enter," QuickBooks creates the invoice transaction for you automatically.

If you have retainer clients from whom you receive an up-front or advance payment, the payment is considered a liability. (This is because you owe the service to the client, and will be working off the liability.) You can track the liability in QuickBooks by setting up these three things:

a liability account for tracking retainers

an "other charges" type item, for showing the retainer on invoices

a "payment" type item, to show the original payment received

For more information, see the:

"Prepaid income" topic in the "Receiving and depositing payments" chapter of the User's Guide

Creating a pending invoice for review

If your firm requires that all invoices be reviewed by the account executive before they are sent to clients, you can create a pending invoice. QuickBooks doesn't show the pending invoice in registers until you mark it as a final invoice.

To create a pending invoice for review:

1.	Create the invoice as usual, entering the client name and charges.

2.	In the Customer Message field, type the word "Pending."

3.	While the invoice is displayed, choose Mark Invoice as Pending from the Edit menu.

QuickBooks displays the word "Pending" on the onscreen invoice (not on the printed form).

4.	Print the pending invoice for the account executive's review.

5.	When the invoice has been approved, display the invoice and choose Mark Invoice as Final from the Edit menu.

6.	Remove the word "Pending" from the Customer Message field.

Invoicing for partial hours

Invoicing clients is an art, not a science. You sometimes change your mind about how and when to invoice for a billable service while you are in the midst of preparing your list of billable items.

Suppose you have spent 35 hours conducting market research for one of your clients. But as you prepare the invoice, you decide that, since the written report of your findings is not yet complete, you'll bill the client for half the hours now, and the remaining hours on a future invoice.

If you recorded your hours in QuickBooks Pro, you just need to adjust your timesheet entry. If you recorded your hours on a pending invoice in QuickBooks, you'll need to create a second pending invoice.

To invoice for partial hours in QuickBooks Pro:

1.	Display the weekly timesheet page where you have the total hours entered.

Even if you originally entered the time on a single activity form, you can see the time entry by displaying the weekly timesheet.

2.	Edit the time to display the number of hours you want to bill for on this invoice.

3.	On the next line of the timesheet, enter the remaining hours.

Choose the same Customer:Job and the same item name.

If you need to insert a blank line, you can choose Insert Line from the Edit menu.

4.	Return to the invoice and click Time/Costs.

QuickBooks shows you the two time entries related to that particular project.

5.	Click in the Use column next to the time entry you want to include on the current invoice.

To invoice for partial hours in QuickBooks:

1.	Display the pending invoice where you have the total hours entered.

2.	Edit the time to display the number of hours you want to bill for on this invoice.

3.	Choose Mark Invoice as Final from the Edit menu.

4.	Create a new pending invoice for the remaining hours.

See "Tracking time without QuickBooks Pro" in this document for information on how to create pending invoices.

Forgiving charges

When you invoice a client, you may sometimes decide to "forgive" certain charges; that is, you decide not to bill the client for a number of billable hours. For example, suppose you estimated that a project would take 25 hours, but it actually took you 30. For an important client, you may decide to forgive the five extra hours, and only invoice for 25 hours of time. If you want to show this forgiven time on your invoice (sometimes called a "courtesy" item), you can handle it in one of two ways:

If you don't want to track forgiven charges for each of the services you perform, or if you perform only one kind of service (you have one "service" item set up on your Item list), you can create one "discount" item called Courtesy. For example, if you create an invoice for 30 hours of account services time (your Account Svcs item), you can choose the Courtesy discount item and subtract 5 hours of time off the client's charges.

If you perform more than one kind of service (you have several "service" items set up on your Item list), you can use subitems that track your forgiven charges for each of your services. For example, you can create a "service" item called Courtesy, with a Rate of 0.00. Then you can create subitems for Service A and Service B. When you enter the amount of the forgiven charges on the invoice, you must enter a negative number.

You can see how many billable hours you've forgiven by creating a Sales by Item report (one of QuickBooks' Sales reports).

Sending summary statements to clients

As you enter invoices and client payments day to day, QuickBooks tracks the information to create summary statements that you can send to your clients. Summary statements are like a mini-report of the charges and payments made on a client's account; you just review them, decide whether to add finance charges, and print them.

Important:	Do not confuse summary statements with billing statements. A billing statement is a second method QuickBooks provides for you to bill your clients (invoices are the other billing method). You should choose whether to use invoices or billing statements and use that method consistently.

For more information, see the:

"Using billing statements" topic in the "Sales and sales forms" chapter of the User's Guide

Customizing invoice appearance

Depending on how you've done invoices in the past, you may want to remove or add information to QuickBooks' standard invoice forms. You can add or delete fields or columns, widen or change the order of columns, and include your own customized fields on the invoice. For example, depending on your needs, you can:

Remove the Item column from the printed invoice form (not from the onscreen form). If you provide a detailed description for each item you set up, you don't need to display the item name to clients.

Change the title of the Quantity column to "Hours."

Remove the Rate column, if you always bill according to a fixed fee. (The Amount column is all you need.)

Add a customized field for a client or project number. (To do this, you must first add the field to your Customer:Job list. See "Tracking information about your clients" in this document for details.)

For more information, see the:

"Adding customized fields" topic in the "Working with lists" chapter of the User's Guide

"Creating custom forms overview" topic in the "Forms" chapter of the User's Guide

"Customizing form content" topic in the "Forms" chapter of the User's Guide

"Designing form layouts" topic in the "Forms" chapter of the User's Guide

Adding multi-line descriptions

When you type text in the Description column, you can set exactly where your lines break by pressing Down Arrow to move to a new line.

To enter several lines of description:

1.	On the invoice form, position your cursor in the Description column.

2.	Type your lines of description, pressing Down Arrow to move to the next line of the description.

Each line has a limit of 99 characters. Although you can't see a line this long on the onscreen form, QuickBooks displays the entire line on the printed invoice. (You can click the Preview button to check how a line will print.)

Using a word processor for client billing

Many public relations or advertising firms want their invoices to have a creative flare consistent with their image and industry. If your client invoices require lots of detail, and are almost letter-like in appearance, you may want to use a word processing program for invoices. Just enter invoices or statements in QuickBooks to keep your accounts receivable information up to date, but don't print the invoices.

To use a word processing program for invoices:

1.	Enter invoices into QuickBooks as usual, but clear the "To be printed" checkbox.

2.	Use your word processing program when it's time to invoice your client.

For more information, see the:

"Entering item information" topic in the "Sales and sales forms" chapter of the User's Guide

Handling reimbursable expenses and employee advances

Advertising and public relations professionals often incur expenses on behalf of clients while working on projects. These expenses -  items such as delivery fees and travel expenses - are called reimbursable expenses. This section tells you how to track your own reimbursable expenses in QuickBooks, as well as how to handle employee advances for client expenses.

Tracking your own costs for reimbursement

When you incur expenses that you plan to pass along to clients, you pay for the expense by cheque, credit card, or cash. You can track these transactions as job costs in QuickBooks, and pass them along to your clients when it's time to bill them.

If you pay for items by cash, use the Splits feature in your Petty Cash account register to indicate the appropriate expense account and Customer:Job for this expense.  Enter any necessary memo information.

If you write a QuickBooks cheque or use the credit card form to pay for reimbursable expenses, select the appropriate expense account and Customer:Job for this expense. Enter a memo in the detail area of the cheque, also; this description will appear in the Description column of the invoice when you select that expense.

When you're ready to invoice the client, and you have the invoice form displayed, click the Time/Costs button, and then click the Expenses tab (in QuickBooks Pro) or click the Expenses button (in QuickBooks). QuickBooks shows you a list of expenses not yet invoiced. If you want to include the expense on the invoice, click in the Use column next to the reimbursable expense and click OK.

For more information, see the:

"Charging for reimbursable expenses" topic in the "Sales and sales forms" chapter of the User's Guide

"Charging for actual time and costs" topic in the "Sales and sales forms" chapter of the User's Guide

Tracking costs and reimbursements for employees

You may have employees who incur expenses for clients. You need to reimburse those employees, then pass on the costs to the client. Here's how to handle this situation in QuickBooks.

To reimburse employees and bill clients:

1.	Have your employees track their expenses in expense reports.

You can use the paper forms you're already using.

2.	From the Activities menu, choose Write Cheques.

Write a reimbursement cheque to each employee (not a pay cheque).

In the cheque detail area, itemize each expense by client and project (Customer:Job).

Click OK to record the cheque.

3.	From the Activities menu, choose Create Invoices.

Write an invoice to the client.

If you have QuickBooks Pro, click Time/Costs, then the Expenses tab to choose the reimbursable expenses you want to include on the invoice. If you have QuickBooks, click the Expenses button to choose the reimbursable expenses you want to include on the invoice.

Click in the Use column next to the expenses you want included on the invoice, and click OK.

For more information, see the:

"Charging for reimbursable expenses" topic in the "Sales and sales forms" chapter of the User's Guide

"Charging for actual time and costs" topic in the "Sales and sales forms" chapter of the User's Guide (QuickBooks Pro)

Issuing employee advances

If you prefer to issue your employees an advance for client costs (rather than reimbursing them later), here's how you can handle it in QuickBooks.

To issue employee advances:

1.	Create a new "other current asset" account called Advances. (From the chart of accounts, click the Account button, then choose New.)

Leave the account's opening balance at zero.

2.	Create one "other current asset" subaccount for each employee for whom you expect to be issuing advance cheques.

For example, if you will be issuing advances to Anna Tomasson, create an other current asset subaccount called "Anna."

In the New Account window, click the "Subaccount of" checkbox, and choose the Advances account as the parent account.

Leave the subaccount's opening balance at zero.

3.	From the Write Cheques window, write an advance cheque to the employee (not a pay cheque).

4.	In the detail area of the cheque, assign the amount of the cheque to the subaccount for that employee's advances (for example, Advances:Anna), and enter a memo describing what the advance is for. Do not assign a Customer:Job to the advance cheque.

QuickBooks puts an increase transaction in the Advances:Anna account register.

5.	When the employee later turns in an expense report, enter each expense as a decrease in the employee's asset subaccount. For each expense transaction:

Leave the Payee field blank.

Assign the expense to the appropriate expense account (for example, travel).

Enter the amount of the expense in the Decrease column.

6.	Assign the expense to the appropriate Customer:Job.

Select the expense in the account register and click Edit.

At the General Journal Entry window, enter the Customer:Job in the Name column on the line for the expense transaction.

Click OK.

When you're ready to invoice the client for expenses incurred by your employee, follow the procedure described earlier in "Tracking costs and reimbursements for employees," Step 3.

If the employee spent more than the advance, you can pay the amount you owe by writing a QuickBooks cheque and entering the employee's "other current asset" subaccount in the detail area.

For more information, see the:

"Charging for reimbursable expenses" topic in the "Sales and sales forms" chapter of the User's Guide

"Charging for actual time and costs" topic in the "Sales and sales forms" chapter of the User's Guide (QuickBooks Pro)

Creating budgets

Because advertising campaigns and public relations services can involve large amounts of money, you might want to set up budgets for your firm as a whole or for a particular client project. By setting up a budget, you can also get an understanding of the costs you have committed for the fiscal year.

You can set up budgets that show your projected income and expenses and your projected account balances. You can then can compare your actual income and expenses or your actual account balances against your plan by using budget reports.

Here are some guidelines on setting up budgets:

To create a budget by job (instead of month by month), in the Set Up Budgets window, enter the budget for the entire fiscal year in the field for the first month of the fiscal year. Be sure to choose the job you are using to track the project. If you don't want a breakdown by account, don't choose any account.

Budgets that extend across two fiscal years need to have the date adjusted on the report to cover two years, for example, from 1/1/96 to 1/1/98.

For more information, see the:

"Budgets" chapter of the User's Guide

Understanding income and profitability with reports

QuickBooks has over 70 preset reports (QuickBooks Pro has even more), which you can customize to fit your needs. The most important reports for any business are the Profit and Loss and Balance Sheet.

Here are some reports which you might find especially useful, along with instructions on how to create them in QuickBooks from the Reports menu. Note that some of the reports are available only in QuickBooks Pro.

Balance Sheet

Choose Balance Sheet, then choose Standard.

Profit and Loss

Choose Profit and Loss, then choose Standard.

Job profitability for each of your projects

Choose Profit and Loss, then By Job.

Billing reports, to determine amount billed in a specific period

Choose Sales Reports, then By Item Detail to see a report organized by service headings. Choose By Customer Detail to see a report organized by client/project. At the report window, change the date range to cover the billing period you want to see.

See what your clients owe, and which client accounts are overdue

Choose A/R Reports, then Aging Detail.

(QuickBooks Pro) See billable versus non-billable hours for each person in the firm

Choose Project Reports, then Time Activity Detail.

(QuickBooks Pro) See hours spent for each type of service item

Choose Project Reports, then Time by Item. Filter the report to show columns for Billed, Unbilled, and Not Billable time. (Click Customize from the report window to filter the report.)

(QuickBooks Pro) See hours spent for each project

Choose Project Reports, then Time by Job.

For more information, see the:

"Reports" chapter of the User's Guide

Other QuickBooks tips for public relations and advertising firms

Here are some other QuickBooks features you may find useful in your business.

Reminding yourself of important tasks

You need to keep track of details related to your own company (such as payroll deposits) as well as details related to the many clients you have. Use QuickBooks' To Do notes to keep track of the many future transactions you are expecting.

For example, you can use To Do notes to remind yourself of:

important tasks (for instance, calling the press in advance of an important client event)

regularly occurring bills (utilities, credit cards, association fees)

GST/PST remittances

For more information, see the:

"To Do notes" topic in the "More QuickBooks lists" chapter of the User's Guide

Keeping track of conversations and tasks

Advertising and public relations professionals often make decisions with clients over the telephone. It's important to keep track of your conversations with clients, whether they occur in person or by phone. QuickBooks lets you enter notes for each client in your Customer:Job list. The customer notes give you a quick way to jot down important details of a meeting.

For more information, see the:

"Keeping notes about a customer or job" topic in the "More QuickBooks lists" chapter of the User's Guide

Tracking information about your clients

The QuickBooks Customer list lets you add extra fields to each client's record for any purpose. You can use these customized fields to track dates, personal information, and so on. Advertising or PR professionals may want to add customized fields to track additional client information such as:

Client's account number

How client was referred

Client's Internet address

Client's birthday

Name of client's spouse

Name of client's administrative assistant

Information you enter into the fields can be just for your use (for example, you can look up a client's record to see his birth date), or you can add the customized fields to your sales forms and have the information appear on your invoices and cash sales receipts.

If you want to add customized fields to a client's record, see the steps below. If you want to then add the customized fields to your invoices, see "Customizing an invoice" earlier in this document.

To add customized fields to a client's record:

1.	Select the client's name in your Customer:Job list, click the Customer:Job button, then click Edit.

2.	At the Edit Customer window, click the Additional Info tab.

3.	Click the Define Fields button to specify the custom fields you want to add to each client's record.

Enter the name of the field and where you want it to be used (you can have it displayed for your clients, vendors, and/or employees).

4.	(Optional) Fill in the fields for this customer, vendor, or employee.

You'll see the new fields on the Additional Info tab. If you fill in a field, and have added that field to your sales forms, the information you enter transfers automatically to any customized form where the field appears. For example, if the field is named "Sales Region" and you've entered "West" as the sales region for a particular customer, the Sales Region field on your sales forms prefills to "West" each time you enter a sale to the customer.

Leave a field blank if you'd prefer to fill it in at the time you make a sale.

5.	Click OK.

What's next

You can add customized fields you've set up for customers to any sales form and to the estimate form. If you want information you've entered in the customized fields to appear on a form, you must add the fields to the form. (For details on how to customize an invoice, see "Customizing an invoice" in this document.)

For more information, see the:

"Adding and using customized fields" topic in the "Working with lists" chapter of the User's Guide

"Creating custom forms overview" topic in the "Forms" chapter of the User's Guide

"Customizing form content" topic in the "Forms" chapter of the User's Guide

"Designing form layouts" topic in the "Forms" chapter of the User's Guide

Helping us help you

We'd like to know your special concerns and the problems you run into when trying to make QuickBooks work in your business. We also want to know how useful "Advertising and PR firms" was in helping you fit QuickBooks to your needs.

Please use this sheet to mail or fax us your comments. If possible, please also attach specific comments marked on the printed version of this document. Mail the completed form and any attachments to:

Intuit Canada, Ltd.

Industry Feedback

P.O.Box 4165

Edmonton, Alberta

Canada

Or fax your comments to us at 1-800-387-4285

Some information about your business

Name:

Business name:

Address:

Phone:

Number of employees:

My business is a: __ Sole proprietorship __ Partnership __ Corporation

What other needs do you have, specific to your type of business, that were not covered in this document?

Do you have any tips for other people in your field who use QuickBooks?

Which two or three topics did you find most useful in this document?

May we call you to discuss your comments?

___ yes    ___ no


Product sellers not using QuickBooks inventory

Overview for product sales businesses

Before you begin

Setting up your QuickBooks company

Introduction to entering sales in QuickBooks

Entering every sale in QuickBooks

Entering summaries of sales in QuickBooks

Issuing purchase orders

Finding out how your company is doing through reports

Helping us help you

Overview for product sales businesses

Important:	This document is written for businesses that are not using the QuickBooks inventory feature. You can get help on deciding whether or not to use QuickBooks inventory from the EasyStep Interview. Just select the interview from the Help menu, go to the Preferences tab in the General section, and click through that section. You'll see a screen entitled "Should I use QuickBooks for inventory?"

Businesses that sell products come in many shapes and sizes: retail stores, mail order businesses, wholesalers, restaurants, sales or manufacturers representatives, and light manufacturers. In addition, many service businesses have a product sales component, such as a hair salon that sells shampoos and conditioners.

Note:	There is a separate industry document for manufacturer's representatives or agents. You may wish to consult that document in addition to this one.

QuickBooks will help you meet most of your financial management needs, including:

Creating detailed reports on your income and expenses

Processing payroll cheques for your employees

Showing you how your business is doing through reports

Tracking your accounts receivable and accounts payable

Keeping track of how much tax you owe

Before you begin

This document gives you information on how to use QuickBooks for your special needs - we won't repeat what's already in the standard information you receive with QuickBooks. Instead, you'll see references to show where you can find complete information and details on using QuickBooks features.

Printing your industry document

If you're looking at this document onscreen, you're now in a "QuickBooks and Your Industry" window.

To print this document:

From the File menu, choose Print... or Print Topic.

To return to the EasyStep Interview:

If you got to this Help window from the interview, close the Help window to return to the interview.

To see other industry documents:

Click any of the industries listed in the contents.

Understanding QuickBooks terms

QuickBooks uses terms you can readily understand: accounts payable/receivable, vendors, and employees. But there are a few special terms you need to be aware of:

Chart of accounts

This is a list of accounts that you use to track how much money your company has, how much money it owes, how much money is coming in, and how much is going out.

Item list

The items on your QuickBooks Item list represent the products you sell. Items also include anything you might want to put on an invoice, such as services, shipping, payments, and discounts.

Bill

A bill is what you receive from your vendor or subcontractor, from which you will pay that vendor or subcontractor. QuickBooks tracks the bills you enter in an accounts payable account until you pay them.

Sales forms

QuickBooks has three types of sales forms:

-	a sales receipt (if you get paid immediately)

-	an invoice (if you get paid later)

-	a credit memo (for recording a return)

Class

This is a way to categorize income and expenses. For example, you can categorize income and expense by a class that you define, such as departments in a store (women's, men's, children's).

Important

The information in this document was compiled from the experiences and suggestions of other QuickBooks users in your type of business. Your own needs may vary considerably, and only you and your accountant understand the unique needs of your business.  Ultimately, you are responsible for your own books.

Therefore, we encourage you to have your accountant look over the setup suggested in this document, and we suggest that you give QuickBooks a thorough "trial run" early in the process. The best way to ensure that you have set up QuickBooks optimally for your business, and that it will provide all the information you need, is to enter a small number of your standard transactions in QuickBooks. Then try running all the reports you may eventually need.

While we can give you technical support on how QuickBooks works, our technical support representatives are not industry experts and cannot give you specific accounting advice. If you have questions regarding accounting issues specifically related to your industry, we recommend you consult either an accountant, industry expert, or professional association.

Setting up your QuickBooks company

The QuickBooks EasyStep Interview asks you questions about your business, and uses your answers to help you set up your business in QuickBooks. We recommend the interview as the easiest way to get started and to customize QuickBooks.

If you choose not to use the EasyStep Interview, you should follow the setup directions in the "Setting up a QuickBooks company" chapter of the Getting Started Guide.

Customizing your Chart of Accounts

Your chart of accounts is your most important list. When you set up books for your company, you want to track where your income comes from, where you put it, what your expenses are for, and what you use to pay them. You track this flow of money though a list of accounts called the chart of accounts.

Important:	The way your chart of accounts is set up determines how your Profit and Loss, and Balance Sheet reports look, and what information they contain.

You will probably choose the preset chart of accounts designed especially for your business. Before you customize your chart of accounts, print the current chart of accounts and then determine which accounts you want to add, edit, or delete. In fact, you might want to show the chart of accounts to your accountant before you set up your QuickBooks company.

Some product sales businesses keep cash on the premises. Thus, they might want to add an account for cash kept at the store called, Cash Drawer (a "bank" account).

For more information, see the:

"Your chart of accounts" chapter of the User's Guide

Introduction to entering sales in QuickBooks

Two ways to record sales in QuickBooks

The way you record sales in QuickBooks depends on how much detail you want to enter. You can enter:

Every single sale paid on the spot

Summaries of sales based on cash register or manual receipts (usually daily)

The way you enter sales determines how you set up your sales "items." Subsequent sections of this document describe how to set up and use QuickBooks depending on which way you enter sales.

When you would enter every sale

If you use QuickBooks to enter each sale transaction, QuickBooks keeps a record of all sales, including what you sold, the date, and customer information. Also by entering every sale, you can use QuickBooks to print out all invoices or sales receipts, and to track invoices until they're paid.

Businesses that would record every sale might include printers, sales agents, small-volume retail shops, mail order businesses, and wholesalers.

See "Entering every sale in QuickBooks" later in this document for details on entering every sale and handling specific situations when you choose this method of recording your sales.

When you would enter summaries of sales

You would use QuickBooks to enter summaries of sales transactions if you:

Have a high-volume business and entering every sale would be too burdensome in QuickBooks.

Have an effective way outside of QuickBooks to track sales transactions (either manually or through a point-of-sale system).

Instead of entering every sale in QuickBooks, you would enter summaries of sales transactions at a convenient period, such as daily or every other day. Businesses that would record sales transactions in summary might include high-volume businesses such as restaurants and bars or businesses with a point-of-sale system.

See "Entering summaries of sales in QuickBooks" later in this document for details on entering sales summaries and handling specific situations when you choose this method of recording your sales.

Create a cash drawer account regardless of which method you use

Regardless of which way you choose to enter sales in QuickBooks, if you keep some cash on hand in a cash drawer or cash register, you need to set up an account in your chart of accounts for that cash. We recommend you call that account Cash Drawer (a "bank" account). You might also want to keep track of each separate cash register in your business. In that case, you can create subaccounts for each cash drawer, for example:

Cash Drawer

-	Cash Drawer 1

-	Cash Drawer 2

-	Cash Drawer 3

For more information, see the:

"Adding new accounts"  topic in the "Your chart of accounts" chapter of the User's Guide

Entering every sale in QuickBooks

Entering every sale in QuickBooks is very easy. You create "items" for your products, and discounts and enter each sale on a Cash Sale Receipt or Invoice in QuickBooks. This section explain the items you'll set up, how to enter a sale, and how to handle some typical situations you might have as a product seller.

Tracking your customers

Many product sellers do not need to track who their customers are. For example, a restaurant or a high-volume retail store probably would not want to track their customers. But if you enter each sale in QuickBooks, you could also keep track of your customers if you wish to.

In QuickBooks, the list that holds information about your customers is called the Customer:Job list. When you set up your customers, you can also enter a customer type for each one. The customer type lets you keep track of the different types of customers you serve and gives you the information you need to analyze your customer base. You can categorize each customer in a way that is meaningful for your business.

Customer types do not appear on QuickBooks forms, but you can create reports based on the information. You can also print mailing labels and invoices based on customer type.

Examples of customer types for product sales businesses.

Walk-in

Referral

Mail-order

Response to promotion

Tips for setting up customers

If you are a distributor and sell alcoholic beverages, you might need to record a customer's permit number. You can create a customized field for the customer's permit number in the customer information area.

QuickBooks will print mailing labels (and Rolodex cards) of all your customers according to the criteria you set. You can sort by name or postal code and select which customers and customer types to include.

Customers with multiple 'Ship To' addresses

Your customers will most likely have one billing address, but they may have multiple 'ship to' addresses. However, QuickBooks lets you enter only one 'ship to' address per customer, and can display that address on invoices and other sales forms.

But there's an easy way to record several shipping addresses in the customer Notepad and quickly paste them into the invoice 'ship to' field.

To handle multiple shipping addresses:

1.	To enter the customer in QuickBooks, choose Customers:Jobs from the Lists menu, click the Customer:Job button, then click New.

2.	Enter the customer information, but leave the 'ship to' field blank.

3.	Click the Notes button, and enter the different shipping addresses in the customer notepad.

4.	When you invoice that customer, choose the customer's name in the Customer:Job field at the top of the invoice.

5.	From the Edit menu, choose Notepad.

6.	With your cursor, select the 'ship to' address you want and press Ctrl+C.

7.	Close the Notepad window.

8.	Place the cursor in the 'Ship To' field on the invoice, and press Ctrl+V.

For more information, see the:

"Customers and jobs" topic in the "More QuickBooks lists" chapter of the User's Guide.

"Customer types" topic in the "More QuickBooks lists" chapter of the User's Guide

"Adding customized fields" topic in the "Working with lists" chapter of the User's Guide

"Keeping notes about a customer or job" topic in the "More QuickBooks lists" chapter of the User's Guide

"Printing labels" topic in the "Printing" chapter of the User's Guide

Using classes to track different segments of your business

In addition to customer types, QuickBooks classes give you another way to track income and expenses if you're entering every sale. Classes give you a way to break down your income and expenses for the products you sell.

How classes differ from customer types

Classes can apply to all transactions, so they are not tied to any particular customer. A customer type is associated with only certain customers.

For example, you might have "regular" and "senior" customer types. You can then get financial reports focused by type of customer. But let's say you need a third classification that spans any type of customer. In this case, you can use QuickBooks classes. For example, if you have separate departments, you can create a class for each department, such as "children's" and "women's." Or if you have two locations, you can set up a class for each location.

When you select the class associated with each department or location on each transaction in QuickBooks, you can get reports on income and expenses by class regardless of what types of customers are involved.

Important:	You should use classes for one purpose only. For example, don't mix using classes for departments with using classes for office locations.

Tips on using classes

Think of the ways you'd like to categorize portions of your business in terms of income and expenses for each portion. The classes you set up should correspond to those portions, and can be any meaningful breakdown of the business you do.

For example, if you want to analyze the profitability of each assistant manager's shift, you can create a class for each assistant manager. Later, you can create a report that looks at income and expenses by class for each assistant manager.

Classes are most useful when you can identify both income and expenses for each class you set up. This makes a Profit and Loss by Class report more meaningful.

For example, if you do business in two methods (store, direct mail), you could make each method a class, identify both your income and expenses for each method when you write cheques or receive payment in QuickBooks. Then you can see your profit and loss for each sales method (class).

If you forget to classify any transaction, QuickBooks reports will show that transaction as "unclassified." To distinguish a transaction you simply forgot to classify, from a transaction that doesn't fit into any of the classes you've created, create a class called "other" and use that on transactions that don't relate to any class.

For example, if you created classes for different locations and incur an expense that applies to neither location, classify that transaction in QuickBooks as "other." On reports, you can double-click the "unclassified" transactions to go to them and add the class.

For more information, see the:

"Classes" topic in the "More QuickBooks lists" chapter of the User's Guide

Creating items

QuickBooks items represent the services or products that you buy, sell, or resell in your business.

When you record a sale or a purchase, you use items from your Item list to fill out the form quickly.  When you choose an item in the Item column on the form, QuickBooks fills in the description, rate or price, and then calculates the amount.

QuickBooks uses information you've recorded about each item to assign the sale or purchase to the right income or expense accounts.  Reports and graphs can then give you valuable information, such as your greatest sources of income and which items you sell most.

Creating non-inventory part items

If you enter every sale in QuickBooks, you'll need to create a non-inventory part item corresponding to every product you sell. For example, you may create items such as:

Quilt

Clay teapot

Craft pillow

For more information, see the:

"Items - your products and services" chapter of the User's Guide

Creating other item types

Besides non-inventory part items, you can use other QuickBooks item types when you're entering every sale.

Discount item (type Discount)

A percentage or fixed amount discount. Typical discounts include cash discount, early-bird discount, employee discount, volume discount, seasonal discount, trade discount, special customer (senior, child, preferred).

Special discount item (type Group)

A special discount on an item for promotional purposes or to sell an item quickly. Create a discount item and then a group item that groups the product itself with a discount item. If the discount is good for a specific period, you can enter the time period in the Group item's description field so you will be reminded of the discount effective date.

Shipping or freight item (type Other charge)

An item for shipping or freight. When you create the item, leave the amount blank. You can enter the amount directly on the sales form. You may want to create a separate income account called Shipping.

Using subitems for volume pricing and other reasons

In addition to using items, you might want to use subitems as well. Product sales businesses have many uses for subitems. Here are a few possible uses. It's important to remember that you should not mix these uses; you should use subitems for a consistent purpose.

Using subitems for volume pricing or varying weights and sizes

You may set up various price levels for products according to the volume bought by the customer. Generally, the higher the volume, the lower the price. Create an item for the product (make the quantity on hand zero and the reorder point zero) and then create subitems for each price level. Enter the quantity on hand and reorder point for each subitem. For example create the item called "T-Shirt" and then subitems "T-Shirt 1-5", "T-Shirt 6-12", and "T-Shirt 13-20."

You might also sell products in various sizes. You may want to create one item for the product and then several subitems for the sizes of the product.

Using subitems for preferred vendors

QuickBooks allows only one preferred vendor per item. If you want to set up multiple vendors for an item, create an item for the product and then create subitems for each vendor from whom you buy the product. Make sure you can tell the vendor from the subitem name. For example create the item called "Ice cream" and then subitems "Vendor A" and "Vendor B."

For more information, see the:

"Using subitems" topic  in the "Items - your products and services" chapter of the User's Guide

Grouping items

If you want to group some items together because these items are frequently sold together, you can use QuickBooks to track the cost of a group of items. Many product sales businesses find it convenient to group items.

For example, a bicycle shop might sell bike frames, seats, wheels, and gearshifts separately. Thus, the shop wants to track each of these items separately. Frequently, the shop sells a bike which is made of one frame, two wheels, one seat and one gearshift. The shop can create a group item called "Bike."

For more information, see the:

"Group items" topic in the "Items - your products and services" chapter of the User's Guide

Tracking tax when entering every sale in QuickBooks

If you sell products to consumers, you may have to charge GST and PST. When you have properly setup your tax environment, QuickBooks will automatically calculate and track the tax you've collected.

For more information, see the:

"GST and PST - tracking and paying" chapter in the User's Guide

Entering each sale in QuickBooks

Use the Enter Cash Sales window (Activities menu) to record a sale paid on the spot.

Note:	Cash sales include payments by cash, credit card, or cheque.

To enter a cash sale:

1.	Choose Enter Cash Payments from the Activities menu.

2.	Fill out the sales receipt.

Important:	Make sure you select the payment method when entering the sale.

3.	Click "Group with other undeposited funds" to add this transaction to a holding account called Undeposited Funds.

See "Making deposits (if entering every sale)" below for instructions on how to handle deposits.

For more information, see the:

"Entering a sale" topic in the "Sales and sales forms" chapter of the User's Guide

Entering sales to be paid later

Use the Create Invoices window to record sales for which you will receive payment later.

To enter a sale:

1.	Choose Create Invoices from the Activities menu.

2.	Fill out the invoice and click OK.

3.	When you receive the payment, record the payment.

From the Activities menu, choose Receive Payments.

See "Making deposits (if entering every sale)" later in this document for instructions on how to handle deposits.

For more information, see the:

"Recording an invoice or statement payment" topic in the "Receiving and depositing payments" chapter of the User's Guide

Recording cash overages or shortages

You can set up QuickBooks to track your daily cash overages or shortages. When you view a sales report, you'll see any overages or shortages for each day of cash sales.

For more information, see the:

"Tracking daily overages and shortages" topic in the "Sales and sales forms" chapter of the User's Guide

Making deposits (if entering every sale)

When you make deposits at your bank, you probably make out separate deposit slips for amounts you'd like to have listed separately on your bank statement. You would do the same thing in QuickBooks, in order for your separate payment methods to appear separately when you reconcile the bank account.

To deposit payments (other than American Express):

1.	Choose Make Deposits from the Activities menu.

Important:	To make reconciliation with your bank statement easier, do a separate "Make Deposit" for each payment method such as cash/cheques, Mastercard, and so on.

2.	In the Payments to Deposit window, check all sales paid by one payment method.

For example, check all your cash payments, and complete the steps in this procedure, then start over and deposit payments from one credit card, then another credit card, and so on.

If you want to keep some cash on hand instead of depositing it, leave one of the cash payments unchecked. Do another "Make Deposit" procedure for that cash payment by itself, and deposit it to the cash drawer account.

If this is a deposit for credit card payments, you may want to group more than one day's credit card payments depending on when your bank usually credits your account. For example, let's say your bank credits your account for credit card payments every Tuesday and Thursday. You would deposit Friday's, Monday's, and Tuesday's credit card payments on Tuesday in QuickBooks (even though you may take the payments to the bank every day).

3.	Click OK.

4.	In the Make Deposits window, choose the account you want to deposit the cheque to, for example, Chequing.

If this is the cash payment you want to keep on hand instead of depositing, instead of a bank account, choose the Cash Drawer account you created earlier (a "bank" account).

5.	Click OK.

To deposit American Express payments:

You'll need to make an adjustment to account for the fee deducted by American Express when it sends you your payment.

For more information, see the:

"Receiving and depositing payments" chapter in  the User's Guide

Creating a standing order

Some customers may place a standing order with your business - they purchase the same items, in the same quantities, on a periodic basis. Rather than creating a new sales receipt or invoice each time they need an order, you can memorize a sales receipt or invoice for reuse.

To handle standing orders:

1.	Create an invoice or sales receipt for the customer that shows the items and quantities which make up the standing order.

From the Activities menu, choose Create Invoices or Enter Cash Sales.

2.	Complete the invoice or sales receipt with the customer's name, billing address, terms, and the order itself.

3.	Before you click OK, memorize the transaction.

From the Edit menu, choose Memorize Invoice. Make sure you include how often you want to be reminded of the standing order (for example, monthly). Alternatively you can have QuickBooks enter the transaction automatically.

4.	Click OK.

For more information, see the:

"Memorized transactions" topic in the "More QuickBooks lists" chapter of the User's Guide

Handling customer returns

If you accept returns, you will need to cancel the sales in QuickBooks.

In QuickBooks, you can cancel a sale in three ways:

Void the sale

Delete the sale

Create a credit memo

With all three ways, QuickBooks automatically reduces the appropriate income account and reduces the tax liability account.

If you use a credit memo to handle the return, make sure you use the same item as was used on the original sales receipt or invoice. If the item is taxable, make sure you also include tax on the credit memo.

For more information, see the:

"Voiding a sale" topic in the "Sales and sales forms" chapter of the User's Guide

"Deleting a sale" topic in the "Sales and sales forms" chapter of the User's Guide

"Recording a return" topic in the "Receiving and depositing payments" chapter of the User's Guide

Handling customer back orders and layaways

You can track orders and layaways for customers in QuickBooks using pending invoices. This lets you get reports on backorders or layaways by customer. You can also record any down payments or prepayments in QuickBooks.

To record a customer's backorder:

1.	From the Activities menu, choose Create Invoices.

2.	Enter the order, but do not click OK.

3.	In the Memo field, type B (for backorder) or L (for layaway).

4.	From the Edit menu, choose Mark Invoice as Pending, and click OK.

To accept prepayment for back orders:

1.	Record the customer's order or layaway on a pending invoice as described above.

2.	From the Activities menu, choose Receive Payments.

3.	Enter the amount of the payment.

4.	Click the Print Cred Memo button and give the customer a receipt for the prepayment.

When the backorder arrives or the customer pays for the layaway:

1.	Find the pending invoice for that backorder or layaway.

Tip: To find the invoice, from the Reports menu, choose Sales Reports, Pending Sales. Locate the invoice on the report and move your cursor to the correct invoice. The cursor becomes a magnifying glass. Click the magnifying glass to QuickZoom to the invoice.

2.	From the Edit menu, choose Mark Invoice as Final.

3.	From the Activities menu, choose Receive Payments, and select the customer.

Enter the customer's payment if receiving it now. If you received prepayment and entered it as a credit memo earlier, be sure to apply it to the correct invoice.

4.	Click OK.

To see a list of backorders or layaways:

1.	From the Reports menu, choose Sales Reports, Pending Sales.

2.	Click Filters and type B (for backorders) or L for (layaways) in the Memo field, and click OK.

Since you entered B or L in the Memo field in the pending invoice depending on whether it was a backorder or layaway, QuickBooks will find all the invoices with the letter you specify in the memo field.

You can total the report by various things, such as Customer, by selecting from the "Total By" field on the report.

For more information, see the:

"Marking a sale as pending" topic in the "Sales and sales forms" chapter of the User's Guide

"Receiving payments overview" topic in the "Receiving and depositing payments" chapter of the User's Guide

"Overpayments, down payments, and prepayments" topic in the "Receiving and depositing payments" chapter of the User's Guide

Tracking serial numbers (if you enter every sale)

Some businesses need to keep track of serial numbers for several reasons, including security, warranty, and manufacturer's recall. An important thing to keep in mind is that to track serial numbers in QuickBooks, you'll need to create a subitem for each serial number.

You may have too many items with different serial numbers to make this feasible to track in QuickBooks. But if you have a manageable number of items, the following procedure lets you track sales of these items and their serial numbers.

To keep track of serial numbers in QuickBooks:

1.	Create a non-inventory part item with the name of the product you're selling.

For example, you might create an item call "TV."

2.	Create a subitem for each serial number.

For example, if you have five TVs, you created an item called TV in Step 1. Now create five subitems under "TV" and enter the serial number for each TV in the "Item Name/Number" field.

3.	When you sell a TV, on the invoice or cash sale, always select the subitem corresponding to its serial number.

To see the effects of entering sales using this method of tracking serial numbers, create a sales report (Reports menu, Sales Reports, By Item Summary). You'll see the TV item listed, along with the serial number subitems below it, and the amount of sales for each one.

Creating custom fields and customizing sales forms

QuickBooks gives you several ways to adjust the appearance of your sales forms (invoices or cash sale receipts). You can change, add or eliminate fields or columns to show the information that's important to you and your customers.

In addition you can add your own custom fields for items, customers, and vendors, and use these fields in combination with fields or columns you add to your invoice or cash sale receipt.

For example, you might create a custom field for items in QuickBooks to enter the manufacturer's suggested retail price (MSRP) for each item. Then if you want the suggested retail price to appear on an invoice or cash sale receipt, you would add a column called MSRP to that sales form. Then QuickBooks will automatically enter the MSRP whenever you select the item on the sales form.

Here are some other examples of why product sellers might use their own custom fields, customized sales forms, or a combination of both:

To keep track of customers' resale number (for nontaxable customer sales)

To enter size, colour, weight, or format of an item (you may use subitems for this purpose instead)

To include a unit of measurement (such as kilograms)

For more information, see the:

"Adding and using customized fields" topic in the "Working with lists" chapter of the User's Guide

"Creating custom forms overview" topic in the "Forms" chapter of the User's Guide

"Customizing form content" topic in the "Forms" chapter of the User's Guide

"Designing form layouts" topic in the "Forms" chapter of the User's Guide

Creating sales forms outside of QuickBooks

Some product sales businesses may want their invoices or sales receipts to have a creative flare consistent with their image and industry. In this case, you can use QuickBooks to calculate subtotals and totals for your invoices or sales receipts and then create the sales form in a word processor or desktop publishing software outside of QuickBooks.

To use another program for creating sales forms:

1.	Enter invoices or sales receipts into QuickBooks as usual, but clear the "to be printed" checkbox.

2.	Manually create the invoice or sales receipt outside of QuickBooks with your word processor or desktop publishing software.

Tracking how much your sales people sell

Many businesses encourage their sales representatives to sell more by paying a sales bonus or commission on their sales. You can set up your sales people as employees in QuickBooks. When you do so, QuickBooks also adds their initials to the "Rep" list (although this list is not available from the Lists menu).

By choosing the sales person's initials in the Rep field in every sales transaction (invoice or cash sale), you can get reports on the gross sales for each sales person.

To calculate gross sales by representative:

1.	Set up sales persons as employees, and be sure to select their initials in the Rep field on invoices or cash sales in which they are involved.

2.	From the Reports menu, choose Sales Reports, Sales by Rep Summary.

3.	Enter or select the applicable dates.

QuickBooks lists the gross sales for each Rep.

If you use QuickBooks for payroll, you can add a bonus or commission to each sales person's paycheque.

For more information, see the:

"Employees" topic in the "More QuickBooks lists" chapter of the User's Guide

"Addition payroll items" topic in the "Payroll items" chapter of the User's Guide

Setting up tickler notes

You need to keep track of many non-financial details related to your business. You can use the QuickBooks To Do list to keep track of these.

You can use the To Do Notes list to remind yourself of things such as:

Calling a customer to pick up a special order

Calling a vendor to check the status of a shipment

Sending out sales catalogs

From the Lists menu, choose To Do Notes. From the To Do List window, click the To Do button, then click New.

For more information, see the:

"To Do notes" topic in the "More QuickBooks lists" chapter of the User's Guide

Entering summaries of sales in QuickBooks

To summarize sales in QuickBooks, you do these things:

Create "summary" items in QuickBooks to represent the way you want to break down your sales.

Create payment items in QuickBooks to represent the different payment methods for your sales.

Enter an invoice in QuickBooks (recommended daily) to summarize your sales.

Make deposits of each payment method at the bank, and reconcile your bank statement regularly.

Creating items to handle sales summaries

Items are what you enter on QuickBooks sales forms to represent things you charge for. If you're entering summaries of your sales instead of every sale in QuickBooks, the items you create will represent some meaningful breakdown similar to the one you would get from a cash register tape.

For example, in a simple case your cash register tape may break down your sales into taxable, nontaxable, and tax collected.

A different cash register might break down sales into "Department 1 - taxable," "Department 1 - nontaxable," "Department 2 - taxable," "Department 2 - nontaxable," etc.

Creating summary items in QuickBooks

You should set up your item list to correspond to the way your cash register summarizes your sales. QuickBooks has different types of items.

Here's an example item list to summarize daily sales, with the type of item you would create in QuickBooks:

Taxable Sales - Non-inventory Part item type

Nontaxable Sales - Non-inventory Part item type

You'll use these items when you enter a sales summary (see the following procedure).

For more information, see the:

"Creating items" topic in the "Items - your products and services" chapter of the User's Guide

Creating payment items for payment methods

Create payment items in QuickBooks for each payment method you accept, and for cash you will not deposit. Be sure to create the items according to how your bank reflects each payment method on the bank statement. You can also have some control over how the bank separates deposits by using separate deposit slips at the bank.

For example, if your bank lumps charges from two credit cards together on the statement, create only one payment item for both credit cards. If the bank handles each credit card separately, create a different payment item for each credit card. You may also cause the bank to create separate deposits for each credit card by using separate deposit slips.

Here's a sample list of payment items (you may have to abbreviate the names of your payment items in QuickBooks):

Cash/Cheques (if you deposit these separately, they would be two items)

Credit Card 1

Credit Card 2

Cash drawer payment (when creating this item, select "Deposit to" the cash drawer bank or asset account)

Important:	When you create these items, be sure to select "Payment" for the item type, and select the corresponding payment method in the "payment method" field.

You will use these items on a summary invoice to facilitate your bank reconciliation (described below).

Creating items such as these works even if your various credit card payments are deposited electronically every 24 hours (or other time period). In this case, your bank will list deposits from each credit card company separately, so you would create payment items for each credit card.

For more information, see the:

"Payment items" topic in the "Items - your products and services" chapter of the User's Guide

Creating an item for overages and shortages

Create an Other Charge type item with a name such as "Over/Short" and enter "Overage/Shortage" in the Account field. QuickBooks will ask you to set up this account. Set it up as an income account.

By assigning this item to the Overage/Shortage income account, overages will increase this account, and shortages will decrease the account. So if you see a negative total for this item or account on reports, you'll have an overall shortage.

When you make this an Other Charge item, you'll be able to see this item separate from sales items on sales reports.

Recording overages and shortages is explained later in this document.

Entering sales summaries in QuickBooks

You'll enter summaries of your sales (preferably daily) on QuickBooks invoices. This is the information you need to enter a sales summary:

cash register totals for each summary item you plan to enter, for example total taxable sales, total nontaxable sales, and GST and PST

total amounts paid by each payment method

total cash amount you are not depositing (that is, keeping in the drawer or spending)

When you've entered the sales summary on an invoice, along with a summary of payments, the invoice total should be zero, unless you have an overage or shortage. See "Recording overages and shortages on sales summaries" later in this document for information on how to handle overages or shortages.

To enter a sales summary:

1.	From the Activities menu, choose Create Invoice.

2.	Type "All customers" (without quotation marks) in the customer field.

An invoice requires you to enter a customer name. QuickBooks will ask you if you want to Quick Add "All customers" to your list. Click OK.

3.	Enter each summary item you created earlier on a separate line of the invoice.

For example, enter "Taxable Sales" and "Nontaxable Sales" items on separate lines and the total amounts for those items from your cash register tape. You would have set up these two items in QuickBooks as nontaxable items (because you are summarizing sales tax on separate lines).

4.	Enter a subtotal line.

Use a subtotal item. See the "Subtotal item" topic in the "Items - your products and services" chapter of the User's Guide for more information.

5.	Enter your GST item and the total GST figure from you cash register.

You should have created this as an other charge item type.

6.	Enter your PST item and the total PST figure from you cash register.

You should have created this as an other charge item type.

7.	Enter the payment items for each payment method, and the total for each method.

For example, if you created payment items for "cash/cheque," "credit card 1," and "credit card 2," enter each one on a separate line with the total amount for that method. QuickBooks automatically makes the payment amount negative on the invoice.

If you're keeping some cash from today's sale in the drawer or spending it, subtract that amount from the "cash/cheques" item, as described in the next step.

8.	If you are not depositing some cash (keeping it in the drawer or spending it), enter it using the cash drawer payment item.

For example, if you received $1000 in cash payments, but had to pay $50 to a delivery person, enter the "cash/cheques" payment item with an amount of $950. Then enter the "cash drawer" payment item with $50 for the amount.

When creating the "cash drawer" payment item, you should have selected "Deposit to" and entered your Cash Drawer account (explained earlier in this document).

Recording overages and shortages on sales summaries

When you enter a summary invoice for your sales, the invoice total should be zero. If not, you have an overage or shortage.

If the invoice total is a negative number, you have an overage.

That is, the amount of your payment items is greater than the amount of your sales items on the invoice.

If the invoice total is a positive number, you have a shortage.

That is, the amount of your payment items is less than the amount of your sales items.

To account for overages or shortages:

1.	When you enter your summary invoice as described earlier in this document, determine if you have an overage or shortage.

A positive total means you have a shortage, and a negative total means you have an overage.

2.	If you have a positive total (shortage) on the summary invoice, enter the Over/Short item you created earlier with an amount equal to the invoice total, but negative.

The goal is to zero out the invoice. (Also, see "Creating an item for overages and shortages" earlier in this document.)

3.	If you have a negative total (overage) on the summary invoice, enter the Over/Short item with an amount equal to the invoice total, but positive.

The goal is to zero out the invoice.

See the illustration above to see what this looks like on an invoice. To see the effect of this procedure, from the Reports menu, choose Sales Reports, By Item Summary.

Making Deposits (if entering sales summaries)

When you make deposits at your bank, you probably make out separate deposit slips for amounts you'd like to show up separately on your bank statement. You would do the same thing in QuickBooks, in order for your separate payment methods to appear separately when you reconcile the bank account.

To deposit payments (other than American Express):

1.	Choose Make Deposits from the Activities menu.

Important:	To make reconciliation with your bank statement easier, do a separate "Make Deposit" for each payment method such as cash/cheques, Mastercard, and so on.

2.	In the Payments to Deposit window, click the payments for one payment method only.

For example, click all your Visa payments, complete all the steps in this procedure, then start over and deposit the payment from one credit card, then another credit card, and so on.

If you've set up your cash drawer payment item correctly, you will not see that payment item in the Payments to Deposit window (when creating the item, you should have selected "Deposit to" and entered the cash drawer "bank" account). See how to create payment items in "Creating items to handle sales summaries" earlier in this document.

If this is a deposit for credit card payments, you may want to group more than one day's credit card payments depending on when your bank usually credits your account. For example, let's say your bank credits your account for credit card payments every Tuesday and Thursday. You would deposit Friday's, Monday's, and Tuesday's credit card payments on Tuesday in QuickBooks (even though you may take the payments to the bank every day).

3.	Click OK.

4.	In the Make Deposits window, choose the account you want to deposit the cheque to, for example, Chequing.

5.	Click OK.

6.	To check the effect of this procedure in QuickBooks, choose Reconcile from the Activities menu.

You should see the total for each payment method listed on a separate line in the Deposits section of the Reconcile window. You will only be able to recognize them by the date and the amount of the deposit.

To deposit American Express payments:

You'll need to make an adjustment to account for the fee deducted by American Express when it sends you your payment.

See "Depositing American Express charges" topic in the "Receiving and depositing payments" chapter of the User's Guide.

For more information, see the:

"Receiving and depositing payments" chapter of the User's Guide

Recording customer returns

When a customer returns an item, it's possible that your cash register will automatically subtract the amount of that sale and any related tax, as well as subtract that amount from the total for the payment method. If so, skip this section.

If your cash register does not operate this way, follow this example.

Example

Let's say that today a customer returns an item, paid in cash, for $10 with $.70 GST. So you return $10.70 in cash to the customer. To account for this, you need to subtract the appropriate amounts from three places on today's sales summary invoice:

Subtract $10 from the taxable sales total.

Subtract $.70 from the GST total.

Subtract $10.70 from today's cash payments total.

If the return was associated with a credit card, follow this example but be sure to subtract the amount of the return from that credit card's payment item total on the invoice.

Issuing purchase orders

Note:	To use purchase orders, you must have the inventory/PO's preference turned on. To turn on the preference, choose Purchases and Vendors from the Preferences menu. Then select "Inventory and Purchase Orders are active."

Even if you're not using the QuickBooks inventory feature, you can create purchase orders in QuickBooks.When you use purchase orders with QuickBooks, you can see the items you have on order and when they're due to be received.You can also see how much money you've committed on purchase orders so you can plan your cash flow needs.

Items used on POs must be associated with expense accounts

QuickBooks issues purchase orders based on items. So you need to create items for everything you wish to list on a purchase order. In addition, since you're using "non-inventory part" items, you must enter expense accounts in the Account field when creating these items (because you're buying them instead of selling them).

Because items used on POs must be associated with expense accounts, if you're entering every sale in QuickBooks, you cannot use the same items that you sell on POs. This is because the items you sell, and enter on cash sales or invoices, must be associated with income accounts.

Note:	Because purchase orders are designed to work with the QuickBooks inventory items, four of the QuickBooks purchase reports work only with inventory items. These Purchase reports are By Item Summary, By Item Detail, By Vendor Summary, and By Vendor Detail.

For more information, see the:

"Purchase order overview" topic in the "Purchase orders" chapter of the User's Guide

Finding out how your company is doing through reports

QuickBooks has over 70 preset reports, which you can customize to fit your needs. The most important reports for any business are the Profit and Loss and Balance Sheet.

This list describes some reports which any product sales business might find useful. All these reports are accessed from the Reports menu:

Balance Sheet

Profit and Loss

Accounts Receivable

Sales Reports

If you're entering every sale in QuickBooks, sales reports can show your total sales by item, by customer, or by "Rep" (salesperson).

If you're entering summaries of sales, the relevant sales reports for you would be the By Item Summary or By Item Detail. These will show you the totals of whatever breakdown you used to enter summaries in QuickBooks.

If you're entering every sale in QuickBooks, you can get reports that show your backorders, layaways and purchase orders. See "Entering every sale in QuickBooks" for more information.

For more information, see the:

"Reports" chapter of the User's Guide

Helping us help you

We'd like to know your special concerns and the problems you run into when trying to make QuickBooks work in your business. We also want to know how useful "Product sellers not using QuickBooks inventory" was in helping you fit QuickBooks to your needs.

Please use this sheet to mail or fax us your comments. If possible, please also attach specific comments marked on the printed version of this document. Mail the completed form and any attachments to:

Intuit Canada, Ltd.

Industry Feedback

P.O.Box 4165

Edmonton, Alberta

Canada

Or fax your comments to us at 1-800-387-4285

Some information about your business

Name:

Business name:

Address:

Phone:

Number of employees:

My business is a: __ Sole proprietorship __ Partnership __ Corporation

What other needs do you have, specific to your type of business, that were not covered in this document?

Do you have any tips for other people in your field who use QuickBooks?

Which two or three topics did you find most useful in this document?

May we call you to discuss your comments?

___ yes    ___ no


Product sellers using QuickBooks inventory

Overview for product sales businesses

Before you begin

Setting up your QuickBooks company

Customizing your Chart of Accounts

Introduction to entering sales in QuickBooks

Entering every sale in QuickBooks

Entering summaries of sales in QuickBooks

Issuing purchase orders

Taking a physical inventory and adjusting quantities

Finding out how your company is doing through reports

Helping us help you

Overview for product sales businesses

Important:	This document is written for businesses who are using the QuickBooks inventory feature. You can get help on deciding whether or not to use QuickBooks inventory from the EasyStep Interview. Just select the interview from the Help menu, go to the Preferences tab in the General section, and click through that section. You'll see a screen entitled "Should I use QuickBooks for inventory?"

Businesses that sell products come in many shapes and sizes: retail stores, mail order businesses, wholesalers, restaurants, sales or manufacturers representatives, and light manufacturers. In addition, many service businesses have a product sales component, such as a hair salon that sells shampoos and conditioners.

Note:	There is a separate industry document for manufacturer's representatives or agents. You may wish to consult that document in addition to this one.

QuickBooks will help you meet most of your financial management needs, including:

Creating detailed reports on your income and expenses

Tracking your inventory

Processing payroll cheques for your employees

Showing you how your business is doing through reports

Tracking your accounts receivable and accounts payable

Keeping track of how much tax you owe

Before you begin

This document gives you information on how to use QuickBooks for your special needs - we won't repeat what's already in the standard information you receive with QuickBooks. Instead, you'll see references to show where you can find complete information and details on using QuickBooks features.

Printing your industry document

If you're looking at this document onscreen, you're now in a "QuickBooks and Your Industry" window.

To print this document:

From the File menu, choose Print... or Print Topic.

If you got to this Help window from the interview, close the Help window to return to the interview.

To see other industry documents:

Click any of the industries listed in the contents.

Understanding QuickBooks terms

QuickBooks uses terms you can readily understand: accounts payable/receivable, vendors, and employees. But there are a few special terms you need to be aware of:

Chart of accounts

This is a list of accounts that you use to track how much money your company has, how much money it owes, how much money is coming in, and how much is going out.

Item list

The items on your QuickBooks Item list represent the products you sell. Items also include anything you might want to put on an invoice, such as services, shipping, payments, and discounts.

Note:	How you set up items depends on whether you're entering every sale or entering sales summaries. See the appropriate section of this document for guidance.

Bill

A bill is what you receive from your vendor or subcontractor, from which you will pay that vendor or subcontractor. QuickBooks tracks the bills you enter in an accounts payable account until you pay them.

Sales forms

QuickBooks has three types of sales forms:

-	a sales receipt (if you get paid immediately)

-	an invoice (if you get paid later)

-	a credit memo (for recording a return)

Class

This is a way to categorize income and expenses. For example, you can categorize income and expense by a class that you define, such as departments in a store (women's, men's, children's).

Important

The information in this document was compiled from the experiences and suggestions of other QuickBooks users in your type of business. Your own needs may vary considerably, and only you and your accountant understand the unique needs of your business.  Ultimately, you are responsible for your own books.

Therefore, we encourage you to have your accountant look over the setup suggested in this document, and we suggest that you give QuickBooks a thorough "trial run" early in the process. The best way to ensure that you have set up QuickBooks optimally for your business, and that it will provide all the information you need, is to enter a small number of your standard transactions in QuickBooks. Then try running all the reports you may eventually need.

While we can give you technical support on how QuickBooks works, our technical support representatives are not industry experts and cannot give you specific accounting advice. If you have questions regarding accounting issues specifically related to your industry, we recommend you consult either an accountant, industry expert, or professional association.

Setting up your QuickBooks company

The QuickBooks EasyStep Interview asks you questions about your business, and uses your answers to help you set up your business in QuickBooks. We recommend the interview as the easiest way to get started and to customize QuickBooks.

If you choose not to use the EasyStep Interview, you should follow the setup directions in the "Setting up a QuickBooks company" chapter of the Getting Started Guide.

Customizing your Chart of Accounts

Your chart of accounts is your most important list. When you set up books for your company, you want to track where your income comes from, where you put it, what your expenses are for, and what you use to pay them. You track this flow of money though a list of accounts called the chart of accounts.

Important:	The way your chart of accounts is set up determines how your Balance Sheet and Profit and Loss reports look, and what information they contain.

You will probably choose the preset chart of accounts designed especially for your business. Before you customize your chart of accounts, print the current chart of accounts and then determine which accounts you want to add, edit, or delete. In fact, you might want to show the chart of accounts to your accountant before you set up your QuickBooks company.

Some product sales businesses keep cash on the premises. Thus, they might want to add an account for cash kept at the store called, Cash Drawer (created as a "bank" type account).  You could also keep track of each separate cash register in your business by creating subaccounts. Your Cash Drawer account may be used for cash payments (petty cash) or represent an amount kept in the till as a "float."

For more information, see the:

"Your chart of accounts" chapter in the User's Guide

Introduction to entering sales in QuickBooks

Two ways to record sales in QuickBooks

The way you record sales in QuickBooks depends on how much detail you want to enter. You can enter:

Every single sale paid on the spot

Summaries of sales based on cash register or manual receipts (usually daily)

When you would enter every sale

If you use QuickBooks to enter each sale transaction, QuickBooks keeps a record of all sales, including what you sold, the date, and customer information. Also by entering every sale, you can use QuickBooks to print out all invoices or sales receipts, and to track invoices until they're paid.

Businesses that would record every sale might include printers, sales agents, small-volume retail shops, mail order businesses, and wholesalers.

See "Entering every sale in QuickBooks" later in this document for details on entering every sale and handling specific situations when you choose this method of recording your sales.

When you would enter summaries of sales

You would use QuickBooks to enter summaries of sales transactions if you:

Have a high-volume business and entering every sale would be too burdensome in QuickBooks.

Have an effective way outside of QuickBooks to track sales transactions (either manually or through a point-of-sale system).

Instead of entering every sale in QuickBooks, you would enter summaries of sales transactions at a convenient period, such as daily or every other day.

See "Entering summaries of sales in QuickBooks" later in this document for details on entering sales summaries and handling specific situations when you choose this method of recording your sales.

Entering every sale in QuickBooks

Entering every sale in QuickBooks is very easy. You create "items" for your products, and discounts, and enter each sale on a Cash Sale Receipt or invoice in QuickBooks. This section explains the items you'll set up, how to enter a sale, and how to handle some typical situations you might have as a product seller.

Tracking your customers

Many product sellers do not need to track who their customers are. For example, a restaurant or a high-volume retail store probably would not want to track their customers. But if you enter each sale in QuickBooks, you could also keep track of your customers if you wish to. In QuickBooks, the list that holds information about your customers is called the Customer:Job list.

Note:	QuickBooks allows you to have a maximum of 16,000 names.  These names include your customers, employees, vendors, and other names lists.

Customer types

When you set up your customers, you can also enter a customer type for each one. The customer type lets you keep track of the different types of customers you serve and gives you the information you need to analyze your customer base. You can categorize each customer in a way that is meaningful for your business.

Customer types do not appear on QuickBooks forms, but you can create reports based on the information. You can also print mailing labels and invoices based on customer type.

Examples of customer types for product sales businesses

Walk-in

Referral

Mail-order

Tips for setting up customers

QuickBooks will print mailing labels (and Rolodex cards) of all your customers according to the criteria you set. You can sort by name or postal code and select which customers and customer types to include.

Customers with multiple 'Ship To' addresses

Your customers will most likely have one billing address, but they may have multiple 'ship to' addresses. However, QuickBooks lets you enter only one 'ship to' address per customer, and can display that address on invoices and other sales forms.

But there's an easy way to record several shipping addresses in the customer Notepad and quickly paste them into the invoice 'ship to' field.

To handle multiple shipping addresses:

1.	To enter the customer in QuickBooks, choose Customers:Jobs from the Lists menu, click the Customer:Jobs button, then click New.

2.	Enter the customer information, but leave the 'ship to' field blank.

3.	Click the Notes button, and enter the different shipping addresses in the customer notepad.

4.	When you invoice that customer, choose the customer's name in the Customer:Job field at the top of the invoice.

5.	From the Edit menu, choose Notepad.

6.	With your cursor, select the 'ship to' address you want and press Ctrl+C.

7.	Close the Notepad window.

8.	Place the cursor in the 'Ship To' field on the invoice, and press Ctrl+V.

For more information, see the:

"Customers and jobs" topic in the "More QuickBooks lists" chapter of the User's Guide.

"Customer types" topic in the "More QuickBooks lists" chapter of the User's Guide

"Adding and using customized fields" topic in the "Working with lists" chapter of the User's Guide

"Keeping notes about a customer or job" topic in the "More QuickBooks lists" chapter of the User's Guide

"Printing labels" topic in the "Printing" chapter of the User's Guide

Using classes to track different segments of your business

In addition to customer types, QuickBooks classes give you another way to track income and expenses if you're entering every sale. Classes give you a way to break down your income and expenses for the products you sell.

How classes differ from customer types

Classes can apply to all transactions, so they are not tied to any particular customer. A customer type is associated with only certain customers.

For example, you might have "regular" and "senior citizen" customer types. You can then get financial reports focused by type of customer. But let's say you need a third classification that spans any type of customer. In this case, you can use QuickBooks classes. For example, if you have separate departments, you can create a class for each department, such as "children's" and "women's." Or if you have two locations, you can set up a class for each location.

When you select the class associated with each department or location on each transaction in QuickBooks, you can get reports on income and expenses by class regardless of what types of customers are involved.

Important:	You should use classes for one purpose only. For example, don't mix using classes for departments with using classes for office locations.

Tips on using classes

Think of the ways you'd like to categorize portions of your business in terms of income and expenses for each portion. The classes you set up should correspond to those portions, and can be any meaningful breakdown of the business you do.

For example, if you want to analyze the profitability of each assistant manager's shift, you can create a class for each assistant manager. Later, you can create a report that looks at income and expenses by class for each assistant manager.

Classes are most useful when you can identify both income and expenses for each class you set up. This makes a Profit and Loss by Class report more meaningful.

For example, if you do business in two methods (store, direct mail), you could make each method a class, identify both your income and expenses for each method when you write cheques or receive payment in QuickBooks. Then you can see your profit and loss for each sales method (class).

If you forget to classify any transaction, QuickBooks reports will show that transaction as "unclassified." To distinguish a transaction you simply forgot to classify, from a transaction that doesn't fit into any of the classes you've created, create a class called "other" and use that on transactions that don't relate to any class.

For example, if you created classes for different locations and incur an expense that applies to neither location, classify that transaction in QuickBooks as "other." On reports, you can double-click the "unclassified" transactions to go to them and add the class.

For more information, see the:

"Classes" topic in the "More QuickBooks lists" chapter of the User's Guide

Creating inventory part items for your products

If you enter every sale in QuickBooks, create an inventory part item corresponding to every product you sell. For example, you may create items such as:

Ceramic cup

Table cloth

Silverware set

For more information, see the:

"Items - your products and services" chapter of the User's Guide

"Inventory" chapter of the User's Guide

Other uses of items

Other item types

You can use other QuickBooks item types when you're entering every sale.

Discount item

A percentage or fixed amount discount. Typical discounts include cash discount, early-bird discount, employee discount, volume discount, seasonal discount, trade discount, or special customer (senior, child, preferred).

Special discount item

A special discount on an item for promotional purposes or to sell an item quickly. Create a discount item and then a group item that groups the product itself with a discount item. If the discount is good for a specific period, you can enter the time period in the Group item's description field so you will be reminded of the discount effective date.

Shipping or freight item

An item for shipping or freight. When you create the item, leave the amount blank. You can enter the amount directly on the sales form. You may want to create a separate income account called Shipping.

Using subitems for varying sizes or preferred vendors

In addition to using items, you might want to use subitems as well. Product sales businesses have many uses for subitems. Here are two possible uses. It's important to remember that you should not mix these uses; you should use subitems for a consistent purpose.

Using subitems for varying weights and sizes

You might also sell products in various sizes or weights. One way to handle this is to create one item for the product and then several subitems for the sizes of the product.

For example, you may sell ceramic plates in three sizes. You would create an inventory item called "Ceramic Plate", and subitems such as "6 inches," "8 inches," and "10 inches." When creating the main item, Ceramic Plate, leave the price, quantity on hand, and reorder point fields blank. Enter all this information for the subitems instead. QuickBooks will keep track of the subitem quantities and reorder points.

Using subitems for preferred vendors

QuickBooks allows only one preferred vendor per item. If you want to set up multiple vendors for an item, create an item for the product and then create subitems for each vendor from whom you buy the product. Make sure you can tell the vendor from the subitem name. For example create the item called "Ice cream" and then subitems "Vendor A" and "Vendor B."

When you create the main item, Ice Cream, leave the price, quantity on hand, and reorder point fields blank, and enter these values for the subitems instead. Remember, QuickBooks will keep track of the reorder points for the subitems. Therefore, on the stock status report, you will see quantity on hand and reorder point information by vendor.

For more information, see these topics:

"Using subitems" topic in the "Items - your products and services" chapter of the User's Guide

"Reports about inventory" topic in the "Inventory" chapter of the User's Guide

Grouping items

If you want to group some items together because these items are frequently sold together, you can use QuickBooks to track the cost of a group of items. Many product sales businesses find it convenient to group items.

For example, a bicycle shop might sell bike frames, seats, wheels, and gearshifts separately. Thus, the shop wants to track each of these items separately. In addition, the shop sells a bike which is made of one frame, two wheels, one seat and one gearshift. The shop can create a group item called "Bike" which is made up of the component parts.

When you create a group item, such as Bike, that is made up of a number of inventory items, QuickBooks will keep track of the value, quantity on hand, and reorder points for the component parts only (not the group item). You can see this information on a stock status report. However, using this example, you'll still be able to see how many bikes you sold on sales reports.

For more information, see:

"Group items" topic in the "Items - your products and services" chapter of the User's Guide

Tracking sales tax when entering every sale in QuickBooks

If you sell your products to consumers, you may have to collect GST and PST. Once you have completed the tax setup procedures by following the EasyStep Interview or the printed documentation, QuickBooks automatically puts the appropriate tax on your sales forms and bills.

For more information, see:

"GST and PST - tracking and paying" chapter of the User's Guide

Entering each sale in QuickBooks

Use the Enter Cash Sales window (Activities menu) to record a sale paid on the spot.

Note:	Cash sales include payments by cash, credit card, or cheque.

To enter a cash sale:

1.	Choose Enter Cash Payments from the Activities menu.

2.	Fill out the sales receipt.

Important:	Make sure you select the payment method when entering the sale.

3.	Click "Group with other undeposited funds" to add this transaction to a holding account called Undeposited Funds.

See "Making deposits (if entering every sale)" following for instructions on how to handle deposits.

For more information, see:

"Entering a sale" topic in the "Sales and sales forms" chapter of the User's Guide

Entering sales to be paid later

Use the Create Invoices window to record sales for which you will receive payment later.

To enter a sale:

1.	Choose Create Invoices from the Activities menu.

2.	Fill out the invoice and click OK.

3.	When you receive the payment, record the payment.

From the Activities menu, choose Receive Payments.

See "Making deposits (if entering every sale)" following for instructions on how to handle deposits.

For more information, see the:

"Recording an invoice or statement payment" topic in the "Receiving and depositing payments" chapter of the User's Guide

Recording cash overages or shortages

You can set up QuickBooks to track your daily cash overages or shortages. When you view a sales report, you'll see any overages or shortages for each day of cash sales.

For more information, see the:

"Tracking daily overages and shortages" topic in the "Sales and sales forms" chapter of the User's Guide

Making deposits (if entering every sale)

When you make deposits at your bank, you probably make out separate deposit slips for amounts you'd like to have listed separately on your bank statement. You would do the same thing in QuickBooks, in order for your separate payment methods to appear separately when you reconcile the bank account.

To deposit payments (other than American Express):

1.	Choose Make Deposits from the Activities menu.

Important:	To make reconciliation with your bank statement easier, do a separate "Make Deposit" for each payment method such as cash/cheques, Mastercard, and so on.

2.	In the Payments to Deposit window, check all sales paid by one payment method.

For example, check all your cash payments, and complete the steps in this procedure, then start over and deposit payments from one credit card, then another credit card, and so on.

If you want to keep some cash on hand instead of depositing it, leave one of the cash payments unchecked. Do another "Make Deposit" procedure for that cash payment by itself, and deposit it to the Cash Drawer account.

If this is a deposit for credit card payments, you may want to group more than one day's credit card payments depending on when your bank usually credits your account. For example, let's say your bank credits your account for credit card payments every Tuesday and Thursday. You would deposit Friday's, Monday's, and Tuesday's credit card payments on Tuesday in QuickBooks (even though you may take the payments to the bank every day).

3.	Click OK.

4.	In the Make Deposits window, choose the account you want to deposit the cheque to, for example, Chequing.

If this is the cash payment you want to keep on hand instead of depositing, choose the Cash Drawer account you created earlier (a "bank" account).

5.	Click OK.

To deposit American Express payments:

You'll need to make an adjustment to account for the fee deducted by American Express when it sends you your payment.

For more information, see the:

"Receiving and depositing payments" chapter of the User's Guide

Creating a standing order

Some customers may place a standing order with your business - they purchase the same items, in the same quantities, on a periodic basis. Rather than creating a new sales receipt or invoice each time they need an order, you can memorize a sales receipt or invoice for reuse.

To handle standing orders:

1.	Create an invoice or sales receipt for the customer that shows the items and quantities which make up the standing order.

From the Activities menu, choose Create Invoices or Enter Cash Sales.

2.	Complete the invoice or sales receipt with the customer's name, billing address, terms, and the order itself.

3.	Before you click OK, memorize the transaction.

From the Edit menu, choose Memorize Invoice. Make sure you include how often you want to be reminded of the standing order (for example, monthly). Alternatively you can have QuickBooks enter the transaction automatically.

4.	Click OK.

For more information, see the:

"Memorized transactions" topic in the "More QuickBooks lists" chapter of the User's Guide

Handling customer returns

If you accept returns, you will need to cancel the sales in QuickBooks.

In QuickBooks, you can cancel a sale in three ways:

Void the sale

Delete the sale

Create a credit memo

With all three ways, QuickBooks automatically reduces the appropriate income account and reduces the tax liability account.

If you use a credit memo to handle the return, make sure you use the same item as was used on the original sales receipt or invoice. If the item is taxable, make sure you select the appropriate tax code on the  credit memo.

For more information, see the:

"Voiding a sale" topic in the "Sales and sales forms" chapter of the User's Guide

"Deleting a sale" topic in the "Sales and sales forms" chapter of the User's Guide

"Recording a return" topic in the "Receiving and depositing payments" chapter of the User's Guide

Handling customer back orders and layaways

You can track orders and layaways for customers in QuickBooks using pending invoices. This lets you get reports on backorders or layaways by customer. You can also record any down payments or prepayments in QuickBooks.

To record a customer's backorder:

1.	From the Activities menu, choose Create Invoices.

2.	Enter the order, but do not click OK.

3.	In the Memo field, type B (for backorder) or L (for layaway).

4.	From the Edit menu, choose Mark Invoice as Pending, and click OK.

To accept prepayment for back orders:

1.	Record the customer's order or layaway on a pending invoice as described above.

2.	From the Activities menu, choose Receive Payments.

3.	Enter the amount of the payment.

4.	Click the Print Cred Memo button and give the customer a receipt for the prepayment.

When the backorder arrives or the customer pays for the layaway:

1.	Find the pending invoice for that backorder or layaway.

Tip: To find the invoice, from the Reports menu, choose Sales Reports, Pending Sales. Locate the invoice on the report and move your cursor to the correct invoice. The cursor becomes a magnifying glass. Click the magnifying glass to QuickZoom to the invoice.

2.	From the Edit menu, choose Mark Invoice as Final.

3.	From the Activities menu, choose Receive Payments, and select the customer.

Enter the customer's payment if receiving it now. If you received prepayment and entered it as a credit memo earlier, be sure to apply it to the correct invoice.

4.	Click OK.

To see a list of backorders or layaways:

1.	From the Reports menu, choose Sales Reports, Pending Sales.

2.	Click Filters and type B (for backorders) or L for (layaways) in the Memo field, and click OK.

Since you entered B or L in the Memo field in the pending invoice depending on whether it was a backorder or layaway, QuickBooks will find all the invoices with the letter you specify in the memo field.

You can total the report by various things, such as Customer, by selecting from the "Total By" field on the report.

For more information, see the:

"Marking a sale as pending" topic in the "Sales and sales forms" chapter of the User's Guide

"Receiving payments overview" topic in the "Receiving and depositing payments" chapter of the User's Guide

"Overpayments, down payments, and prepayments" topic in the "Receiving and depositing payments" chapter of the User's Guide

Tracking serial numbers (if you enter every sale)

Some businesses need to keep track of serial numbers for several reasons, including security, warranty, and manufacturer's recall. An important thing to keep in mind is that to track serial numbers in QuickBooks, you'll need to create a subitem for each serial number.

You may have too many items with different serial numbers to make this feasible to track in QuickBooks. But if you have a manageable number of items, the following procedure lets you track sales of these items and their serial numbers.

To keep track of serial numbers in QuickBooks:

1.	Create an inventory part item with the name of the product you're selling.

For example, you might create an item call "TV."

2.	Create a subitem for each serial number.

For example, if you have five TVs, you created an item called TV in Step 1. Now create five subitems under "TV" and enter the serial number for each TV in the "Item Name/Number" field.

3.	When you sell a TV, on the invoice or cash sale, always select the subitem corresponding to its serial number.

To see the effects of entering sales using this method of tracking serial numbers, create a sales report (Reports menu, Sales Reports, By Item Summary). You'll see the TV item listed, along with the serial number subitems below it, and the amount of sales for each one.

Creating custom fields and customizing sales forms

QuickBooks gives you several ways to customize the appearance of your sales forms (invoices or cash sale receipts). You can change, add or eliminate fields or columns to show the information that's important to you and your customers.

In addition you can add your own custom fields for items, customers, and vendors, and use these fields in combination with fields or columns you add to your invoice or cash sale receipt.

For example, you might create a custom field for items in QuickBooks to enter the manufacturer's suggested retail price (MSRP) for each item. Then if you want the suggested retail price to appear on an invoice or cash sale receipt, you would add a column called MSRP to that sales form. Then QuickBooks will automatically enter the MSRP whenever you select the item on the sales form.

Here are some other examples of why product sellers might use their own custom fields, customized sales forms, or a combination of both:

To keep track of customers' resale number (for nontaxable customer sales)

To enter size, colour, weight, or format of an item (you may use subitems for this purpose instead)

To include a unit of measurement (such as kilograms)

For more information, see the:

"Adding and using customized fields" topic in the "Working with lists" chapter of the User's Guide

"Creating custom forms overview" topic in the "Forms" chapter of the User's Guide

"Customizing form content" topic in the "Forms" chapter of the User's Guide

"Designing form layouts" topic in the "Forms" chapter of the User's Guide

Creating sales forms outside of QuickBooks

Some product sales businesses may want their invoices or sales receipts to have a creative flare consistent with their image and industry. In this case, you can use QuickBooks to calculate subtotals and totals for your invoices or sales receipts and then create the sales form in a word processor or desktop publishing software outside of QuickBooks.

To use another program for creating sales forms:

1.	Enter invoices or sales receipts into QuickBooks as usual, but clear the "to be printed" checkbox.

2.	Manually create the invoice or sales receipt outside of QuickBooks with your word processor or desktop publishing software.

Tracking how much your sales people sell

Many businesses encourage their sales representatives to sell more by paying a sales bonus or commission on their sales. You can set up your sales people as employees in QuickBooks. When you do so, QuickBooks also adds their initials to the "Rep" list (although this list is not available from the Lists menu).

By choosing the sales person's initials in the Rep field in every sales transaction (invoice or cash sale), you can get reports on the gross sales for each sales person.

To calculate gross sales by representative:

1.	Set up sales persons as employees, and be sure to select their initials in the Rep field on invoices or cash sales in which they are involved.

2.	From the Reports menu, choose Sales Reports, Sales by Rep Summary.

3.	Enter or select the applicable dates.

QuickBooks lists the gross sales for each Rep.

If you use QuickBooks for payroll, you can add a bonus or commission to each sales person's pay cheque.

For more information, see the:

"Employees" topic in the "More QuickBooks lists" chapter of the User's Guide

"Adding payroll items" topic in the "Payroll items" chapter of the User's Guide

Setting up tickler notes

You need to keep track of many non-financial details related to your business. You can use the QuickBooks To Do list to keep track of these.

You can use the To Do Notes list to remind yourself of things such as:

Calling a customer to pick up a special order

Calling a vendor to check the status of a shipment

Sending out sales catalogs

From the Lists menu, choose To Do Notes. From the To Do List window, click the To Do button, then click New.

For more information, see the:

"To Do notes" topic in the "More QuickBooks lists" chapter of the User's Guide

Entering summaries of sales in QuickBooks

To summarize sales in QuickBooks, you do these things:

Create inventory items in QuickBooks.

Create payment items in QuickBooks to represent the different payment methods for your sales.

Enter an invoice in QuickBooks (recommended daily) to summarize your sales.

Make deposits of each payment method at the bank, and reconcile your bank statement regularly.

Creating items to handle sales summaries

Creating summary items

You should create items for each inventory product and tax for which you'll be entering a summary of sales.

Here's an example item list to summarize daily sales, with the type of item you would create in QuickBooks:

AM/FM Radio - Inventory Part item type

Cordless Phone -  Inventory Part item type

You'll use these items when you enter a sales summary (see the following procedure).

For more information, see the:

"Creating items" topic in the "Items - your products and services" chapter of the User's Guide

"Inventory" chapter in the User's Guide

Creating payment items for payment methods

Create payment items in QuickBooks for each payment method you accept, and for cash you will not deposit. Be sure to create the items according to how your bank reflects each payment method on the bank statement. You can also have some control over how the bank separates deposits by using separate deposit slips at the bank.

For example, if your bank lumps charges from two credit cards together on the statement, create only one payment item for both credit cards. If the bank handles each credit card separately, create a different payment item for each credit card. You may also cause the bank to create separate deposits for each credit card by using separate deposit slips.

Here's a sample list of payment items (you may have to abbreviate the names of your payment items in QuickBooks):

Cash/Cheques (if you deposit these separately, they would be two items)

Credit Card 1

Credit Card 2

Cash drawer payment (when creating this item, select "Deposit to" your Cash Drawer bank account)

Important:	When you create these items, be sure to select "Payment" for the item type, and select the corresponding payment method in the "payment method" field.

You will use these items on a summary invoice to facilitate your bank reconciliation (described below).

Creating items such as these works even if your various credit card payments are deposited electronically every 24 hours (or other time period). In this case, your bank will list deposits from each credit card company separately, so you would create payment items for each credit card.

For more information, see the:

"Payment items" topic in the "Items - your products and services" chapter of the User's Guide

Creating an item for overages and shortages

Create an Other Charge type item with a name such as "Over/Short" and enter "Overage/Shortage" in the Account field. QuickBooks will ask you to set up this account. Set it up as an income account.

By assigning this item to the Overage/Shortage income account, overages will increase this account, and shortages will decrease the account. So if you see a negative total for this item or account on reports, you'll have an overall shortage.

When you make this an Other Charge item, you'll be able to see this item separate from sales items on sales reports.

Recording overages and shortages is explained later in this document.

Entering sales summaries in QuickBooks

You'll enter summaries of your sales (preferably daily) on QuickBooks invoices. This is the information you need to enter a sales summary:

quantity sold of each inventory item

total GST and PST charged

total amounts paid by each payment method

total cash amount you are not depositing (that is, keeping in the drawer or spending)

When you've entered the sales summary on an invoice, along with a summary of payments, the invoice total should be zero, unless you have an overage or shortage. See "Recording overages and shortages on sales summaries" later in this document for information on how to handle overages or shortages.

To enter a sales summary:

1.	From the Activities menu, choose Create Invoice.

2.	Type "All customers" (without quotation marks) in the customer field.

An invoice requires you to enter a customer name. QuickBooks will ask you if you want to Quick Add "All customers" to your list. Click OK.

3.	Enter each inventory item you created earlier on a separate line of the invoice, and the total quantity sold.

4.	Enter a subtotal line.

Use a subtotal item. See the "Subtotal item" topic in the "Items - your products and services" chapter of the User's Guide for more information.

5.	Enter your GST item and the total GST figure from you cash register.

You should have created this as an other charge item type.

6.	Enter your PST item and the total PST figure from you cash register.

You should have created this as an other charge item type.

7.	Enter the payment items for each payment method, and the total for each method.

For example, if you created payment items for "cash/cheque," "credit card 1," and "credit card 2," enter each one on a separate line with the total amount for that method. QuickBooks automatically makes the payment amount negative on the invoice.

If you're keeping some cash from today's sale in the drawer or spending it, subtract that amount from the "cash/cheques" item, as described in the next step.

8.	If you are not depositing some cash (keeping it in the drawer or spending it), enter it using the cash drawer payment item.

For example, if you received $1000 in cash payments, but had to pay $50 to a delivery person, enter the "cash/cheques" payment item with an amount of $950. Then enter the "cash drawer" payment item with $50 for the amount.

When creating the "cash drawer" payment item, you should have selected "Deposit to" and entered your Cash Drawer account (explained earlier in this document).

Recording overages and shortages on sales summaries

When you enter a summary invoice for your sales, the invoice total should be zero. If not, you have an overage or shortage.

If the invoice total is a negative number, you have an overage.

That is, the amount of your payment items is greater than the amount of your sales on the invoice.

If the invoice total is a positive number, you have a shortage.

That is, the amount of your payment items is less than the amount of your sales.

To account for overages or shortages:

1.	When you enter your summary invoice as described earlier in this document, determine if you have an overage or shortage.

A positive total means you have a shortage, and a negative total means you have an overage.

2.	If you have a positive total (shortage) on the summary invoice, enter the Over/Short item you created earlier with an amount equal to the invoice total, but negative.

The goal is to zero out the invoice. (Also, see "Creating an item for overages and shortages" earlier in this document.)

3.	If you have a negative total (overage) on the summary invoice, enter the Over/Short item with an amount equal to the invoice total, but positive.

The goal is to zero out the invoice.

See the illustration above to see what this looks like on an invoice. To see the effect of this procedure, from the Reports menu, choose Sales Reports, By Item Summary.

Making Deposits (if entering sales summaries)

When you make deposits at your bank, you probably make out separate deposit slips for amounts you'd like to show up separately on your bank statement. You would do the same thing in QuickBooks, in order for your separate payment methods to appear separately when you reconcile the bank account.

To deposit payments (other than American Express):

1.	Choose Make Deposits from the Activities menu.

Important:	To make reconciliation with your bank statement easier, do a separate "Make Deposit" for each payment method such as cash/cheques, Mastercard, and so on.

2.	In the Payments to Deposit window, click the payments for one payment method only.

For example, click on all your Visa payments, complete all the steps in this procedure, then start over and deposit the payment from one credit card, then another credit card, and so on.

If you've set up your cash drawer payment item correctly, you will not see that payment item in the Payments to Deposit window (when creating the item, you should have selected "Deposit to" and entered the cash drawer "bank" account). See how to create payment items in "Creating items to handle sales summaries" earlier in this document.

If this is a deposit for credit card payments, you may want to group more than one day's credit card payments depending on when your bank usually credits your account. For example, let's say your bank credits your account for credit card payments every Tuesday and Thursday. You would deposit Friday's, Monday's, and Tuesday's credit card payments on Tuesday in QuickBooks (even though you may take the payments to the bank every day).

3.	Click OK.

4.	In the Make Deposits window, choose the account you want to deposit the cheque to, for example, Chequing.

5.	Click OK.

6.	To check the effect of this procedure in QuickBooks, choose Reconcile from the Activities menu.

You should see the total for each payment method listed on a separate line in the Deposits section of the Reconcile window. You will only be able to recognize them by the date and the amount of the deposit.

To deposit American Express payments:

You'll need to make an adjustment to account for the fee deducted by American Express when it sends you your payment.

See "Depositing American Express charges" topic in the "Receiving and depositing payments" chapter of the User's Guide.

For more information, see the:

"Receiving and depositing payments" chapter of the User's Guide

Recording customer returns

To record returns of inventory items when you're entering sales summaries, follow this example.

Example

Let's say that today a customer returns one inventory item, paid in cash, for $10 with $.70 GST. So you return $10.70 in cash to the customer. To account for this, you need to subtract the appropriate amounts from four places on today's sales summary invoice:

Subtract one from the quantity sold of that item today (or the next time that item is sold)

Subtract $10 from the sales amount for that item.

Subtract $.70 from the GST total.

Subtract $10.70 from today's cash payments total.

If the return was associated with a credit card, follow this example but be sure to subtract the amount of the return from that credit card's payment item total on the invoice.

Issuing purchase orders

If you're using the QuickBooks inventory feature, ideally, you should also be using purchase orders. When you use purchase orders, QuickBooks automatically fills in your purchase price if you entered it when creating an inventory item. Using reports, you'll see the items you have on order and when they're due to be received.

You can receive against purchase orders, and QuickBooks will remember the quantity you have on order with each vendor. Also, QuickBooks will automatically keep track of partial receipts when, for example, you receive only half of what you ordered.

Tip: When you click the QuickReport button on the Items window, you can get a report showing the opening and ending quantity on hand, every transaction, and every open purchase order.

For more information, see the:

"Purchase order overview" topic in the "Purchase orders" chapter of the User's Guide

"Inventory" chapter of the User's Guide

Taking a physical inventory and adjusting quantities

Many product sales businesses take a physical count of inventory periodically to make sure they are valuing their inventory correctly and using the proper controls. You can use QuickBooks to create a physical inventory worksheet. This worksheet includes item names, descriptions, and quantity on hand of each item with spaces for you to enter the physical count of each item.

If you have a discrepancy, possibly due to theft or damage, you can adjust your quantity on hand in QuickBooks.

For more information, see the:

"Reports" chapter of the User's Guide

"Adjusting value and quantity on hand" topic in the "Inventory" chapter of the User's Guide

Finding out how your company is doing through reports

QuickBooks has over 70 preset reports, which you can customize to fit your needs. The most important reports for any business are the Profit and Loss and Balance Sheet.

Some useful reports for product sales businesses

This list describes some reports which any product sales business might find useful. All these reports are accessed from the Reports menu:

Balance Sheet

Profit and Loss

Accounts Receivable

Sales Reports

If you're entering every sale in QuickBooks, sales reports can show your total sales by item, by customer, or by "Rep" (salesperson).

If you're entering summaries of sales, the relevant sales reports for you would be the By Item Summary or By Item Detail. These will show you the totals of whatever breakdown you used to enter summaries in QuickBooks.

Inventory Reports

-	Inventory Valuation

-	Stock Status by Item

-	Physical Inventory Worksheet

-	Inventory Price List

If you're entering every sale in QuickBooks, you can get reports that show your backorders, layaways and purchase orders. See "Entering every sale in QuickBooks" for more information.

For more information, see the:

"Reports" chapter of the User's Guide

Helping us help you

We'd like to know your special concerns and the problems you run into when trying to make QuickBooks work in your business. We also want to know how useful "Product sellers using QuickBooks inventory" was in helping you fit QuickBooks to your needs.

Please use this sheet to mail or fax us your comments. If possible, please also attach specific comments marked on the printed version of this document. Mail the completed form and any attachments to:

Intuit Canada, Ltd.

Industry Feedback

P.O.Box 4165

Edmonton, Alberta

Canada

Or fax your comments to us at 1-800-387-4285

Some information about your business

Name:

Business name:

Address:

Phone:

Number of employees:

My business is a: __ Sole proprietorship __ Partnership __ Corporation

What other needs do you have, specific to your type of business, that were not covered in this document?

Do you have any tips for other people in your field who use QuickBooks?

Which two or three topics did you find most useful in this document?

May we call you to discuss your comments?

___ yes    ___ no


Property management companies

Overview for property managers

Before you begin

Setting up a 'properties company' in QuickBooks

Setting up owners and tenants

Setting up the properties

Your typical business transactions

Creating property and tenant reports

Other QuickBooks tips for property managers

Helping us help you

Overview for property managers

As a property manager, you understand the importance of keeping accurate and easy-to-maintain accounting records. After all, you're entrusted to keep clear, accurate records of your clients' properties. Given all the responsibilities you have and the significant amount of paperwork entailed in a property management firm, you need a hassle-free accounting system.

That's where QuickBooks comes in. QuickBooks will help you meet most of your financial management needs, including:

Tracking each property's income and expenses

Assessing finance charges for late rental payments

Creating purchase orders for repair and maintenance work

Keeping the books for the properties you manage separate from your management company

As a property manager, you have a unique set of circumstances in your business. You act as an agent on behalf of the property owners whom you represent. You collect rent and security deposits from the tenants. From the receipts of the property, you pay for the maintenance and expenses of the buildings you manage. After paying for the maintenance and expenses of the properties, you generally retain a portion of the receipts of the properties and then send cheques to the property owners for the portions due them.

Essentially you are running two companies:

Your clients' properties with their income and expenses (the properties company)

Your own company with its income from management fees and its own overhead expenses (the management company)

It's critical that you keep the transactions of the properties company separate from your management company. Thus you will need to:

Set up a QuickBooks company (the properties company) for the properties themselves.

Important:	This document describes how to set up the properties company only.

Set up a separate QuickBooks company (the management company) for your management firm.

Set up your management company as a Service type of business (not Property Management). This document does not describe how to create and set up the management company. However, there are tips for setting up your management company in "Setting up a separate management company" later in this document.

Before you begin

This document gives you information on how to use QuickBooks for your special needs - we won't repeat what's already in the standard information you receive with QuickBooks. Instead, you'll see references to show where you can find complete information and details on using QuickBooks features.

Printing your industry document

If you're looking at this document onscreen, you're now in a "QuickBooks and Your Industry" window.

To print this document:

From the File menu, choose Print... or Print Topic.

If you got to this Help window from the interview, close the Help window to return to the interview.

To see other industry documents:

Click any of the industries listed in the contents.

Understanding QuickBooks terms

QuickBooks uses terms you can readily understand: accounts payable/receivable, vendors, and employees. But there are some special terms you need to be aware of:

Chart of accounts

A list of accounts that you use to track how much money your company has, how much money it owes, how much money is coming in, and how much is going out.

Item list

A list of items that includes what your company charges for (such as rent, security deposits).

Bill

A bill is what you receive from your vendor or supplier, from which you will pay that vendor or supplier.

Statements

Use the QuickBooks statement as your billing method to bill customers for charges (such as rent, late fees) accumulated over a certain time period.

Class

A way to categorize income and expenses. For example, you should categorize income and expense by a class that you define, such as a property address, for example 18 Rolling Meadows.

Important

The information in this document was compiled from the experiences and suggestions of other QuickBooks users in your type of business. Your own needs may vary considerably, and only you and your accountant understand the unique needs of your business.  Ultimately, you are responsible for your own books.

Therefore, we encourage you to have your accountant look over the setup suggested in this document, and we suggest that you give QuickBooks a thorough "trial run" early in the process. The best way to ensure that you have set up QuickBooks optimally for your business, and that it will provide all the information you need, is to enter a small number of your standard transactions in QuickBooks. Then try running all the reports you may eventually need.

While we can give you technical support on how QuickBooks works, our technical support representatives are not industry experts and cannot give you specific accounting advice. If you have questions regarding accounting issues specifically related to your industry, we recommend you consult either an accountant, industry expert, or professional association.

Setting up your QuickBooks company

The QuickBooks EasyStep Interview asks you questions about your business, and uses your answers to help you set up your property management firm in QuickBooks. We recommend the interview as the easiest way to get started and to customize QuickBooks for your type of business.

If you choose not to use the EasyStep Interview, you should follow the setup directions in the "Setting up a QuickBooks company" chapter of the Getting Started Guide.

Setting up a QuickBooks company to track your properties

QuickBooks uses generic terms for some things which you'll need to match to your own industry terms. Here are some important property management terms and how you'll set them up in QuickBooks:

Set up property owners as vendors, because you pay the property owners their share of the proceeds from the property.

Set up your management company (your other QuickBooks company) as a vendor, because you pay your management company its management fees, lease commissions, etc. This is in addition to creating a separate QuickBooks company for the management company.

Set up tenants as customers in QuickBooks, because you receive payments from your tenants.

Set up properties in three ways: as classes, chequing subaccounts, and Accounts Receivable subaccounts.

By setting up a class for each property, you can associate income and expense transactions to the appropriate property. By setting up a chequing subaccount and an Accounts Receivable subaccount for each property, you'll be able to keep cash and receivables for each property separate from cash and receivables from other properties.

This setup is discussed in more detail in the following two sections.

Setting up a separate management company

You'll set up your management company as a separate QuickBooks company. In the management company, your customer will be the properties company. Your management company will have its own set of employees and vendors for its overhead costs, and can be set up as a Service type of business.

Every month in your properties company you'll enter cheques for the management fees, lease commissions, and optionally, late fees.

Then in your management company (your other QuickBooks company), you'll enter a cash sale to record the income you received from the properties company. The properties company is the customer of the management company.

Important:	The remainder of this document applies only to the properties company, not to the management company.

For more information, see the:

"Service Businesses" topic in the "QuickBooks and your industry" document

Setting up owners and tenants

Setting up property owners and your management company as vendors

You keep information about your vendors and subcontractors in the Vendor list. Your Vendor list will include property owners, your own management company, and any other businesses you need to pay from the properties company, including taxes, mortgage, insurance, repairs, janitor, landscaping, homeowner associations, and so on.

For more information, see the:

"Vendors" topic in the "More QuickBooks lists" chapter of the User's Guide

Adding customized fields to describe property owners

For vendors who are property owners, you might want to set up these customized fields in the New Vendor window:

Reporting preference (how often the property owner wants to receive reports)

Reserve (how much reserve the property owners want you to retain for expenses for their properties)

Accountant name (property owners might want their accountants informed of certain issues or decisions)

Customized fields are optional; these are suggestions only.

For more information, see the:

"Adding and using customized fields" topic in the "Working with lists" chapter of the User's Guide

Setting up tenants as customers

You will set up tenants as customers in the properties company.

You can optionally set up customer types to help you distinguish among different types of tenants. The customer types do not appear on QuickBooks forms, but you can create reports based on the information. You can also print mailing labels and statements based on customer type.

Here are suggested customer types for the properties company:

Sublet - A tenant who is subletting the property from a tenant.

Tenant - A person or company leasing a property.

Residential manager - A tenant who gets a discount on rent in return for doing some on-site residential management (such as collecting rent or taking care of small repairs).

Depending on their workload, some residential managers may be considered vendors (contractors) or employees. In this case, you would not set up a customer type for them.

Adding customized fields for tenants

In addition to the standard information you can set up for tenants, you might want to set up customized fields in the New Customer window. Many property managers are interested in recording information on their tenants, such as:

employer

annual salary

credit rating

marital status

pets

children

smoking

Or in the case of commerical tenants:

business name

business owner's name and residential address

tenant's broker, lawyer and/or accountant

You might also want to use the customer notepad to record information about the tenant's references or emergency contact. Although you can print the customer notepad, you can't create a report of all tenants with this information.

For more information, see the:

"Adding and using customized fields" topic in the "Working with lists" chapter of the User's Guide

"Keeping notes about a customer or job" topic in the "More QuickBooks lists" chapter of the User's Guide

Setting up the properties

You need to keep the financial transactions on each property separate from the financial transactions of other properties. To do this, you'll need to set up the following for each property:

a class

a chequing subaccount

an Accounts Receivable subaccount

Decide how you want to refer to each property in QuickBooks. You could refer to the property in many ways:

by name, such as Sulgrave Manor

by address, such as 101 Middlefield Rd.

or by code, such as Smith02 (the second property of property owner John Smith)

The examples here refer to properties by address, but choose the way that best suits your business.

Sample setup for properties

For example, a QuickBooks class list for a properties company with four properties might look like this:

101 Middlefield Rd.

18 Rolling Meadows

1515 Chesapeake St.

1507 Chesapeake St.

You may have an account called "Chequing" with subaccounts as shown here:

Chequing

-	101 Middlefield Rd.

-	18 Rolling Meadows

-	1515 Chesapeake St.

-	1507 Chesapeake St.

You may have an "Accounts Receivable" account with subaccounts as shown here:

Accounts Receivable

-	101 Middlefield Rd.

-	18 Rolling Meadows

-	1515 Chesapeake St.

-	1507 Chesapeake St.

Setting up classes

QuickBooks classes give you a way to associate income and expenses to your properties. By setting up properties as classes, you can generate a Profit and Loss by Class report that shows income and expense by property.

Once you set up the classes, you can write cheques for a property. For example, you can write a cheque for advertising the rental unit and assign the expense to the class (property); you don't need to specify a tenant.

Setting up and using classes

Make sure class tracking is on.

Create a class for each property.

Assign a class for every income and expense transaction.

-	If you enter a bill, a cheque, a credit card charge, or a statement charge, be sure to choose the appropriate class (property) for every item from the Class drop-down list.

-	If you forget to assign a class, the transaction appears as "Unclassified" on your reports. If you find unclassified or incorrectly classified transactions, you can correct the classification by locating the item, choosing the correct class for the item, and clicking OK. (To move directly to the transaction from within a report, move your cursor to the correct transaction. The cursor becomes a magnifying glass. Click the magnifying glass to QuickZoom to the original transaction.)

If you're using the QuickBooks payroll feature, and the employee does work for a specific property, be sure to assign a class to your payroll items or pay cheques.

For more information, see the:

"Classes" topic in the "More QuickBooks lists" chapter of the User's Guide

"Set up payroll" topic in the "Setting up a QuickBooks company" chapter of the Getting Started Guide

"Payroll preferences" topic in the "Customizing preferences" chapter of the User's Guide

Setting up subaccounts in the chequing account

You will need to keep the money for each property you manage separate from the money of other properties. To keep the money separate, create a chequing subaccount for each property.

Important:	If you have multiple chequing accounts set up in QuickBooks, make sure to set up a subaccount for each property that has cash in each chequing account.

To set up chequing subaccounts:

1.	From the Lists menu, choose Chart of Accounts.

2.	If you haven't set up a chequing account yet:

Click the Account button, then choose New.

The type of the account should be Bank. If it isn't, choose Bank from the drop-down list.

Enter the name of the account, for example "Chequing."

Leave the Opening balance as zero (0).

Click Next.

3.	Set up a subaccount for each property.

The type of the subaccount should be Bank. If it isn't, choose Bank from the drop-down list.

Enter the name of the subaccount, for example, the name of the first property, such as "18 Rolling Meadows."

Click the Subaccount of checkbox.

From the drop-down list, choose the parent account, such as Chequing.

Enter the opening balance.

Click Next to set up another subaccount or click OK to leave.

Setting up the Accounts Receivable account and subaccounts

You will need to keep the accounts receivables for each property you manage separate from the accounts receivables of other properties. To keep the receivables separate, create an Accounts Receivable subaccount for each property.

To set up an Account Receivable account and subaccounts:

1.	From the Lists menu, choose Chart of Accounts.

2.	If you haven't set up an Accounts Receivable account yet:

Click the Account button, then choose New.

For the account type, choose Accounts Receivable from the drop-down list.

Enter the name of the account, for example "Accounts Receivable."

Click Next.

3.	Set up subaccounts for each property:

For type of account, choose Accounts Receivable from the drop-down list.

Enter the name of the subaccount, for example, the name of the first property, such as "18 Rolling Meadows."

Click the "Subaccount of" checkbox.

From the drop-down list, choose the parent account "Accounts Receivable."

Click Next to set up another subaccount or click OK to leave.

4.	Assign statement charges to the appropriate Accounts Receivable subaccount.

See "Using billing statements for customer charges" in the next section.

Important:	When you enter a statement charge, be sure to choose the appropriate Accounts Receivable subaccount from the Account drop-down list. If you assign the statement charge to the wrong Accounts Receivable subaccount, you can go back and correct it.

Your typical business transactions

Here are some of the typical procedures you'll do in QuickBooks as a property manager:

Account for any management company money

Create items for your services

Use billing statements for customer charges

Record rent and other fees

Enter security deposits

Receive payment for rent and other charges

Write cheques for property expenses

Pay the management company and property owners

The following sections describe each of these in detail.

Accounting for any management company money

When you opened the chequing account for the properties company, you might have put money from the management company into the account to get it started. If you did this, you'll need to account for that money which belongs to the management company. You'll need to create:

a liability account for the portion that is eventually due to the management company

a subaccount for the management company in the chequing account

To account for your management company money in the properties company:

1.	Set up the liability account:

From the Lists menu, choose Chart of accounts.

Click the Account button, then choose New.

For the account type, choose Long term liability.

Enter the name of the account, for example, "Owe to mgt company."

Enter the Opening balance.

Click OK.

2.	Set up a subaccount for your management company equity.

Click the Account button, then choose New.

For the account type of the account, choose Bank.

Enter the name of the subaccount, for example, "Mgt company."

Click the "Subaccount of" checkbox.

From the drop-down list, choose your bank account, such as Chequing.

Enter the Opening balance.

Click OK.

For more information, see the:

"Adding accounts to QuickBooks" topic in the "Your chart of accounts" chapter of the User's Guide

Creating items for your services

The items on your QuickBooks Item list represent the services you do. When you need to charge rent to a tenant, you choose an item from the Item list. QuickBooks prints the name of the item and its description. If you enter a quantity for the item, QuickBooks also figures out the total and assigns that total to the appropriate income or expense account.

Here are some suggested items for your properties company:

Rent

Repairs and maintenance

Garage rent

QuickBooks has many types of items, including service items, inventory items, other charge items, and so on. You can create all of the items suggested above as service items.

When you set up your items, you'll need to determine what account you want to associate each item with. For example, you might associate these items with the following accounts:

Rent item with Rental income account (preset if you chose property management as your kind of business)

Repairs and maintenance with Other income account

Garage item with Rental income account (or Garage income account if you want to track it separately on the Profit and Loss Report)

For more information, see the:

"Creating items" topic in the "Items - your products and services" chapter of the User's Guide

Suggested items and subitems if you manage commercial properties

If you manage commercial properties, you might have to charge tenants for common area maintenance (CAM) fees. Usually you'll want to track CAM fees separately and you'll probably want to set up subitems for the different categories of fees.

You would set up an item called CAM (Common area maintenance) with subitems, such as:

Utilities

Parking area maintenance

Insurance

Condo association fee

The CAM item and subitems would be associated with an income account such as "CAM income."

Using billing statements for customer charges

In QuickBooks you have two main ways to charge a customer for a service: invoices or billing statements. Invoices are recommended for businesses like consulting, construction, advertising. The billing statement is recommended for the properties company.

A billing statement is similar to a credit card statement; it lists the charges and payments a tenant has accumulated over a period of time. You enter charges when they occur. If there are any special charges, such as tenant-related damages like a clogged drain or a broken window, you can enter them as statement charges, and print and send the statements.

Important:	Don't confuse billing statements with reminder statements. A reminder statement is used with invoices and summarizes invoices sent during a specific period.

QuickBooks billing statements include the following:

balance forward

date, number, amount, and description of each statement charge

date and amount of each payment received

a record of finance charge invoices

Every time you want to charge a tenant (for rent, late fees, and so on), you'll enter a statement charge in the customer register, using an item from your Item list, such as Garage Rent. You need to enter a separate charge for each item. You can memorize the statement charge to have QuickBooks automatically enter the monthly rental or other charges.

For more information, see the:

"Using billing statements" topic in the "Sales and sales forms" chapter of the User's Guide.

"Viewing the customer register" topic in the "Accounts receivable management" chapter of the User's Guide

Recording rent and other fees

You'll use the customer register to enter statement charges for rent, tenant-related damages, late fees, and so on. Before you can enter a statement charge, make sure you have an item set up for anything you want to charge for.

To record rent and other fees:

1.	From the Lists menu, choose Customers:Jobs.

2.	In the Customer:Job list, select the tenant you want to enter a charge for.

3.	Click the Activities button, then choose Enter Statement Charges.

QuickBooks displays the register for that customer.

4.	Click in the blank entry at the end of the register.

5.	Fill in the register fields for the new charge:

From the Item drop-down list, choose the item, such as Rent. If the appropriate item is not on the list, you can set it up "on the fly."

In the Rate field enter the amount.

For the Account drop-down list, choose the Accounts Receivable subaccount for the property.

Choose the appropriate property from the class drop-down list.

Enter the due date.

6.	Click Record.

QuickBooks keeps a running balance for the customer.

7.	(Optional) If you want to memorize the transaction, choose Memorize Statement charge from the Edit menu.

You might want to memorize rent charges since they occur regularly. For more information, see "Receiving payment for rent and other charges" later in this document.

8.	(Optional) Print the statement.

From the File menu, choose Print Statements.

Memorizing rent charges

Because rent charges are recurring, you may want to memorize the regular rent charge for a tenant. You can have the transaction automatically entered every month or you can simply be reminded to enter the transaction yourself.

In addition, you can memorize all rent charges, group the memorized rent charges, and have them entered automatically.

For more information, see the:

"Memorized transactions" topic in the "More QuickBooks lists" chapter of the User's Guide

Handling security deposits

Most property owners require a deposit from their tenants at the beginning of a lease period. To track receipt of security deposits, you need to create a liability account for tracking deposits. Deposits are liabilities because you might return all or some of the deposit to the tenant at the end of the lease depending on the condition of the property.

Recording the deposit

To enter a security deposit:

1.	From the Activities menu, choose Make Deposits.

2.	In the Deposit to field, choose the chequing subaccount for the property.

3.	In the Received from column, choose the tenant from the drop-down list.

4.	In the Amount column, enter the amount.

5.	In the From Acct. column, choose the liability account for security deposits.

6.	(Optional) In the Memo, Chq No., and Payment Method columns, enter the appropriate information.

7.	In the Class column, choose the property from the drop-down list.

8.	Click OK.

Paying back the deposit

If you keep part of the security deposit for damages

If you had to pay damage expenses out of the security deposit, before you pay the remainder to the tenant, do this in QuickBooks:

In the account register for the security deposit liability account, reduce the liability by the amount of the damages.

Enter the tenant as the payee.

Enter a "damages" expense account in the account field.

To pay a tenant out of a security deposit account:

1.	From the Activities menu, choose Write Cheques.

2.	For the bank account, choose the property subaccount of your chequing account.

3.	For the Pay to the Order of field, choose the tenant's name from the drop-down list.

4.	For the Expense account, choose the long term liability account for security deposits, and enter the amount of the deposit on this line.

5.	If you have to pay interest on the security deposit, enter an "interest paid" expense account on the next line, and enter the amount of the interest.

6.	For the Customer:Job field, choose the tenant's name.

7.	Choose the appropriate property from the class drop-down list.

8.	Click OK.

Assessing late fees

Many property managers assess late fees for rent that is not paid by a specified grace period.

Setting up late fees

You can use the QuickBooks finance charge feature to set up late fees. With the QuickBooks finance charge, you can set up a minimum charge and an annual percentage rate.

To assess a late fee, you'll need to:

Create an income account for the finance charges

Set up finance charges (From the File menu, choose Preferences, then choose Finance Charges.)

Enter a due date when you enter a statement charge (see "Recording rent and other fees" later in this document)

Assess finance charges (see "Assessing late fees" later in this document)

For more information, see the:

"Assessing finance charges" topic in the "Sales and sales forms" chapter of the User's Guide

"Adding accounts to QuickBooks" topic in the "Your chart of accounts" chapter of the User's Guide

Charging for a late fee

Even though you should use billing statements to enter tenant charges such as rent, QuickBooks' finance charge feature records the finance charge on an invoice. You can set the finance charge feature so as to never print the invoice. A record of that finance charge will appear in the customer register as an INV entry, and you'll still be able to print the statement showing the finance charge, and give it to the tenant as a reminder.

The finance charge will remain in accounts receivable until the tenant pays you the late amount.

To assess a late fee:

1.	From the Activities menu, choose Assess Finance charges.

2.	Mark the tenants for whom you want to assess the charges.

3.	Review the assessment date, Accounts Receivable subaccount for the property, and finance charges. If needed, edit them.

4.	Click OK.

Passing costs to a tenant

In some cases you'll want to pass repairs or property costs to a tenant, rather than the property owner. For instance, a tenant arranges with the you to have work done on a property which the tenant agrees to pay for. Or a tenant has damaged a property accidentally. If you have tenants that lease commercial properties, the tenant may be responsible for common area maintenance fees (CAM), such as the utilities on common areas like washrooms and hallways.

You can use QuickBooks to write cheques or enter the bills for such costs. For information on assigning costs to the tenant, see "Writing cheques for property expenses" later in this document.

If you've already written a cheque for some expense that you want to pass to the tenant, follow this procedure.

To charge a tenant for costs:

1.	From the Lists menu, choose Customers:Jobs.

2.	In the Customer:Job list, select the tenant you want to pass the charge to.

3.	Click the Activities button, then choose Use Register.

QuickBooks displays the register for that customer.

4.	Select the appropriate Accounts Receivable subaccount from the Account drop-down list.

5.	Click the Expenses button.

6.	Click Select All or click the Use column for the costs you want to pass to the tenant.

7.	(Optional) If you add markup to the cost, enter the percentage or amount for the markup.

8.	Click OK.

QuickBooks enters the expense in the Customer Register.

9.	Make sure the property appears in the Class field. If it doesn't, select it from the drop-down list.

10.	(Optional) Print the statement.

From the File menu, choose Print Statements.

Receiving payment for rent and other charges

Once you receive the rent and other payments from your tenants, you need to record the payments in QuickBooks.

To make reconciliation of banking records easier:

Manually sort rent cheques by property.

Enter and deposit the rent cheques in QuickBooks by property.

That is, do a separate deposit transaction in QuickBooks to deposit all the cheques from one property. Then go on to do the same for each property.

Make your actual bank deposits by property.

That is, make out a separate deposit slip for each property's cheques.

If you follow this recommendation, you will see bank deposits for each property listed separately when you reconcile your account in QuickBooks, as well as on your bank statement.

To receive payments by property:

1.	From the Activities menu, choose Receive Payments.

2.	From the Account drop-down list, choose the Accounts Receivable subaccount for the property.

3.	From the Customer:Job drop-down list, choose the tenant.

4.	For the amount, enter the amount of the payment.

5.	If you have multiple payments on a property (for example, for an apartment with several rental units), click "Group with other undeposited funds."

Click Next.

Continue entering all the payments for the property.

To make deposits in QuickBooks:

1.	From the Activities menu, choose Make Deposits.

The Payments to Deposit window appears.

2.	Select the payments to deposit and click OK.

The Make Deposit window appears.

3.	In the "Deposit to:" field, choose the chequing subaccount for the property.

4.	Click OK.

For more information, see the:

"Recording an invoice or statement payment" topic in the "Receiving and depositing payments" chapter of the User's Guide

"Depositing payments" topic in the "Receiving and depositing payments" chapter of the User's Guide

Writing cheques for property expenses

You need to track expenses carefully so that you know exactly what expenses are for which properties. In QuickBooks, tracking expenses by property is simple because the properties are on the Class list.

In QuickBooks, you have two ways to pay for property expenses. You can enter the bills for expenses and then pay the bills when they're due. Or you can simply write a cheque when you receive the bill. The second method is recommended for property managers and is the method described in this document.

To write cheques for property expenses:

1.	From the Activities menu, choose Write Cheques.

2.	In the Bank Account field, choose the chequing subaccount for the property.

3.	In the Pay to the Order of field, select the Vendor name from the drop-down list.

You can Quick Add the vendor if you have not already set up the vendor.

If you are entering a lease commission, the vendor would be your management company.

4.	Enter the amount of the cheque.

5.	In the Account column, choose an expense account from the drop-down list.

For example a maintenance expense could be associated with an expense account called Building maintenance.

A lease commission could be associated with an expense account called Lease commissions.

If the expense is split between two properties, you'll need to write two cheques, one from the chequing subaccount for each property, using the appropriate class for each property.

6.	(Optional) Enter a memo on what the expense is for.

7.	If the expense is for tenant-related charges (you will charge the costs to the tenant), select the tenant's name from the Customer:Job list.

Make sure the small invoice icon appears. This means the cost for the expense can be passed-through to the tenant when you access the customer register.

8.	If the expense is a lease commission or a normal maintenance cost that should be covered by the income of the property, leave the Customer:Job list blank.

9.	Choose the appropriate property from the class drop-down list.

Important:	It is very important to choose the class so that you can associate the expense with the correct property.

For more information, see the:

"Cheques overview" topic in the "Managing your chequebook" chapter in the User's Guide

"Paying bills" topic in the "Bills" chapter in the User's Guide

"Charging for reimbursable expenses" topic in the "Sales and sales forms" chapter in the User's Guide

"Charging for actual time and costs" topic in the "Sales and sales forms" chapter in the User's Guide (QuickBooks Pro)

Paying the management company and property owners

Since the property management company and property owners are vendors in QuickBooks, you'd enter a cheque to pay the management company or the property owners.

Paying the management company

From the Profit and Loss by Class report, you can determine two important figures to determine the compensation for your management company:

total income

late fees (if the late fees get passed to the management company)

In many cases, the property management fee is a percentage of the total income of the property. By looking at the Profit and Loss by Class report, you can determine the total income for the property. If the management fee is based on the total (gross) income of the property, use this figure to calculate your property management fee. See "Determining the monthly income and expenses for properties" later in this document, under "Creating property and tenant reports."

If your property management company keeps late fees, you can use the report to determine how much to pay the management company for late fees.

Once you have determined the management fees and late fees that should be paid to your management company, write a cheque in QuickBooks with your management company as the vendor.

When you write a cheque for the management fees, associate the expense with the management fee expense account. If you pass the late fees to the management company, create an expense account for late fees and associate the late fee expenses with this account.

Paying the property owners

After you have entered the cheques for fees due to your management company, create another Profit and Loss by Class report to determine how much is due to the property owner.

By looking at this Profit and Loss by Class report (which now takes into account your management fees), you can determine the net income for the property. Use the net income figure to calculate what to pay the property owners. You may also want to print this report to send with your cheque to the owner. See "Determining the monthly income and expenses for properties" later in this document, under "Creating property and tenant reports."

Some property owners receive all of the net income from the property monthly while others might elect to keep a percentage of the net income in their accounts until a reserve is reached.

Important:	Create an expense account called something like "Payment to owner" for associating the payment to the property owners.

Write a cheque with the property owner as the vendor. When you write the cheque, associate the expense with the "Payment to owner" expense account.

If you generate another Profit and Loss by Class report (after writing the cheque to the property owner), you will see the net income for the property. If the property owner receives all the net income for the property, the net income for the property should be zero (0) on the report. If the property owner leaves a reserve in the account, you should see the reserve amount in the net income.

Creating property and tenant reports

QuickBooks has over 70 preset reports, which you can customize to fit your needs. The most important reports for any business are the Profit and Loss and Balance Sheet. To create these for your business, choose them from the Reports menu.

Determining the monthly income and expenses for properties

You'll want to see what the monthly income and expenses are for every property you manage so you can determine your own fee and what's due to the property owner. You'd use a preset QuickBooks report, Profit and Loss by Class, to determine what rental income was received and what expenses were paid on a property.

If your management fee is based on the total income for a property, you'd:

1.	Create the Profit and Loss by Class report to determine the total income on which your management fee is based.

2.	Write the cheque for your management fee and associate the expense with the Management Fee expense account.

3.	Create the Profit and Loss by Class report again to determine the property's net income.

Creating a Profit and Loss by Class report

Creating a Profit and Loss by Class report is simple and easy. The report shows you the income and expenses on each property (class). You can optionally filter the report to show all properties owned by one property owner.

If you've classified every transaction, the report is complete. If you've forgotten to classify a transaction, you'll see a column in the report called Unclassified income. To access the unclassified transaction, place your cursor on the appropriate number in the column. The cursor turns into a magnifying glass. Double-click the magnifying glass to QuickZoom to the account detail and then double-click the magnifying glass again to QuickZoom to the transaction. You can then classify the transaction and regenerate the report.

To generate a Profit and Loss by Class report:

1.	From the reports menu, choose Profit and Loss by Class.

2.	Enter the applicable time period by entering the From and To fields or choose the date in the Dates drop-down list.

3.	(Optional) Click Filters.

4.	Select Class on the Filters list. Next, from the Class field choose Selected Classes from the drop-down list.

5.	Select each property that is owned by the property owner and click OK.

6.	Click OK.

7.	Click Memorize.

8.	Enter the name of the report, such as "John Smith Properties P&L" and click OK.

9.	Click Print to print the report.

Other reports

Although Quickbooks cannot create a traditional rent roll, QuickBooks can create several reports of interest to property managers:

security deposit transactions for a property

tenant delinquencies for all properties

cash balance by property

cash transactions by property

tenant receivables by property

tenant receivables detail by property

To create a report on security deposit transactions for a property:

1.	From the Reports menu, choose Transaction Detail - by Date.

2.	Enter the applicable time period.

Use the Dates drop-down list or enter the dates in the From and To fields.

3.	Click Filters.

4.	For the Source, choose the name of the chequing subaccount for the property.

Scroll past All Accounts, Selected Accounts, and the list of accounts by type, until you see the chequing account and its subaccounts.

5.	For the Account, choose the liability account for Security Deposits.

6.	(Optional) Memorize the report.

Click Memorize. Name the report something like "18 Rolling Meadows - Security deposits."

7.	Click OK.

To create a cash balance by property:

1.	From the Reports menu, choose Balance Sheet - Standard.

2.	Click Filters.

3.	Select Account on the Filters list. Next, from the Account field, choose Selected Accounts.

4.	Select the chequing subaccounts for the properties owned by the property owner and click OK.

5.	Click OK.

6.	Click Memorize and enter a name for the report, such as "John Smith Properties Cash Balance." Click OK.

7.	Click Print to print the report.

Tip: To look up a balance for any property quickly, from the Lists menu, choose Chart of Accounts. Look at the chequing subaccount for the property.

To create a report of cash transactions by property

1.	From the Lists menu, choose Chart of Accounts.

2.	Select the chequing subaccount for the property.

3.	From the Reports menu, choose QuickReport.

4.	If you want to see transactions for more than one property, filter the report.

Click Filters. In the Account field, choose selected accounts, and check the chequing subaccount for each property you want to see on the report.

5.	Click Memorize and enter a name for the report, such as "18 Rolling Meadows Transactions." Click OK.

6.	Click Print to print the report.

Accounts Receivable reports

You can create many reports on Accounts Receivable for all properties or selected properties. Here are a few examples.

To create a report of tenant receivables by property:

1.	From the Report menu, choose A/R - Customer Balance Summary.

2.	Click Filters.

3.	Select Account on the Filters list. Next, from the Account field, choose Selected Accounts.

4.	Select the Accounts Receivable subaccount for the property and click OK.

You can also see tenant receivables for all properties by selecting all the property A/R subaccounts instead of just one.

5.	Click OK.

6.	Click Memorize and enter a name for the report, such as "18 Rolling Meadows Receivable Summary." Click OK.

7.	Click Print to print the report.

To create a report of tenant receivables detail by property:

1.	From the Report menu, choose A/R - Customer Balance Detail.

2.	Click Filters.

3.	Select Account on the Filters list. Next, from the Account field, choose Selected Accounts.

4.	Select the Accounts Receivable subaccount for the property and click OK.

You can also see tenant receivables detail for all properties by selecting all the property A/R subaccounts instead of just one.

5.	Click OK.

6.	Click Memorize and enter a name for the report, such as "18 Rolling Meadows Receivable Detail." Click OK.

7.	Click Print to print the report.

To create a report on tenant delinquencies for all properties:

1.	From the Reports menu, choose A/R reports - Collections Report.

The report shows the tenant with overdue balances, the tenant phone number, and the number of days the balance is overdue.

QuickBooks has many other preset reports, which you can customize to meet your needs.

For more information, see the:

"Reports" chapter in the User's Guide

Other QuickBooks tips for property managers

This section describes some QuickBooks tips for property management firms:

Setting up tickler items

Creating budgets

Setting up tickler items

Besides collecting rent in a timely way, you may need to keep track of many non-financial details. You can use the To Do notes feature to keep track of these details.

For example, you could use to the To Do notes to remind yourself of:

expired leases

when to increase rents

insurance expiration

regularly scheduled maintenance (painting, gutters, and so on)

For instance, when you set up a new lease or a new insurance policy, make sure to add a To Do item so you remember when the lease expires or when you need to renew the insurance policy.

For more information, see the:

"To Do notes" topic in the "More QuickBooks lists" chapter of the User's Guide

Creating budgets

By setting up a budget, you can get an understanding of the costs you have committed for the fiscal year and the income you're projected to make.

You can set up budgets that show your projected income and expenses and your projected account balances. You can then can compare your actual income and expenses or your actual account balances against your plan by using budget reports.

You can set up budgets for each property:

From the Activities menu, choose Set Up Budgets.

Choose the fiscal year for which you want to set up a budget.

Choose the account, for example, the building repairs expense account.

Leave the Customer:Job field blank.

From the class drop-down list, choose the property (class).

Enter the amount for the first month.

(Optional) Click Fill Down.

In the Fill Down window, enter an amount or percentage.

Click OK.

Click Save to save the budget.

Click OK to close the Set Up Budgets window.

You can get various budget reports from the Reports menu. Filter the reports by class to get budget data for a particular property.

For more information, see the:

"Budgets" chapter in the User's Guide

Helping us help you

We'd like to know your special concerns and the problems you run into when trying to make QuickBooks work in your business. We also want to know how useful "Property management companies" was in helping you with QuickBooks.

Please use this sheet to mail or fax us your comments. If possible, please also attach specific comments marked on the printed version of this document. Mail the completed form and any attachments to:

Intuit Canada, Ltd.

Industry Feedback

P.O.Box 4165

Edmonton, Alberta

Canada

Or fax your comments to us at 1-800-387-4285


Some information about your business

Name:

Business name:

Address:

Phone:

Number of employees:

My business is a: __ Sole proprietorship __ Partnership __ Corporation

What other needs do you have, specific to your type of business, that were not covered in this document?

Do you have any tips for other people in your field who use QuickBooks?

Which two or three topics did you find most useful in this document?

May we call you to discuss your comments?

___ yes    ___ no


Real estate brokers

Overview for real estate brokers

Before you begin

Setting up your QuickBooks company

Organizing your income, expenses, buyers, sellers and properties

Setting up clients and properties as "customers" and "jobs"

Setting up agents as "vendors"

Using classes to track different segments of your business

Creating items

Tracking property transactions in QuickBooks

Customizing your sales receipt

Paying your agents and charging for office services

Managing properties

Monitoring your business with reports

Other QuickBooks tips for real estate brokers

Helping us help you

Overview for real estate brokers

As a real estate broker, you have some basic needs from your accounting system. QuickBooks can help you meet many of these needs, including:

Keeping track of the properties that are pending sales

Recording the commission or transaction fees you receive when a sale closes

Keeping track of your expenses

Keeping track of what your agents owe you for rent and other expenses

Analyzing the performance of your agents

Analyzing your profitability

Keeping track of property management transactions

Before you begin

This document gives you information on how to use QuickBooks for your special needs - we won't repeat what's already in the standard information you receive with QuickBooks. Instead, you'll see references to show where you can find complete information and details on using QuickBooks features.

Printing your industry document

If you're looking at this document onscreen, you're now in a "QuickBooks and Your Industry" window.

To print this document:

From the File menu, choose Print... or Print Topic.

If you got to this Help window from the interview, close the Help window to return to the interview.

To see other industry documents:

Click any of the industries listed in the contents.

Understanding QuickBooks terminology

QuickBooks uses some standard terms that can be used in all industries. As a real estate broker, you need to know how to apply QuickBooks' terms to your industry. Here are some QuickBooks terms and how to apply them to a real estate brokerage business:

Customer

The party that your brokerage firm is representing. This party is either buying or selling a property.

Vendor

Your agents. By setting up agents as "vendors", you can write commission cheques to your agents.

Job

Name of the property involved in a transaction. To identify the property in a meaningful way, you might want to use the property's address or perhaps the MLS number.

Cash Sales Receipt

By using a cash sales receipt, you can keep track of exactly how much money you received from each party and for what property transactions. When a sales offer is made, you create a sales receipt and mark it as "pending." This lets you keep track of how much money you expect to receive from the transaction without this potential income affecting account balances and reports. At close of a sale, you mark the sales receipt as "final." If the transaction does not go through, you can simply delete (or void) the sales receipt.

Item

When you create a sales receipt in QuickBooks, you choose items from an Item list and QuickBooks fills in the rest of the details. As a real estate broker, you might want to create items that represent the commissions that you will receive as well as items for disbursements so you can keep track of exactly how much you expect to receive from the parties to the sale. QuickBooks uses the information you record about your items to automatically associate transactions with the right income account.

Bill

A bill is what you receive from a supplier and from which you will pay the supplier. For example, your electricity bill or your cleaning bill.

Important

The information in this document was compiled from the experiences and suggestions of other QuickBooks users in your type of business. Your own needs may vary considerably, and only you and your accountant understand the unique needs of your business.  Ultimately, you are responsible for your own books.

Therefore, we encourage you to have your accountant look over the setup suggested in this document, and we suggest that you give QuickBooks a thorough "trial run" early in the process. The best way to ensure that you have set up QuickBooks optimally for your business, and that it will provide all the information you need, is to enter a small number of your standard transactions in QuickBooks. Then try running all the reports you may eventually need.

While we can give you technical support on how QuickBooks works, our technical support representatives are not industry experts and cannot give you specific accounting advice. If you have questions regarding accounting issues specifically related to your industry, we recommend you consult either an accountant, industry expert, or professional association.

Setting up your QuickBooks company

The QuickBooks EasyStep Interview asks you questions about your business, and uses your answers to help you set up your real estate agency in QuickBooks. We recommend the interview as the easiest way to get started and to customize QuickBooks for your type of business.

If you choose not to use the EasyStep Interview, you should follow the setup directions in the "Setting up a QuickBooks company" chapter of the Getting Started Guide.

Organizing your income, expenses, buyers, sellers and properties

When you set up your brokerage firm in QuickBooks, you need to think about the ways that you and others (such as your accountant, stockholders, clients, and their lawyers) want to look at your business. For example, do you want to see a profile of your clients? Do you want to look at how many sales of a particular type of property your company closed? Do you want to see which lawyers you are dealing with? QuickBooks lets you organize your business in any way that works for you.

QuickBooks provides powerful features that let you look at your business in great detail:

The Customer:Job list, with customer types, lets you keep track of your customers (buyers and sellers) and the properties that you negotiate for them. By listing each purchase or sale that you negotiate for a customer as a separate "job," you can also track the commission that you receive for each property.

Classes let you segment your business into divisions or categories that make sense to you. For example, you can divide your business by the names of the agents involved in the transactions or you can divide it in more general terms such as commercial or residential. The way you use classes depends on your information needs.

Items let you track the fees that you want to collect or disburse.

The following sections give you more information about these and other features.

Setting up clients and properties as "customers" and "jobs"

In QuickBooks, your customers are the people you are providing a service to. In the case of real estate brokers, your customers are the buyers and sellers that your brokerage firm is representing.

Real estate brokerage firms often handle more than one type of property transaction for their clients. For example, the same client will both sell one house and then buy another one. You'll want to keep track of the commission income that you receive for each property associated with your client. You can enter the property in QuickBooks as a job.

In QuickBooks, information about both your clients (customers) and properties (jobs) is stored in the Customer:Job list. Before setting up specific customers and jobs, you should take a look at how you want to categorize your customers by defining customer types.

Do you want to track customers by type?

Customer types let you categorize your clients in any way that is meaningful for your brokerage firm. For example, you might want to classify your customers as "residential" or "commercial." Then you can see reports organized by different types of customers you deal with.

You can also print mailing labels sorted by customer type. For example, if you have residential and commercial clients, you may want to send a flyer to only your residential clients.

Examples of customer types for real estate brokers

You may want to categorize your customers in various ways, such as:

"residential," "commercial"

"buyer," "seller," "buyer & seller"

or any distinction that is meaningful to your company

Be creative when defining your customer types - you can define many different types. For example, you can define detailed categories such as "residential buyer," "residential seller," "commercial buyer," and "commercial seller."

For more information, see the:

"Customers and jobs" topic in the "More QuickBooks lists" chapter of the User's Guide

"Customer types" topic in the "More QuickBooks lists" chapter of the User's Guide

Adding Customers and Jobs

When adding information about a customer and job, you first enter the general customer information such as the name, address, telephone number, etc. Then you can add jobs to a customer. You can add as many jobs to a customer as you like. In many cases, you'll be adding two jobs: a sales transaction when your client's property sells, and a purchase transaction when the client purchases a property.

This lets you keep track of each transaction separately. For example, if you're selling a house for Doug Clayton on Lilac Drive and you're also handling a purchase for him on MacBeth Road, you can track each property separately.

QuickBooks uses this format for customers and jobs:

Customer:Job

(For example, Doug Clayton:Lilac Drive and Doug Clayton:MacBeth Road)

When you set up jobs this way, you only have to enter the customer's information once (when you set up the customer). From then on, every time you have a different job for that customer, you simply add the job information.

Once you've set up a customer with jobs, remember to always choose the job (property) name as well as the customer name when entering transactions in QuickBooks.

To add a customer and job:

1.	From the Lists menu, choose Customer:Jobs, click the Customer:Job button, then choose New.

2.	Fill in the New Customer window and click OK.

3.	From the Customer:Jobs list, select the new customer, click the Customer:Job button, then choose Add Job.

4.	Fill in the New Job window and click OK.

5.	From now on, when you record a property transaction in QuickBooks, choose the customer and job in the Customer:Job field.

See "Recording a property transaction as a "pending" sale" in this document for more information.

For more information, see the:

"Adding a new customer" topic in the "More QuickBooks lists" chapter of the User's Guide

"Adding a new job" topic in the "More QuickBooks lists" chapter of the User's Guide

Setting up agents as vendors

In QuickBooks, you keep information about your vendors in the Vendor list. As a real estate broker who is paying agents' or other brokers' commissions, you can enter these agents or brokers as vendors on your Vendor list. Then you can write commission cheques easily by choosing the agent or broker name from the list. You can also print reports by vendor so you can keep track of how much commission you have paid to each agent or broker that you deal with.

For more information, see the:

"Adding a new vendor" topic in the "More QuickBooks lists" chapter of the User's Guide

Using classes to track different segments of your business

QuickBooks classes give you another way, in addition to customer type, to track income and expenses. You can use classes to break down your income and expenses for different segments of your business, regardless of customer or job.

For example, you can set up a class for each one of your agents. You can then print sales reports by class to see how much income is associated with each of your agents.

Examples of classes for real estate brokers

You may wish to segment your business in several ways, such as:

by agent

by office location

by area of business such as "property sales" or "property management"

or any distinction meaningful to your company

Important:	You should use classes for one purpose only. For example, don't mix using classes for agents with using classes for office locations.

Some tips on using classes

Think of the ways you'd like to categorize portions of your business in terms of the type of business you do. The classes you set up should be a meaningful breakdown of your business.

Set up classes on the basis of how you'd like to see your entire business segmented on reports.

Classes are most useful when you can identify both income and expenses for each class you set up. That way, you can see a Profit and Loss report by class. For example, if you do business in two different offices or locations, you could make each location a class and designate both your income and expense transactions in QuickBooks by location.

Set up a class such as "other" that you can use to classify transactions that don't fit into a class. This eliminates confusion between transactions that you forget to classify and those that you can not classify.

For more information, see the:

"Classes" topic in the "More QuickBooks" lists chapter of the User's Guide

Creating items

In QuickBooks, items are used on sales forms for quick data entry and to track sales and purchases. Using items, you can get "itemized" reports on all your sales transactions. Items are associated with income accounts, so when you use them in transactions, they will affect your balance sheet.

As a real estate broker, you can use items in a special way in order to keep track of commissions and other fees you expect to receive after a transaction closes. You can set up three important items:

one for commissions

(optional) one for receipts (that is, anything you expect to be paid to a third party)

(optional) one for disbursements (that is, any amount actually paid out to a third party).

The optional items above let you keep track of third party payments that you as the broker may be liable for. For example, a pest inspector may agree to be paid at the close of the sale, and you may want to track that receipt until you receive a statement from the party showing the amount as paid.  If you need these optional items, you should associate both with the same income account. Later, you'll see examples of how to use these items.

To create item for commission:

1.	From the Lists menu, choose Items.

2.	Click the Item button, then choose New.

3.	For the Type field, choose Service.

4.	In the Item Name/Number field, enter the name of the service, for example, Brokerage Fee or Commission.

You can use up to 13 characters to name your item so pick a name that lets you and any other QuickBooks users easily identify the item.

5.	Enter an income account for the item, such as Commission Income.

6.	Click Next to set up another item, or Click OK to exit.

To create items for escrow demands and disbursements:

1.	From the Lists menu, choose Items.

2.	Click the Item button, then choose New.

3.	For the Type field, choose Other Charge.

Making these items "Other Charge" type items will separate them on your sales reports.

4.	Enter "Receipt" in the Item Name/Number field.

5.	Enter an income account for the item, such as Disbursements, and click Next or OK.

6.	Follow the same steps to create an item called "Disburse." Be sure to make it an "other charge" type item, and to assign it to the Disbursements income account.

For more information, see the:

"Items - your products and services" chapter of the User's Guide

Tracking property transactions in QuickBooks

When a property transaction is started, QuickBooks makes it easy for you to keep track of the money that you will receive after the transaction closes. Here's how it works:

Record the transaction in QuickBooks as a "pending" cash sale.

Enter your commission "item" with the amount of the commission you expect to receive at close of escrow.

When the sale is entered as "pending," it does not affect account balances and reports. However, you can print the Pending Sales report for a list of transactions in process.

Record out of pocket costs for which you expect to be reimbursed.

Track amounts that third parties should receive.

You may not be handling any of these amounts, but you may still need to track them. In some cases, brokers may be liable to third parties for these amounts if the transaction falls through.

After closing the sale, mark the pending sale as "final" and make adjustments according to the closing statement.

When the sale is "final," the income shows up on reports.

Important:	You may not need to track all of these property transactions. Some of the procedures described in the following sections are for brokers who want to track their receipts (for themselves and for third parties) as well as their commissions with QuickBooks. However, you may wish to simply keep track of the commissions coming in. In that case, you can simplify the pending sale described below by only including your commission on it.

Recording a property transaction as a "pending" sale

Let's say a transaction has begun and you know how much commission or brokerage fees you will receive next month at the close of the sale. You can record this information on a QuickBooks cash sales receipt and mark the sale as "pending" so it doesn't affect account balances. You can also include other demands on behalf of third parties on this sales receipt, as well as reimbursements for your out-of-pocket costs.

When you receive the cheque from the lawyer, you can mark the sale as "final" and make sure the amount on the cheque matches the amount on the QuickBooks sales receipt, and that all disbursements owed have been included. On the other hand, if the transaction falls through, you can simply delete the pending sale and your books remain unaffected.

To record an offer as a pending sale:

1.	From the Activities menu, choose Enter Cash Sales.

You may wish to customize the Cash Sales form in QuickBooks to include fields important to a broker. See "Customizing your sales receipt" in this document.

2.	In the Customer:Job field of the Create Invoice window, choose the customer and job (client and property).

3.	Enter a class in the Class field (if you are using classes).

You may want to set up your sales agents as classes in order to get income reports per agent.

4.	Select the commission item, and enter the commission amount.

The amount should include any commission due to your agents or other brokers.

5.	Enter any other receipts on behalf of third parties as line items.

6.	If you've incurred expenses on this transaction for which you expect to be reimbursed through escrow, click the Expenses button (or Time/Costs button in QuickBooks Pro).

7.	Choose Mark as Pending from the Edit menu, and click OK.

QuickBooks does not record the sale until you mark it as final, so the sale does not affect reports and account balances.

To get a report on your pending property sales, choose Sales Reports, Pending Sales, from the Reports menu. You can double click on any line of the report to display the original pending cash sale you created.

For more information, see the:

"Marking a sale as pending" topic in the "Sales and sales forms" chapter of the User's Guide

When the transaction closes

At the close of the transaction, when you receive a closing statement and a cheque from the seller's lawyer, you can finalize the pending cash sale receipt in QuickBooks.

To close the transaction in QuickBooks:

1.	Display the pending cash sale receipt.

A quick way of finding this cash sale is to create a Pending Sales report and double click the line corresponding to this sale.

2.	Make adjustments for any additional items.

Compare the closing statement with your cash sale receipt.

3.	Choose Mark as Final from the Edit menu, and click OK.

QuickBooks deposits the amount of the cash sale in your Undeposited Funds register if you chose "Group with other undeposited funds" when you entered the pending cash sale. Or, if you entered "Deposit to" and specified the account, QuickBooks records the amount in the account that you specified.

For more information, see the:

"Receiving and depositing payments" chapter of the User's Guide

If the transaction falls through

If a transaction does not close, and you've recorded it as a pending sale, you can delete that pending sale.

If you'd like to keep a record of the information, you can void the pending sale, and add any notes if necessary in the Message field. To void the pending sale receipt, display it on your screen, and choose "Void Cash Sale" from the Edit menu.

Customizing your sales receipt

As a real estate broker who is using pending cash receipts to record property transactions that are pending, you may want to customize the cash receipt form.

Here's a list of some of the changes you may want to make:

Change the title from "Sales Receipt" to "Pending Property."

Change the "Sale Number" field to "Trade Number."

Change "Sold to" field to "Buyer/Seller."

Change the "Ship to" field to "Seller's Lawyer."

Change "Due Date" to "Close Date."

Remove several header fields that you won't need such as REP, shipping and purchase order information.

Remove the "Quantity" and "Rate" column. The amount column is likely all you will need.

You may also want to add fields that give you specific information about the property transaction such as name of title company, name of agent (if you haven't set agents up as classes), property selling price and perhaps listing number.

You can also include any customized fields. For more information, see "Using custom fields to track information about your customers and agents" in this document.

For more information, see the:

"Creating custom forms overview" topic in the "Forms" chapter of the User's Guide

"Customizing form content" topic in the "Forms" chapter of the User's Guide

"Designing form layout" topic in the "Forms" chapter of the User's Guide

Paying your agents and charging for office services

Paying your agents

If you pay your agents a percentage of the proceeds from a property sale, you'll track those payments as expenses to your business. Earlier you saw how to enter a cash sale for the total amount you expect to receive at close of escrow on a property. Now you will pay out part of that amount to an agent by writing a cheque. The difference between the two amounts is your net profit from the sale.

Since you associate both the cash sale and the agent's cheque with a customer and job (client and property), you can create a profit and loss report by customer:job in QuickBooks to see your net profit for a particular property.

Also, if you set your agents up as "classes" you can create a profit and loss report by class in QuickBooks to see your net income for that agent overall.

To pay your agents:

1.	Determine the amount you owe the agent.

2.	From the Activities menu, choose Write Cheques.

3.	In the Account column in the detail area of the cheque, enter the expense account you're applying the check amount to, for example, "Commission Expense."

4.	Select the property transaction that the commission is for in the Customer:Job field.

5.	Click OK.

Charging agents for office services

You can invoice agents for rent, utilities, and other charges, as well as pass-through expenses. If you invoice your agents, you'll have to consider them "customers" as well as "vendors."

QuickBooks does not let you use the same name on two different lists. Therefore, when setting up agents as both customers and vendors, you'll need to use a slightly different name for your agents on each list. For example, you might include a middle initial for the agents in the customer list, but not in the vendor list.

To invoice agents for specific items, such as rent, create a non-inventory part item called "rent" and use it on invoices to agents.

To have agents reimburse you for expenses you incurred, choose the agent's name in the customer:job field on the check or other QuickBooks purchase form. Then invoice the agent (as a customer), and click the Expenses (or Time/Costs) button to select the expenses for which you want to be reimbursed.

For more information, see the:

"Charging for reimbursable expenses" topic in the "Sales and sales forms" chapter of the User's Guide

"Charging for actual time and costs" topic in the "Sales and sales forms" chapter of the User's Guide (QuickBooks Pro)

Managing properties

As a real estate broker, you may also be managing properties. QuickBooks has many features that make it easy for you to manage properties.

For more information, see the:

"Using QuickBooks in a property management firm" located on the QuickBooks and Your Industry list

Monitoring your business with reports

You can print reports that give you valuable information about your company. QuickBooks has over seventy preset reports that you can customize to fit your needs. The most important reports for any business are the Profit and Loss and the Balance Sheet reports.

The following shows how you can use reports to get useful information for your business. To create the reports mentioned below, choose them from the Reports menu.

Check your profit for each property transaction.

Create a Profit and Loss Report by Job.

See a sales report by agent.

Create a Profit and Loss by Class Report (if you're designating your agents as classes). See "Using classes to track different segments of your business" earlier in this document.

See which transactions are in escrow.

Create a Pending Sales report.

See your net income for a property.

Create a Profit and Loss by Job report.

For more information, see the:

"Reports" chapter of the User's Guide

Other QuickBooks tips for real estate brokers

Here are some other QuickBooks features that you may find useful in your real estate brokerage firm.

Keeping track of conversations

It may be important for you to keep track of your conversations with your customers, whether they occur in person or by phone. QuickBooks provides a "note pad" that you can use as a quick way to jot down important details of a conversation or keep a reminder of a customer's special needs and requests. You can enter or read notes directly from the Customer:Job window. You simply double-click in the Notes column next to the customer you're interested in.

To enter a note for a specific customer

1.	Display the Customer:Job list.

2.	Click in the column to the right of the customer name.

3.	Enter your notes.

For more information, see the:

"Keeping notes about a customer or job" topic in the "More QuickBooks lists" chapter of the User's Guide

Keeping track of things you need to do

You can use the To Do list in combination with the customer notes. You can have QuickBooks remind you of important due dates by entering To Do information in the To Do list. If you have reminders turned on, QuickBooks displays your "to do" note in the Reminders window when you start QuickBooks.

To add an entry to the To Do list

1.	From the Lists menu, choose To Do notes, click the To Do button, then choose New to add a new note.

-or-

Click New To Do from a customer's Notepad window.

2.	Enter the note and the date you want to be reminded.

3.	Click OK.

For more information, see the:

"To Do notes" topic in the "More QuickBooks lists" chapter of the User's Guide

Using custom fields to track information about your customers and agents

You can use QuickBooks' customized fields to add additional information about your customers, your vendors or your employees. As a real estate brokerage, you'll find customized fields particularly useful for keeping track of information about your clients and your agents. You can use these fields to track information such as dates, personal information, and so on.

For example, you might want to use customized fields on your vendor list to keep track of commission arrangements that you've made with your agents. Or you might add some custom fields to your customer records to reflect clients' birthdays, spouse's name, property price range, etc.

To add customized fields for customers and vendors:

1.	Open the Customer:Job list or the Vendor list.

2.	Click the Customer:Job or Vendor button, then choose New or Edit.

3.	Go to the Additional Info tab of the New/Edit Customer or Vendor window.

4.	Click Define Fields.

5.	Enter a name in the label field and select in which lists you want to use the field.

6.	Click OK.

QuickBooks adds the customized field to the setup window and you can fill in the fields to record the additional information

To include customized fields on your sales receipts

1. 	From the Lists menu, choose Templates.

2. 	Click the Templates button, then choose New.

3. 	Choose "Cash Sale" and click OK.

4. 	On the Header tab, customize your default title. For example, you could call it "Pending Sale."

5.	Click on the Fields tab.

The Field tab will include any customized fields that you created.

6. 	Next to the customized field, click "screen" if you want the customized field to be displayed on the invoice when it is on your screen and click "print" if you want the customized field to be printed on the invoice.

7. 	Give your new template a name, such as "Pending Sale."

8. 	To view your customized form, or to customize the layout, click Layout Designer.

9. 	Click OK to record the changes. Select this form whenever you go into the Cash Sales window to enter pending sales.

For more information, see the:

"Creating custom forms overview" topic in the "Forms" chapter of the User's Guide

"Customizing form content" topic in the "Forms" chapter of the User's Guide

"Designing form layout" topic in the "Forms" chapter of the User's Guide

Helping us help you

We'd like to know your special concerns and the problems you run into when trying to make QuickBooks work in your business. We also want to know how useful "Real estate brokers" was in helping you fit QuickBooks to your needs.

Please use this sheet to mail or fax us your comments. If possible, please also attach specific comments marked on the printed version of this document. Mail the completed form and any attachments to:

Intuit Canada, Ltd.

Industry Feedback

P.O.Box 4165

Edmonton, Alberta

Canada

Or fax your comments to us at 1-800-387-4285

Some information about your business

Name:

Business name:

Address:

Phone:

Number of employees:

My business is a: __ Sole proprietorship __ Partnership __ Corporation

What other needs do you have, specific to your type of business, that were not covered in this document?

Do you have any tips for other people in your field who use QuickBooks?

Which two or three topics did you find most useful in this document?

May we call you to discuss your comments?

___ yes    ___ no


User groups
User groups & associations

Overview for user groups

Before you begin

Setting up your QuickBooks company

Setting up members as customers

Using classes to track segments of your user group

Printing mailing labels

Tracking and collecting membership dues

Tracking membership expiration dates

Tracking other sources of revenue

Handling overdue invoices

Budgeting - a road map to success

Understanding income and profitability with reports

Other QuickBooks tips for user groups

Helping us help you

Overview for user groups & associations

Treating your user group like a business is essential to sustaining its success. An accurate financial picture will help you and your board of directors make informed decisions on many levels - from moving your growing user group to a bigger meeting place to applying for nonprofit tax status.

User groups function like any other type of small business with income, expenses, assets and liabilities. The two main areas of financial responsibility for user groups are managing group funds and establishing solid financial management controls.

It is very important to keep accurate records that are easily transferable as the position of treasurer changes hands. Often, the exiting treasurer is not available to explain existing financial records, which forces the incoming treasurer to start from scratch. If you use QuickBooks for your user group bookkeeping, this process will be relatively painless, because all the information will be organized in one place.

Can QuickBooks meet your needs?

As a user group, you have some basic needs from your accounting system. QuickBooks can help you meet many of these needs, including:

Collecting dues from your members

Keeping track of customers' balances and monitoring overdue amounts

Tracking membership expiration dates and reminding members when to renew

Analyzing what your user group is doing by seeing the types of customers (or members) you are representing

Before you begin

This document gives you information on how to use QuickBooks for your special needs - we won't repeat what's already in the standard information you receive with QuickBooks. Instead, you'll see references to show where you can find complete information and details on using QuickBooks features.

Printing your industry document

If you're looking at this document onscreen, you're now in a "QuickBooks and Your Industry" window.

To print this document:

From the File menu, choose Print... or Print Topic.

If you got to this Help window from the interview, close the Help window to return to the interview.

To see other industry documents:

Click any of the industries listed in the contents.

Understanding QuickBooks terminology

QuickBooks uses terms you can readily understand: customers, jobs, accounts payable, accounts receivable, vendors, employees and so on. There are a few special terms you need to be aware of.

Customers

Successful user groups think of members as customers. They know that members have paid their dues in good faith and expect their money to be spent accordingly.

Chart of accounts

You want to track how much money your user group has, how much money it owes, how much money is coming in, and how much is going out. You track this flow of money through a list of accounts called the chart of accounts.

Bill

A bill is what you receive from a vendor or supplier, from which you will pay that vendor or supplier.

Invoice

An invoice is what you send to your members and from which you will be paid.

Important

The information in this document was compiled from the experiences and suggestions of other QuickBooks users in your type of business. Your own needs may vary considerably, and only you and your accountant understand the unique needs of your business.  Ultimately, you are responsible for your own books.

Therefore, we encourage you to have your accountant look over the setup suggested in this document, and we suggest that you give QuickBooks a thorough "trial run" early in the process. The best way to ensure that you have set up QuickBooks optimally for your business, and that it will provide all the information you need, is to enter a small number of your standard transactions in QuickBooks. Then try running all the reports you may eventually need.

While we can give you technical support on how QuickBooks works, our technical support representatives are not industry experts and cannot give you specific accounting advice. If you have questions regarding accounting issues specifically related to your industry, we recommend you consult either an accountant, industry expert, or professional association.

Setting up your QuickBooks company

The QuickBooks EasyStep Interview asks you questions about your business, and uses your answers to help you set up your user group or association in QuickBooks. We recommend the interview as the easiest way to get started and to customize QuickBooks for your type of business.

If you choose not to use the EasyStep Interview, you should follow the setup directions in the "Setting up a QuickBooks company" chapter of the Getting Started Guide.

Customizing your Chart of Accounts

In QuickBooks, an account represents a group of transactions and is used for tracking and reporting purposes.  The complete list of accounts for your company is called the Chart of Accounts.  When you set up your QuickBooks company, you can choose a preset chart of accounts designed especially for user groups.  This preset chart of accounts gives you a head start in creating your balance sheet accounts, income account, and expense accounts.

You may find as you review the preset chart of accounts that you need to add, edit, or delete accounts from that list, or add subaccounts.

For more information, see the:

"Your chart of accounts" chapter in the User's Guide

Setting up members as customers

Membership dues are probably the single largest source of revenues for user groups. It is important to track your dues accurately and to remind members to renew. You can use the Customer:Job list feature in QuickBooks to track individual user group members. QuickBooks lists are shared by all parts of the QuickBooks program; accounts receivable, accounts payable, chequing, and reports. Using the Customer list in QuickBooks for your user group allows you to easily perform the following tasks:

Track dues as accounts receivable

Track membership types

Print mailing labels

Track membership expiration dates

Begin by setting up each individual member as a QuickBooks customer.

To set up a member as a customer:

1.	From the Lists menu, choose Customer:Jobs.

2.	Click the Customer:Job button, then choose New.

3.	Enter the customer's name in the Customer field. Enter the last name first if you'd like to sort your members alphabetically by last name.

4.	On the Address Info tab, enter all appropriate information about the customer.

You can use the "Bill To" and "Ship To" address field to store home and work addresses and phone numbers. Once you've entered the customer's address, QuickBooks automatically enters it when you use this customer in a transaction, such as an invoice for membership renewal.

5.	On the Additional Info tab, enter all appropriate information about the customer.

To help you keep track of expiration dates, you might want to define a customized field on this tab. See "Other QuickBooks tips for user groups" later in this document.

6.	Click OK.

Adding customers "on the fly"

You can also add a new member (or customer) as you write an invoice. If QuickBooks doesn't recognize the name, the program will simply ask you if you want to add it to your list. If you QuickAdd customers, you can fill in all the other information later on, such as phone number, fax number, etc. QuickBooks automatically captures the member's address and other information that you enter on the invoice.

Importing member lists from other programs

You may be able to import member lists from other programs using IIF (Interchange Format). For instructions on how to do this, see "Importing and exporting data" topic onscreen or in the "Maintaining your data" chapter of the User's Guide.

Tracking membership types

You can use the Customer Type feature in QuickBooks to track membership types. Classifying your members with others of the same type can be extremely useful for reporting and mailing purposes. For example, you may want to have customer types that define types of membership such as complimentary, new, and renewal. You can then print reports and mailing labels for a specific type of member.

To set up types of members:

1.	From the Lists menu, choose Other Lists, then choose Customer Types.

2.	Click the Customer Type button, then choose New.

3.	Enter the name of the new member type and click OK.

Now when you're entering a member, you can choose this type from the Customer Type drop-down list.

For more information, see the:

"Customers and jobs" topic in the "More QuickBooks lists" chapter of the User's Guide

"Customer types" topic in the "More QuickBooks lists" chapter of the User's Guide

"Adding a new customer" topic in the "More QuickBooks lists" chapter of the User's Guide

"Adding a new job" topic in the "More QuickBooks lists" chapter of the User's Guide

Using classes to track segments of your user group

QuickBooks classes give you a way to split your income and expenses into different segments. For example, you may want to organize income and expenses by location of your members, or by special interest group, or SIG.

Then, in each QuickBooks transaction, you would assign a "class." At the end of a period, you can print a Profit and Loss report by class to show all revenue and expenses for each of your SIGs.

You can further break down the classification of your user group finances by using subclasses.

Important:	You should use classes for one purpose only. For example, don't mix using classes for SIGs with using classes for member locations.

As with other QuickBooks lists, you can add a new class at any time, even as you are completing the form.

Some tips for when to use classes

Think of the ways you'd like to categorize portions of your user group in terms of the type of member services you provide or the types of members or memberships in general. The classes you set up should be a meaningful breakdown of your user group.

Set up classes on the basis of how you'd like to see your entire user group segmented on reports.

Set up a class such as "other" that you can use to classify transactions that don't fit into a class. This eliminates confusion between transactions that you forget to classify (QuickBooks puts these into a class called "uncategorized") and those that you can not classify.

For more information, see the:

"Classes" topic in the "More QuickBooks lists" chapter of the User's Guide

Printing mailing labels

QuickBooks will print mailing labels (and also Rolodex cards) of all your members according to criteria that you set. You can sort by name or postal code, and select which customers and customer types to include.

To print mailing labels:

1.	Choose Print Forms - Print Mailing Labels from the File menu.

2.	Specify which customers and customer types to include.

3.	Select to sort by name or postal code.

4. 	Click OK.

For more information, see the:

"Printing labels" topic in the "Printing" chapter of the User's Guide

Tracking and collecting membership dues

Organizations with memberships can choose a variety of ways to charge dues. Some use a rolling calendar for membership. This means that if a member signs up in June, the membership is good until June of the next year.

Others use a calendar year membership and may want to pro-rate membership according to what month a member joined. If a member joins in August, the member pays 1/3 of regular membership.

Each of these ways of charging membership would require different procedures in QuickBooks.

To charge for rolling calendar membership:

1.	From the Activities menu, choose Create Invoices.

2.	Select the Customer name in the Customer:Job pull-down list.

If you haven't set up the customer name, you can set one up by typing the name in the field. QuickBooks prompts you from there.

3.	Select the membership item.

4.	Memorize the transaction.

From the Edit menu, choose Memorize.

In the Memorize Transaction window, click Remind Me.

In the How Often pull-down list, select Annually.

Click OK.

Note:	Make sure you have your Reminder preferences are set up correctly. From the File menu, select Preferences. From the Preferences menu, choose Reminders. For Memorized Transactions, click either Show Summary or Show List.

To charge pro-rated membership:

1.	Set up service items for membership for each month of the year.

For example, if dues are $120 per year ($10 per month) set up January membership as $120. Set up February membership as $110 and so on.

Note:	If you set up items for each month of the year, you will also be able to see how many members joined in certain months. This could help you track the effectiveness of recruiting drives.

2.	When you create an invoice for a member who joins in a certain month, select the item that represents that month's membership.

You can also memorize an invoice for membership charges for each month.

3.	In December, send reminder notices to all members to renew their membership.

You can use To Do Notes to remind yourself to send renewal notices.

For more information, see the:

"Memorized transactions" topic in the "More QuickBooks lists" chapter of the User's Guide

"To Do notes" topic in the "More QuickBooks lists" chapter of the User's Guide

"Sales and sales forms" chapter of the User's Guide

Tracking membership expiration dates

QuickBooks makes it easy for you to keep track of when memberships are up for renewal. All you need to do is memorize your member's invoices so that QuickBooks automatically creates them when they are due. You can memorize groups of invoices using memorized transaction groups in QuickBooks.

To track membership expiration dates, first create separate transaction groups for January through December. Then create and memorize your invoices, specifying the corresponding month's transaction group to which the invoice you are memorizing belongs. For example, all memorized invoices for members who joined in January will belong to a transaction group called "January."

To create a memorized transaction group:

1.	From the Lists menu, choose Memorized Transactions.

2.	Click the Memorized Transaction button, then choose New Group.

3.	Enter the name of the new group (for example, January).

4.	In the How Often field, choose how often you want to use the memorized transaction group.

5.	Choose how you want QuickBooks to treat your transaction group.

If you selected Automatically Enter, you need to indicate:

How often you want QuickBooks to enter the transaction (in other words, how often your members pay their dues).

The next date the transaction is due (for example, if you are creating a transaction group for January invoices, enter 1/1/98 if the membership dues are due on January 1).

If you want QuickBooks to enter the invoices before their due date, enter the number of days in advance that you want QuickBooks to enter the invoices (for example, if you specify that you want the invoice entered five days in advance, QuickBooks will back up five days from 1/1/98 and enter the invoices on 12/26/97).

6.	Click OK.

QuickBooks adds the group to the Memorized Transaction list.

To memorize the invoices you want in the group:

1.	Create an invoice for a member.

2.	From the Edit menu, choose Memorize.

3.	Enter the name of the transaction (for example, Invoice to Ray Jones).

4.	Choose With Transactions in Group.

5.	Choose a group name (for example, January)

6.	Click OK.

7.	QuickBooks memorizes the transaction and adds it to the Memorized Transaction list under the transaction group that you specified.

8.	Repeat Steps 1 through 7 for each invoice that you want to include in the group.

For more information, see the:

"Memorized transactions" topic in the "More QuickBooks lists" chapter of the User's Guide

Tracking other sources of revenue

QuickBooks invoices can also be used to track and record nonmember revenue, such as newsletter advertising, conferences, and seminars. QuickBooks makes invoicing these customers very easy. QuickBooks has three types of invoices: service, professional and product. The service invoice will be the most appropriate format for most user groups.

For more information, see the:

"Sales and sales forms" chapter of the User's Guide

Handling overdue invoices

You may want to keep track of overdue amounts and inform your members of these amounts. By looking at your Customer:Job list, you can see what each of your members owes you. You can print one of the A/R Aging Reports to see, in detail, unpaid invoices. These reports tell you how many days a payment is overdue. To calculate when a customer's payment is due, QuickBooks uses the terms that you specified when you entered the customer information or when you entered the invoice.

If you want to charge your customers for late payments, you can specify a Finance Charge and then choose Assess Finance Charges from the Activities menu. QuickBooks calculates the charge for you and creates a separate invoice for this charge. You can also add a late charge as a line item on an existing invoice by setting up the late charge as an "Other Charge" type item and then choosing this item on your invoice.

You may want to send your customers a late notice. You can do this easily by changing the invoice into a late notice.

To change an invoice into a late notice:

1. 	Display the customer's late invoice.

2. 	Change the title of this invoice to "Late Notice."

Select a customized invoice template on  which you have changed the default title to "Late Notice". (See the "Customizing forms" topic in the "Forms" chapter of the User's Guide.)

3.	Press Return.

For more information, see the:

"Accounts receivable management" chapter of the User's Guide

"Setting up and assessing finance charges" topic in the "Sales and sales forms" chapter of the User's Guide

"Creating custom forms overview" topic in the "Forms" chapter of the User's Guide

"Customizing form content" topic in the "Forms" chapter of the User's Guide

Budgeting - a road map to success

Although budgeting estimates are never set in stone, they do provide a good road map as you compare expenses with projections during the course of the year, and evaluate the possibilities of new projects along the way. With QuickBooks, your group will easily be able to track where its money is being earned and spent in the current year. This information is a good starting point for creating a budget.

You should increase the amounts for inflation and any additional projects your group is undertaking. Encourage the coordinators of each area in your group to provide timely and reasonable estimates at the beginning of the year and ask for periodic (perhaps quarterly) updates to maintain integrity in your records. Annual budget estimates should be presented to the board of directors for approval. Finalized budgets should then be communicated to user group members.

For more information, see the:

"Budgets" chapter of the User's Guide

Understanding income and profitability with reports

We cannot overstate the importance of generating regular financial reports. Accurate and timely reports will allow your user group to make wise decisions. Reporting becomes even more important if your group has non-profit status with Revenue Canada and must file tax returns.

Clear and accurate financial reports can give you valuable insight into the financial situation of your user group. QuickBooks provides you with over 70 preset reports you can easily customize to fit your group's needs. A few of them are:

Profit & Loss Statement: A report of incoming dollars vs. expenditures over a specified time period. (Also called "Income Statement" and "Statement of Revenue, Expenses and Changes in Funds Balance.")

Balance Sheet: A report of your user group's assets, liabilities, and equity at a specific point in time. (Also called "Statement of Financial Position" and "Statement of Financial Condition.")

Cash Flow Forecast: This report shows the expected cash inflows, outflows and expected cash balance for any time period specified.

With QuickBooks, you can easily customize and memorize your reports to show information in the way that best suits your needs. For example, you can create an accrual- or cash-basis Profit and Loss statement, broken out by month, quarter, or year. QuickBooks also has Accounts Payable and Accounts Receivable reports, which provide valuable management information.

The board of directors can strengthen its accountability to the organization by publishing a financial report in the user group newsletter at least annually, preferably every quarter and possibly every month.

For more information, see the:

"Reports" chapter of the User's Guide

Other QuickBooks tips for user groups

Here are some other QuickBooks features that you may find useful in your user group.

Keeping track of information

It may be important for you to keep track of your conversations with your members, whether they occur in person or by phone. QuickBooks provides a "note pad" that you can use as a quick way to jot down important details of a conversation or keep a reminder of a member's special needs and requests. The note pad can help you record member concerns or ideas for sessions at upcoming user group conferences. You can enter or read notes directly from the Customer:Job window. You simply double-click in the Notes column next to the member you're interested in.

For more information, see the:

"Keeping notes about a customer or job" topic the "More QuickBooks lists" chapter of the User's Guide

Keeping track of things you need to do

You can use the To Do list in combination with the customer notes. You can have QuickBooks remind you of important due dates by entering To Do information in the To Do list. If you have reminders turned on, QuickBooks displays your "to do" note in the Reminders window when you start QuickBooks.

For more information, see the:

"To Do notes" topic in the "More QuickBooks lists" chapter of the User's Guide

Using customized fields to track information about your members

You can use QuickBooks' customized fields to add additional information about your members (customers). You can use these fields to track dates, personal information, and so on. For example, you can add an email field or a SIG field to your customer records.

To add a customized field

1.	Open the Customer:Job list.

2.	Click the Customer:Job button, then choose New for a New Customer. Or select an existing customer, click the Customer:Job button, then choose Edit.

3.	Go to the Additional Info tab of the New/Edit Customer window.

4.	Click Define Fields.

5.	Enter a name in the label field and select in which lists you want to use the field.

You can show the custom field in one or more lists.

6.	Click OK.

QuickBooks adds the customized field to the setup window and you can fill in the fields to record the additional information.

To display or print a customized field on invoices:

1. 	From the Lists menu, choose Templates.

2. 	Click the Template button, then choose New to create a customized invoice template.

3. 	Select Invoice from the templates list and click OK.

4. 	Give your new invoice template a name, such as "Customized Company Invoice."

5.	Click on the Fields tab.

The Fields tab will include any customized fields that you created.

6.	Next to the customized field, click "screen" if you want the customized field to be displayed on the invoice when it is on your screen and click "print" if you want the customized field to be printed on the invoice.

7.	Click OK at the Customize Invoice window to record the changes.

For more information, see the:

"Adding and using customized fields" topic in the "Working with lists" chapter of the User's Guide

"Creating custom forms overview" topic in the "Forms" chapter of the User's Guide

"Customizing form content" topic in the "Forms" chapter of the User's Guide

Helping us help you

We'd like to know your special concerns and the problems you run into when trying to make QuickBooks work in your business. We also want to know how useful "User groups" was in helping you fit QuickBooks to your needs.

Please use this sheet to mail or fax us your comments. If possible, please also attach specific comments marked on the printed version of this document. Mail the completed form and any attachments to:

Intuit Canada, Ltd.

Industry Feedback

P.O.Box 4165

Edmonton, Alberta

Canada

Or fax your comments to us at 1-800-387-4285

Some information about your business

Name:

Business name:

Address:

Phone:

Number of employees:

My business is a: __ Sole proprietorship __ Partnership __ Corporation

What other needs do you have, specific to your type of business, that were not covered in this document?

Do you have any tips for other people in your field who use QuickBooks?

Which two or three topics did you find most useful in this document?

May we call you to discuss your comments?

___ yes    ___ no


Writers, photographers,
and other artists

Overview for writers, photographers, and other artists

Before you begin

Setting up your QuickBooks company

Organizing your income, expenses, clients, and projects

Customizing your Chart of Accounts

Setting up clients as customers

Tracking projects as jobs

Creating items

Using classes to track different segments of your business

Writing proposals

Tracking time

Billing clients for your fees and costs

Customizing invoice appearance

Handling reimbursable expenses and employee advances

Handling product sales

Understanding income and profitability with reports

Other QuickBooks tips for creative professionals

Helping us help you

Overview for writers, photographers, and other artists

This document gives examples from writing and photography, but applies to many other types of artists as well. If you have a business which sells creative services or products, this document tells you how to use QuickBooks for your needs.

As a writer, photographer, or other artist, you have some basic needs from your accounting system. QuickBooks can help you meet many of those needs, including:

Sending your clients invoices that meet their requirements

Tracking reimbursable expenses and charging them back to clients

Running payroll cheques for your employees

Analyzing how your business is doing by creating detailed financial reports

We recommend QuickBooks Pro for writers, photographers, and other artists

Although you can use QuickBooks to handle your accounting, QuickBooks Pro is particularly useful for writers, photographers, and other artists. QuickBooks Pro has additional features that let you:

Track the time you spend on each project

Create client invoices based on billable time

Track non-billable time separately from billable time

Write estimates or proposals that you can send to clients and later turn into an invoice

Run payroll cheques based on employees' timesheets

Separate your costs for work done by subcontractors from the amount you charge your clients for that work

Get reports on actual time spent on projects, versus time billed or unbilled

Get reports on how much billable and unbilled time each person in your office is accumulating

Before you begin

This document gives you information on how to use QuickBooks for your special needs - we won't repeat what's already in the standard information you receive with QuickBooks. Instead, you'll see references to show where you can find complete information and details on using QuickBooks features.

Printing your industry document

If you're looking at this document onscreen, you're now in a "QuickBooks and Your Industry" window.

To print this document:

From the File menu, choose Print... or Print Topic.

To return to the EasyStep Interview:

If you got to this Help window from the interview, close the Help window to return to the interview.

To see other industry documents:

Click any of the industries listed in the contents.

Understanding QuickBooks terminology

QuickBooks uses a few special terms that you should be aware of:

Chart of accounts

A list of accounts that you use to track how much money your company has, how much money it owes, how much money is coming in, and how much is going out.

Item

Anything you charge a client for, such as a writing or photography service, or a product sale (such as books, negatives, tapes, or reprints that you produce).

Service item

Fee for services provided by your firm (for example, for an article, photo shoot, book, video, seminar, or photographic coverage of an event)

Class

A way to categorize income and expenses.

QuickBooks also uses some generic terms which you will need to match to the terms you use.

A client would be a Customer in QuickBooks.

A project or event would be a Job in QuickBooks.

A proposal or bid would be an Estimate in QuickBooks.

Important

The information in this document was compiled from the experiences and suggestions of other QuickBooks users in writing, photography, and other artistic businesses. Your own needs may vary considerably. Only you and your accountant understand the unique needs of your business. Ultimately, you are responsible for your own books.

We encourage you to have your accountant look over the setup suggested in this document We suggest that you give QuickBooks a thorough "trial run" early in the process. The best way to ensure that QuickBooks will provide all the information you need, is to enter a small number of your standard transactions. Then try running all the reports you may need.

We will give you technical support on how QuickBooks works, but our technical support representatives are not industry experts and cannot give you specific accounting advice. If you have questions regarding accounting issues specifically related to your industry, we recommend you consult either an accountant, industry expert, or professional association.

Setting up your QuickBooks company

The QuickBooks EasyStep Interview asks you questions about your business, and uses your answers to help you set up your business in QuickBooks. We recommend the interview as the easiest way to get started and to customize QuickBooks for your type of business.

If you choose not to use the EasyStep Interview, you should follow the setup directions in "Setting up a QuickBooks company" chapter in the Getting Started Guide.

Organizing your income, expenses, clients, and projects

QuickBooks includes important features that let you analyze your writing, photography, or other creative business in great detail:

Your Chart of Accounts (balance sheet, income, and expense accounts) tracks all of your transactions.

The Customer list, with optional customer types, lets you keep track of the types of clients you serve.

Job tracking lets you track the income and expenses for each project you do for a client, while the use of job types (available in QuickBooks Pro) lets you track the scope of your projects.

Items let you track the services and products you provide to your clients.

Classes let you categorize income and expenses associated with any client or any project.

The following sections give you more information about these and other features.


Customizing your Chart of Accounts

In QuickBooks, an account represents a group of transactions and is used for tracking and reporting purposes.  The complete list of accounts for your company is called the Chart of Accounts.  When you set up your QuickBooks company, you can choose a preset chart of accounts designed especially for writers, photographers, and other artists.  This preset chart of accounts gives you a head start in creating your balance sheet accounts, income account, and expense accounts.

You may find as you review the preset chart of accounts that you need to add, edit, or delete accounts from that list, or add subaccounts.

Important:	As a general rule, you should reserve the accounts on your Chart of Accounts for broad categories. Use QuickBooks items and subitems to see more detail about items you've sold or bought.

For more information, see the:

"Your chart of accounts" chapter in the User's Guide

Setting up clients as customers

You store information about your clients and the individual projects you want to track for each client in the Customer:Job list. You should set up each client as a customer in QuickBooks.

Customer types

You can also categorize your clients by giving them a customer type. The customer type lets you keep track of the different types of clients you serve, and gives you the information you need to analyze your client base. You can categorize each client in a way that is meaningful and useful for your business.

The customer types do not appear on QuickBooks forms, but you can create reports based on the information. You can also print mailing labels and summary billing statements based on customer type.

Examples of customer types for writing and photography firms

You can use customer types to track the information that is most meaningful for your business. For example, you can set up customer types to track:

different types of clients you serve (for example, Nonprofit, Corporate, and Individual)

how a client was referred (for example, Other Client, Advertising, and Colleague)

specific types of organizations represented by clients you serve (for example, magazine, newspaper, publishing house, advertising agency, video producer)

types of industries represented by clients (for example, a technical writer might have clients in the engineering, computer, or medical industries; a photographer might have clients in the commercial, industrial, or educational industries)

If you want to break down your customer types even further, you can add subtypes.

For more information, see the:

"Customers and jobs" topic in the "More QuickBooks lists" chapter of the User's Guide

"Customer types" topic in the "More QuickBooks lists" chapter of the User's Guide

Tracking projects as jobs

If you want to keep track of your income and expenses on a project-by-project basis, you may want the level of detail provided by job tracking. In QuickBooks you can track projects for each client by setting up the projects as "jobs" in the Customer:Job list.

For example, if you're a writer currently doing an interview for a client, but you know that you'll also be doing a feature story for them, you can add two jobs for that client on your Customer:Job list. This lets you track the income and expenses separately for each project.

If you never do more than one project for a client, you don't have to enter job names on the Customer:Job list. In that case, your list will contain only customer names.

If you have QuickBooks Pro, you can also categorize your projects (jobs) by using the Type field in the New/Edit Job window. Tracking job types gives you an idea of the profitability of each kind of project you do. It can also help you determine what proportion of your time is spent on different types of projects.

Examples of job types for writing and photography firms (QuickBooks Pro)

You can use QuickBooks Pro's optional job types to track any information about your projects that you think is important. For example, you can set up job types to:

Track what proportion of your projects are for different types of services. For example, writers might provide articles, technical writing, marketing/ad copy, and training services; photographers might provide photography for weddings, birthdays, and so on.

This is useful for writers and photographers who have one hourly rate (and who have set up one service item in their Item list), but who want to track the different types of services they offer to clients.

Distinguish between Fixed Fee and Time Billing (hourly) projects. Writers who get paid by the word may also want to set up a job type for By Word projects.

If you want to further break down your job types, you can add subtypes. For example, if you have a job type for "Training," you can add "Off-site" and "On-site" as subtypes.

For more information, see the:

"Job types" topic in the "More QuickBooks lists" chapter of the User's Guide

Creating items

QuickBooks items represent the services or products that you buy, sell, or resell in your business.

When you record a sale or a purchase, you use items from your Item list to fill out the form quickly.  When you choose an item in the Item column on the form, QuickBooks fills in the description, rate or price, and then calculates the amount.

QuickBooks uses information you've recorded about each item to assign the sale or purchase to the right income or expense accounts.  Reports and graphs can then give you valuable information, such as your greatest sources of income and which items you sell most.

If you have outside expenses for which you want to be reimbursed (such as blueprint copying or travel expenses), you don't need to create a QuickBooks item in order to include them on an invoice. See "Handling reimbursable expenses and employee advances" in this document.

Important:	The way you set up items depends on how you want to bill your clients, and the information you want to show on your invoices. Following are some sample uses of items in QuickBooks. "Billing clients for your fees and costs" in this document gives you detailed information on how to set up your Item list to handle specific billing needs.

Using Service items

Create a service item for each type of work you do for clients, whether it's done by a partner, salaried employee, subcontractor, or hourly employee.

You can set up your items all at once or as you're filling out an invoice.  When you create the item, enter the rate you charge for that service.  If items are charged on a percentage basis, leave the Rate field blank.

Using Other Charge items

Besides creating service-type items, you can create items for other charges. For example, if you charge for administrative services such as copying, you can create an "other charge" type item. That way, on an item report (one of QuickBooks' Sales reports), you'll be able to see your writing services (service items) separately from administrative charges (other charges items).

Using Inventory and Non-inventory items

If you are a writer or photographer who also sells products (for example, some writers sell their books, audio tapes, or courses directly to clients; photographers may sell prints and videos), you can create "inventory" or "non-inventory" type items to track the products you buy and sell. See "Handling product sales" in this document for more information.

Example uses of items for a creative services firm

To charge clients for creative services

Create a "service" item for each type of service you provide to clients. Writers may have items such as Writing, Copy Editing, Proofing, and Research. Photographers may have items such as Portrait, Videotaping, and Print Enlargement. When you create the item, enter the rate you charge for that service.

If you bill at different hourly rates for different writers/photographers, or if you bill in phases (before a project is complete), you can use a combination of QuickBooks items and subitems. For details, see "Billing clients for your fees and costs," in this document.

To charge clients for products you sell to them

Create an "inventory" or "non-inventory" item for each product you sell to clients (such as a book, photographic print, brochure, videotape, or audio tape).

Use an inventory type item if you keep products in stock and you want to track the products you sell as inventory (that is, you want to keep an updated count of your quantities on hand and the current value of your inventory). When you create the inventory type item, enter the amount you've paid for the product as well as the price you plan to charge clients for the product.

Use a non-inventory type item if you don't keep products in stock, and you don't want to track products as inventory (that is, you don't need to have your quantities on hand and inventory value updated with each sale). When you create the non-inventory type item, enter the price you plan to charge clients for the product.

For more information, see "Handling product sales" in this document.

To track forgiven charges (billable hours for which you decide not to bill the client)

Create a "discount" item called Courtesy. When you create the item, leave the rate at 0.00; you can enter the amount of the forgiven charge directly on the invoice. See "Forgiving charges" in this document for details.

To charge clients for non-creative services, such as administrative fees (for example, for copying)

Create an "other charge" item for each of the administrative services you provide to clients. When you create the item, enter the rate you charge for that service.

(QuickBooks Pro) To track costs of services done by subcontractors as expenses, and revenue from those services (when the client reimburses you) as income

Create "service" items for subcontractor services and select the "This service is performed by a subcontractor" checkbox. This lets you enter your cost and an expense account. You also enter what you charge your clients for the services, and an income account to record the reimbursement.

For more information, see the:

"Items - your products and services" chapter of the User's Guide

Using classes to track different segments of your business

QuickBooks classes give you another way to track income and expenses in addition to customer type and job type.

Classes give you a way to break down your income and expenses for the services you perform. For example, if your firm does business in two different locations, you can use classes to track the proportion of your income and expenses related to those two locations.

Examples of classes for writing and photography firms

You can use classes to:

Analyze the income and expenses related to each partner's clients, by setting up each billing partner as a separate class.

Analyze the income and expenses for each type of service your firm provides. For example, if you provide both studio and location photography, you can set up a class for each service.

Analyze the income and expenses for each location, if you have offices in more than one location. Make each business office a separate class.

Important:	You should use classes for one purpose only. For example, don't mix using classes for partners with using classes for office locations.

How classes differ from customer types and job types

Classes can apply to all transactions, so they are not tied to any particular client or project. However, a job type or a customer type is associated with only certain projects or certain clients.

For example, a writer might have "Corporate" and "Individual" customer types to group her clients, and "Writing" and "Training" job types to categorize each project for a client. She can then get financial reports focused by type of client or type of project.

But let's say she needs a third classification that spans any type of client or project. In this case, she can use QuickBooks classes. For example, if she has a partner, she can create a class for herself and a class for her partner. She would then select one of those classes on each transaction in QuickBooks. Later, she could get reports on income and expenses by partner (class), regardless of which types of clients or projects they each worked on.

Tips for when to use classes

Set up classes based on the type of reporting you want to do, and consider how you want to see your finances arranged on reports. For example, if your firm has three writers and you want to analyze the profitability of each writer's projects, you can create a class for each writer. Later, you can create a report that looks at income and expenses by class (for each writer).

Classes are most useful when you can identify both income and expenses for each class you set up, because this lets you create a Profit and Loss report by class. For example, if you do business in two different offices or locations, you can make each location a class if you can identify both your income and expenses by location. That way, you can see a Profit and Loss report by location (class).

Writing proposals

Many people in creative firms submit proposals at the beginning of a project. You may need to create a proposal or estimate if:

the project is being "put out to bid" by a potential client, who asks for proposals from interested professionals

you bill on a fixed-fee basis and the client wants a proposal that specifies the work you agree to complete for the stated fee

you bill on an hourly basis, but the client wants an estimate of how long (how many hours) it will take you to complete the project

If you have QuickBooks Pro, you can use the estimate form to create your proposal or bid. If you have QuickBooks, you can use a pending invoice.

QuickBooks Pro automates estimates

If you have QuickBooks Pro, you can use the estimate form to create a proposal or bid. You can create one proposal for each project. Once you have all the project tasks entered on the estimate form, you can later turn the estimate (proposal) into client invoices. (See "Invoicing from a QuickBooks Pro estimate" in this document for details.)

You can also customize the estimate form to include only the columns and information you need. Here are some of the changes and/or additions you might want to make to QuickBooks Pro's estimate form:

Change the title of the form from "Estimate," to "Proposal" or "Bid."

Change the name of the "Estimate No." field to "Proposal No."

Change the name of the Item column to "Task" or "Phase."

Change the name of the Quantity column to "Hours."

Change the name of the Cost column to "Rate" or "Fee."

Remove the Markup column from the form.

For more information, see the:

"Customizing your estimates" chapter of the User's Guide

Creating a proposal without QuickBooks Pro

If you don't have QuickBooks Pro, you can use a pending invoice to create a proposal or bid. When the client approves your proposal and you are ready to invoice for your work, you can invoice directly from your proposal. See "Invoicing from a QuickBooks pending invoice" in this document.

To create proposals without QuickBooks Pro:

1.	Create an invoice that details the work you plan to do for the client.

Enter the client name and charges as usual. (If you don't have all your charges set up in your QuickBooks Item list, you can add them as you go.)

2.	Type the words "Pending Approval" in the Customer Message field.

3.	While the invoice is displayed, choose Mark Invoice as Pending from the Edit menu.

QuickBooks displays the word "Pending" on the onscreen invoice (it does not appear on the printed invoice).

4.	Change the title of this invoice to "Proposal" or "Bid".

Select a customized invoice template on  which you have changed the default title to "Proposal" or "Bid". (See the "Customizing forms" topic in the "Forms" chapter of the User's Guide.) When you wish to convert this proposal back to an invoice, simply display it on your screen and select your usual invoice template.

5.	(Optional) If you think you may create more than one invoice from this proposal (because you are billing in phases), memorize the invoice by choosing Memorize Invoice from the Edit menu.

Give the memorized invoice a name such as "Company A Proposal." Click the "Don't remind me" checkbox to select it.

6.	Print the proposal for the client's review.

You can get a report listing all pending invoices by choosing A/R Reports from the Reports menu, then choosing Pending Invoices.

For more information, see the:

"Creating custom forms overview" topic in the "Forms" chapter of the User's Guide

"Customizing form content" topic in the "Forms" chapter of the User's Guide

"Designing form layouts" topic in the "Forms" chapter of the User's Guide

Tracking time

A creative professional sells time and expertise, so tracking time accurately and completely is important. If you have QuickBooks Pro, you can track your time on QuickBooks Pro timesheets and transfer the hours directly to client invoices. If you have QuickBooks, you can track your time on a pending invoice.

QuickBooks Pro automates time tracking

QuickBooks Pro lets you track your time on projects, and analyze your time costs by client or project, person who did the work, or by type of work done.

Keeping track of time

You can enter time for an owner, partner, or employee. On the time entry form, you choose the client and project for whom the work was done in the Customer:Job field. You then choose the "service item," which is the type of work you did (see "Creating 'items' for billable services" in this document). Later you can pass the charges to your clients on invoices or statements.

You have the option of entering individual activities on separate forms or using a weekly timesheet format. In either case, be sure to enter as complete a record as possible so QuickBooks can translate those hours into billable hours on client invoices or statements.

Important:	Do not use QuickBooks Pro to enter time for a subcontractor. To track and invoice for actual costs of services performed by outside subcontractors, see "Services performed by subcontractors" topic in the "Items - your products and services" chapter of the User's Guide

Which time entry form to use

QuickBooks Pro lets you track time using either the Single Activity window or the Weekly Timesheet window. The Single Activity window is for recording time spent by one person on a single activity for a single project on a single date. A weekly timesheet is a record of time spent by one person on any number of projects within a seven-day period.

Individual time entries are better for creative professionals who must keep detailed notes on each activity, because you can see more of your notes without scrolling. Also, they are convenient to use if you will be continuously running QuickBooks, and entering each activity as you do it, rather than entering all your time at the end of the week from a paper timesheet.

The weekly timesheet in QuickBooks is useful when you want to work from a paper form and enter time for all your projects at once. If you want to continue using the timesheets you've been using in your firm, you can transfer the data from them to QuickBooks' weekly timesheet form before invoicing clients.

Transferring time data and notes to invoices

When you are invoicing a client and have the invoice form displayed, you can click Time/Costs (and then click the Time tab) to see a list of the time entries you've recorded in QuickBooks Pro for that client's project. Clicking next to a time entry transfers it directly to the invoice.

You may also want the notes you've entered for each activity to be included on the invoice.

To use your time entry notes on the invoice:

1.	Select the client and project (Customer:Job), and click Time/Costs.

2.	Click the Time tab.

3.	If 'Transfer activity notes' does not appear under options, click the Change button, then click the "Transfer notes for each activity" box to select it, and click OK.

QuickBooks has a limit on the number of characters you can enter in the notes field. That limit is the same on the weekly and individual time entry forms. If you transfer notes to invoices, you may have to manually adjust the appearance of the text on those forms. (This is especially true if you entered your notes and pressed the Enter key at the end of each line. When you're entering notes, it's better to type without pressing the Enter key, so that QuickBooks can automatically wrap each line.)

Tracking non-billable time

Some creative professionals track their non-billable hours as well as their billable ones. For example, if you spend part of your day marketing your services, or presenting proposals to clients, you may want to track the total amount of time you spend on such activities.

QuickBooks Pro lets you track the actual number of hours you spend on projects, not just the amount for which you bill clients. By tracking your non-billable hours, you can get a better idea of your business's profitability. If your firm has several staff members, you may want to track each person's billable hours versus non-billable hours.

To keep track of non-billable time (for activities you never plan to bill clients for), you need to set up "service" type items for each of your non-billable activities. Then, on your time entry form in QuickBooks Pro, you can choose from your list of service items to fill out the form. If the activity is non-billable, deselect the Billable checkbox (in the Single Activity window) or the Billable column (in the Weekly Timesheet window) by clicking it. QuickBooks Pro places an 'X' over non-billable items.

For example, if you spend four hours doing research (a billable activity) and two hours following up on client leads (a non-billable activity), you enter 4.0 for the Research item and 2.0 for the Marketing item on your time entry form. Because marketing activities are not billable, you can click next to the Marketing item on the time entry form, to mark that line with an 'X.' This tells QuickBooks Pro that you don't want to invoice the client for that activity.

You can see how much of your time is spent in billable versus non-billable activities by creating a Time by Item report (one of the Project reports).

For more information, see the:

"Time tracking" chapter of the User's Guide

"Invoicing customers for time" topic in the "Time tracking" chapter of the User's Guide

Tracking time without QuickBooks Pro

If you don't have QuickBooks Pro, you can keep track of your time on a pending invoice. Use a separate invoice for each client's project.

To keep track of time on a pending invoice:

1.	Create the invoice as usual, entering the client name and project.

2.	While the invoice is displayed, choose Mark Invoice as Pending from the Edit menu.

QuickBooks displays the word "Pending" on the onscreen invoice (not on the printed version).

3.	Whenever you work on this project for this client, enter the time and charges on the pending invoice.

4.	When you're ready to invoice for your time, display the invoice and choose Mark Invoice as Final from the Edit menu. Then print the invoice as usual.

Tip: When you're ready to mark the invoice as final, you can find the invoice quickly by creating a pending sales report and using QuickZoom to display the original invoice form. (To do so, choose Sales Reports from the Reports menu, then choose Pending Sales. In the report window, double-click the invoice you want to see.)

Billing clients for your fees and costs

When you fill out a QuickBooks invoice, you list each service you've provided for the client, along with its associated fee. You may want your invoice to show some or all of these details:

the service you're invoicing for (for example, writing a trade journal article or shooting a commercial)

the number of hours spent on each service

if you are billing by time and more than one person was involved, the total number of hours worked and the hourly rate for each person

if you sell products, the total amount you wish to charge for each product

expenses for which you want to be reimbursed (such as delivery and travel)

Creative professionals typically bill their clients using a combination of these methods:

Time billing. The invoice should show the services provided, the number of hours spent on each service, the hourly rate, and the total fee. If you invoice clients using this method, see "Billing clients for time" and "Billing for work done by several creative professionals" in this document.

Flat-fee billing. The invoice should show the service and the fee. If you invoice clients using this method, see "Billing clients for a fixed fee"in this document.

Setting up items for billing

Each fee you include on an invoice (each service you provide or each product you sell) should be a separate item on QuickBooks' Item list. (See "Creating items" in this document.) The way you set up your Item list depends on the services you provide and the information you want to show clients on an invoice. For example, suppose your writing firm provides these services:

Writing Svcs

Training Svcs

Consulting Svcs

Within each of these general areas are specific tasks that need to be accomplished. For example, services underneath Writing Svcs are Ad/Mktng Copy, Editing, and Tech Writing. (Of course, your own task list will depend on the type of business you have and the services you offer.)

If you want your invoices to show each main heading, as well as the time spent on individual services underneath that heading, you can use a combination of QuickBooks items and subitems. (Use items for each main heading and subitems for tasks underneath that heading.) When creating your Item list, you should model it on the list of services your firm already uses.

To set up the Item list to show service headings with subservices:

1.	Create "service" type items for each main service heading, such as Writing Services. Do not enter a Rate for the item.

2.	For each service item just created, create subitems for each service included in that heading.

For example, if one of the services underneath Writing Svcs is "Editing," you can create a subitem for Writing Svcs called Editing.

3.	Type a description that you want to appear on the invoice.

Because the item name usually requires abbreviation, you'll want to provide a complete description that will be understandable to your clients.

4.	Enter a Rate for the new subitem.

If you are charging by time (hours worked), enter your hourly fee for the Rate.

If you are charging by time, and your firm employs several creative professionals, leave the Rate at 0.00. You'll want to create subitems underneath this task for each of your staff members, as described in "Billing for work done by several creative professionals" in this document.

If you are charging according to a flat fee, enter your fee for this service in the Rate field.

On the invoice, when you choose "Writing Svcs:Editing" from the Item list, QuickBooks displays the item and subitem name (separated by a colon), the description, and the rate.

For more information, see the:

"Items - your products and services" chapter of the User's Guide

Billing clients for time

For a project charged on a time basis (number of hours worked), you'll want your Item list to include the hourly rate you charge for each service (see Step 4 in the previous section).

If you have QuickBooks Pro, you can track your time within QuickBooks Pro, and transfer that time directly to your invoices, as described earlier in "Tracking time."

If you have QuickBooks, you can track your time on a pending invoice and turn that into a final invoice when you're ready to bill, as described earlier in "Tracking time without QuickBooks Pro."

Billing for work done by several staff members

If your projects typically involve the work of more than one staff member, and you bill their time at different hourly rates, you'll want to set up your Item list to include those rates.

For example, suppose your firm has three photographers, all with different hourly rates. If you want your invoices to show the time worked by each photographer, you can set up your Item list like this:

Portrait ("service" item with 0.00 rate)

Smith (subitem of Portrait; 100.00 rate)

Jones (subitem of Portrait; 85.00 rate)

Adams (subitem of Portrait; 75.00 rate)

When you're ready to invoice, just choose the appropriate subitem from the drop-down list in the Item column, and QuickBooks enters the service description and rate for you. All you have to do is enter the time worked by each person (or, if you have QuickBooks Pro, click Time/Costs to transfer your time data to the invoice).

Billing clients for a fixed fee

If you plan to charge a client a fixed fee for a service (for example, writing the copy for a marketing brochure), create the invoice as usual. When you choose the service from the drop-down list in the Item column, you can edit the amount shown in the Rate column as necessary.

Invoicing from a proposal or estimate

If you created a proposal or estimate in QuickBooks or QuickBooks Pro (see "Writing proposals" in this document), you'll want to use that estimate as you invoice your clients.

Invoicing from a QuickBooks Pro estimate

If you have QuickBooks Pro, you can convert your entire proposal into an invoice. Then you can modify the invoice if necessary.

To convert a proposal or estimate into an invoice:

1.	Locate the estimate.

You locate the estimate by displaying the Customer:Job list, selecting the project (or the client, if there is no separate project for that client), clicking the Activities button, and choosing View Estimate.

2.	Click Create Invoice at the bottom of the Create Estimates window.

You can edit the invoice by deleting lines, changing rates or hours, and adding new charges or services.

3.	Delete all sections from the invoice that you don't plan to bill the client for at this time, and add any other information as necessary.

You can create multiple invoices from the same proposal or estimate (in order to bill for different phases of the project), by repeating the preceding steps.

For more information, see the:

"Entering a sale" topic in the "Sales and sales forms" chapter of the User's Guide

Invoicing from a QuickBooks pending invoice

If you created a proposal by using a pending invoice, the way you invoice from that proposal depends on whether you want to create one or multiple invoices from the same proposal.

To create one invoice from a proposal or estimate:

1.	Display the pending invoice that contains your proposal.

Tip: You can find the invoice quickly by creating a pending sales report and using QuickZoom to display the original invoice form. To do so, choose Sales Reports from the Reports menu, then choose Pending Sales. In the report window, double-click the invoice you want to see.

2.	Change the title from "Proposal" back to "Invoice" by selecting your regular invoice template.

3.	Edit the invoice as necessary to reflect the charges you want to bill.

4.	Choose Mark Invoice as Final from the Edit menu.

When you return the proposal back into an invoice, QuickBooks removes the original proposal.

To create multiple invoices from a proposal or estimate:

1.	Follow the steps for creating a proposal using a pending invoice. (See "Creating a proposal without QuickBooks Pro" in this document.)

If you followed the steps listed in that section, you should have memorized your proposal.

2.	From the Lists menu, choose Memorized Transactions.

3.	Select the memorized proposal for your client, click the Enter Transaction button.

QuickBooks displays the proposal in the Create Invoices window.

4.	Select your usual Invoice template from the Custom Template list to change the title from "Proposal" back to "Invoice."

5.	Edit the invoice as necessary to reflect the charges you want to bill.

The next time you're ready to bill the client, you can repeat the preceding steps, beginning at Step 2.

Invoicing for partial hours

Invoicing clients is an art, not a science. You sometimes change your mind about how and when to invoice for a billable service while you are in the midst of preparing your list of billable items.

Suppose you have spent 35 hours writing and editing a research paper for one of your clients. But as you prepare the invoice, you decide that, since the written report is not yet complete, you'll bill the client for half the hours now, and the remaining hours on a future invoice.

If you recorded your hours in QuickBooks Pro, you just need to adjust your timesheet entry. If you recorded your hours on a pending invoice in QuickBooks, you'll need to create a second pending invoice.

To invoice for partial hours in QuickBooks Pro:

1.	Display the weekly timesheet page where you have the total hours entered.

Even if you originally entered the time on a single activity form, you can see the time entry by displaying the weekly timesheet.

2.	Edit the time to display the number of hours you want to bill for on this invoice.

3.	On the next line of the timesheet, enter the remaining hours.

Choose the same Customer:Job and the same item name.

If you need to insert a blank line, you can choose Insert Line from the Edit menu.

4.	Return to the invoice and click Time/Costs.

QuickBooks shows you the two time entries related to that particular project.

5.	Click in the Use column next to the time entry you want to include on the current invoice.

To invoice for partial hours in QuickBooks:

1.	Display the pending invoice where you have the total hours entered.

2.	Edit the time to display the number of hours you want to bill for on this invoice.

3.	Choose Mark Invoice as Final from the Edit menu.

4.	Create a new pending invoice for the remaining hours.

See "Tracking time without QuickBooks Pro" in this document for information on how to create pending invoices.

Forgiving charges

When you invoice a client, you may sometimes decide to "forgive" certain charges; that is, you decide not to bill the client for a number of billable hours. For example, suppose you estimated that a project would take 25 hours, but it actually took you 30. For an important client, you may decide to forgive the five extra hours, and only invoice for 25 hours of time. If you want to show this forgiven time on your invoice (sometimes called a "courtesy" item), you can handle it in one of two ways:

If you don't want to track forgiven charges for each of the services you perform, or if you perform only one kind of service (you have one "service" item set up on your Item list), you can create one "discount" item called Courtesy. For example, if you create an invoice for 30 hours of writing time (your Writing Services item), you can choose the Courtesy discount item and subtract 5 hours of time off the client's charges.

If you perform more than one kind of service (you have several "service" items set up on your Item list), you can use subitems that track your forgiven charges for each of your services. For example, you can create a "service" item called Courtesy, with a Rate of 0.00. Then you can create subitems for Service A and Service B.

Important	When you enter the amount of the forgiven charges on the invoice, you must enter a negative number.

You can see how many billable hours you've forgiven by creating a Sales by Item report (one of QuickBooks' Sales reports).

Customizing invoice appearance

Invoices present a picture of your business to your clients, so you want the invoice to reflect your business image. QuickBooks lets you customize an invoice to show only the information you want your clients to see.

Depending on how you've done invoices in the past, you may want to remove or add information to QuickBooks' standard invoice forms. You can add or delete fields or columns, widen or change the order of columns, and include your own customized fields on the invoice. For example, depending on your needs, you can:

Remove the Item column from the printed invoice form (not from the onscreen form). If you provide a detailed description for each item you set up, you don't need to display the item name to clients.

Change the title of the Quantity column to "Hours."

Remove the Rate column, if you always bill according to a fixed fee. (The Amount column is all you need.)

Add a customized field for a client or project number. (To do this, you must first add the field to your Customer:Job list. See "Tracking information about your clients" in this document for details.)

For more information, see the:

"Adding and using customized fields" topic in the "Working with lists" chapter of the User's Guide

"Creating custom forms overview" topic in the "Forms" chapter of the User's Guide

"Customizing form content" topic in the "Forms" chapter of the User's Guide

"Designing form layouts" topic in the "Forms" chapter of the User's Guide

Adding multi-line descriptions

When you type text in the Description column, you can set exactly where your lines break by pressing Down Arrow to move to a new line.

To enter several lines of description:

1.	On the invoice form, position your cursor in the Description column.

2.	Type your lines of description, pressing Down Arrow to move to the next line of the description.

Each line has a limit of 99 characters. Although you can't see a line this long on the onscreen form, QuickBooks displays the entire line on the printed invoice. (You can click the Preview button to check how a line will print.)

Using a word processor for client billing

If your client invoices require lots of detail, and are almost letter-like in appearance, you may want to use a word processing program for invoices. Using a word processor to invoice is no problem. Just enter invoices or statements in QuickBooks to keep your Accounts Receivable information up to date, but don't print the invoices.

To use a word processing program for invoices:

1.	Enter invoices into QuickBooks as usual, but clear the "To be printed" checkbox.

2.	Use your word processing program when it's time to invoice your client.

For more information, see the:

"Changing your sales form format" topic in the "Sales and sales forms" chapter of the User's Guide

"Entering item information" topic in the "Sales and sales forms" chapter of the User's Guide

Handling reimbursable expenses and employee advances

Creative professionals sometimes incur expenses on behalf of clients while working on projects. These expenses - items such as delivery fees and travel expenses - are called reimbursable expenses. This section tells you how to track your own reimbursable expenses in QuickBooks, as well as how to handle employee advances for client expenses.

Tracking your own costs for reimbursement

When you incur expenses that you plan to pass along to clients, you pay for the expense by cheque, credit card, or cash. You can track these transactions as job costs in QuickBooks, and pass them along to your clients when it's time to bill them.

If you pay for items by cash, use the Splits feature in your Petty Cash account register to indicate the appropriate expense account and Customer:Job for this expense.  Enter any necessary memo information.

If you write a QuickBooks cheque or use the credit card form to pay for reimbursable expenses, select the appropriate expense account and Customer:Job for this expense. Enter a memo in the detail area of the cheque, also; this description will appear in the Description column of the invoice when you select that expense.

When you're ready to invoice the client, and you have the invoice form displayed, click the Time/Costs button, and then click the Expenses tab (in QuickBooks Pro) or click the Expenses button (in QuickBooks). QuickBooks shows you a list of expenses not yet invoiced. If you want to include the expense on the invoice, click in the Use column next to the reimbursable expense and click OK.

For more information, see the:

"Charging for reimbursable expenses" topic in the "Sales and sales forms" chapter of the User's Guide

"Charging for actual time and costs" topic in the "Sales and sales forms" chapter of the User's Guide (QuickBooks Pro)

Tracking costs and reimbursements for employees

You may have employees who incur expenses for clients. You need to reimburse those employees, then pass on the costs to the client. Here's how to handle this situation in QuickBooks.

To reimburse employees and bill clients:

1.	Have your employees track their expenses in expense reports.

You can use the paper forms you're already using.

2.	From the Activities menu, choose Write Cheques.

Write a reimbursement cheque to each employee (not a pay cheque).

In the cheque detail area, itemize each expense by client and project (Customer:Job).

Click OK to record the cheque.

3.	From the Activities menu, choose Create Invoices.

Write an invoice to the client.

If you have QuickBooks Pro, click Time/Costs, then the Expenses tab to choose the reimbursable expenses you want to include on the invoice. If you have QuickBooks, click the Expenses button to choose the reimbursable expenses you want to include on the invoice.

Click in the Use column next to the expenses you want included on the invoice, and click OK.

For more information, see the:

"Charging for reimbursable expenses" topic in the "Sales and sales forms" chapter of the User's Guide

"Charging for actual time and costs" topic in the "Sales and sales forms" chapter of the User's Guide (QuickBooks Pro)

Issuing employee advances

If you prefer to issue your employees an advance for client costs (rather than reimbursing them later), here's how you can handle it in QuickBooks.

To issue employee advances:

1.	Create a new "other current asset" account called Advances. (From the chart of accounts, click the Account button, then choose New.)

Leave the account's opening balance at zero.

2.	Create one "other current asset" subaccount for each employee for whom you expect to be issuing advance cheques.

For example, if you will be issuing advances to Anna Tomasson, create an other current asset account called "Anna."

In the New Account window, click the "Subaccount of" checkbox, and choose the Advances account as the parent account.

Leave the subaccount's opening balance at zero.

3.	From the Write Cheques window, write an advance cheque to the employee (not a pay cheque).

4.	In the detail area of the cheque, assign the amount of the cheque to the subaccount for that employee's advances (for example, Advances:Anna), and enter a memo describing what the advance is for. Do not assign a Customer:Job to the advance cheque.

QuickBooks puts an increase transaction in the Advance:Anna account register.

5.	When the employee later turns in an expense report, enter each expense as a decrease in the employee's asset subaccount. For each expense transaction:

Leave the Payee field blank.

Assign the expense to the appropriate expense account (for example, travel).

Enter the amount of the expense in the Decrease column.

6.	Assign the expense to the appropriate Customer:Job.

Select the expense in the account register and click Edit.

At the General Journal Entry window, enter the Customer:Job in the Name column on the line for the expense transaction.

Click OK.

When you're ready to invoice the client for expenses incurred by your employee, follow the procedure described earlier in "Tracking costs and reimbursements for employees," Step 3.

If the employee spent more than the advance, you can pay the amount you owe by writing a QuickBooks cheque and entering the employee's "other current asset" subaccount in the detail area.

For more information, see the:

"Charging for reimbursable expenses" topic in the "Sales and sales forms" chapter of the User's Guide

Handling product sales

If you sell products as well as services (for example, writers may sell their own books or audio tapes; photographers may sell prints and videotapes), you should set up an item in your Item list for each product.

If some of the products you sell are products you purchase from others (for example, a photographer may have a storefront and sell books on photography), you may want to use QuickBooks' inventory feature to track those products. If you purchase items ready for resale, keep them in inventory, and then sell them, QuickBooks can track the current number in stock and the value of your inventory after every purchase and sale.

However, not all writers and photographers who sell products want to track their product sales as inventory. QuickBooks' Item list has a non-inventory item to track product sales for products you do not want to track as inventory. If the products you sell are products you do not purchase from others (for example, you have self-published a book), you can set up a "non-inventory" type item in your QuickBooks Item list for each product.

Here are the benefits of setting up "inventory" type items and using QuickBooks' inventory tracking:

When you use purchase orders to buy inventory items, QuickBooks updates your inventory, so you know which items are on order and when they're due to be received.

You can easily keep track of the cost to you of the items you have sold (the cost of goods sold).

You can easily keep track of the income you receive from the resale of inventory items.

You always know your current quantities on hand.

You always know the current value of your inventory.

For more information, see the:

"Inventory" chapter of the User's Guide

"Non-inventory part items" topic in the "Items - your products and services" chapter of the User's Guide

Understanding income and profitability with reports

QuickBooks has approximately 70 preset reports (QuickBooks Pro has even more), which you can customize to fit your needs. The most important reports for any business, creative firms included, are the Profit and Loss reports and the Balance Sheet reports. To create these for your business, just choose from the Reports menu.

Here are some reports which writers, photographers, and other artists may find especially useful, along with instructions on how to create them in QuickBooks from the Reports menu:

Billing reports, to determine amount billed in a specific period

Choose Sales Reports, then choose By Item Detail to see a report organized by service headings. Choose By Customer Detail to see a report organized by client/project. At the report window, change the date range to cover the billing period you want to see.

Job profitability for each of your projects

Choose Profit & Loss, then By Job.

(QuickBooks Pro) See billable versus non-billable hours by writer or photographer

Choose Project Reports, then Time Activity Detail.

(QuickBooks Pro) See hours spent for each type of service item

Choose Project Reports, then Time by Item. Filter the report to show columns for Billed, Unbilled, and Not Billable time. (Click Customize from the report window to filter the report.)

(QuickBooks Pro) See hours spent for each project

Choose Project Reports, then Time by Job.

For more information, see the:

"Reports" chapter in the User's Guide

Other QuickBooks tips for creative professionals

Here are some other QuickBooks features you may find useful in your business.

Keeping track of conversations and tasks

Creative professionals often make decisions with clients over the telephone. It's important to keep track of your conversations with clients, whether they occur in person or by phone. QuickBooks lets you enter notes for each client in your Customer:Job list. The customer notes give you a quick way to jot down important details of a meeting.

To enter a note related to a specific client:

1.	Display the Customer:Job list.

2.	Double-click in the Notes column to the right of the client name.

QuickBooks displays the Notepad for that client.

3.	Enter your notes.

You can use the To Do list in combination with the customer notes. Suppose your client wants you to fax her a proposal for a new project, and you've agreed to send it to her in two days. You can enter a note about your conversation in your customer notes, and you can also have QuickBooks remind you of the due date by entering it in the To Do list.

To add a note to the To Do list:

1.	From the Lists menu, choose To Do Notes.

If you already have the Notepad displayed for that customer, you can click the New To Do button.

2.	Click the To Do button, then choose New to add a new note.

3.	Enter the note and the date you want to be reminded.

If you have reminders turned on, QuickBooks displays your "to do" note in the Reminders window when you start QuickBooks.

Tracking information about your clients

The QuickBooks Customer list lets you add extra fields to each client's record for any purpose. You can use these customized fields to track dates, personal information, and so on. Creative professionals may want to add customized fields to track additional client information such as:

How client was referred

Client's birthday

Name of client's spouse

Name of client's administrative assistant

(For writers) Whether client pays by the story, by the hour, or by the word

(For photographers) Whether client pays by the photo or by the hour

Information you enter into the fields can be just for your use (for example, you can look up a client's record to see his birth date), or you can add the customized fields to your sales forms and have the information appear on your invoices and cash sales receipts.

If you want to add customized fields to a client's record, see the steps below. If you want to then add the customized fields to your invoices, see "Customizing an invoice" in this document.

To add customized fields to a client's record:

1.	Select the client's name in your Customer:Job list, click the Customer:Job button, then choose Edit.

2.	At the Edit Customer window, click the Additional Info tab.

3.	Click the Define Fields button to specify the custom fields you want to add to each client's record.

Enter the name of the field and where you want it to be used (you can have it displayed for your clients, vendors, and/or employees).

4.	(Optional) Fill in the fields for this customer, vendor, or employee.

You'll see the new fields on the Additional Info tab. If you fill in a field, and have added that field to your sales forms, the information you enter transfers automatically to any customized form where the field appears. For example, if the field is named "Sales Region" and you've entered "Far West" as the sales region for a particular customer, the Sales Region field on your sales forms prefills to "Far West" each time you enter a sale to the customer.

Leave a field blank if you'd prefer to fill it in at the time you make a sale.

5.	Click OK.

What's next

You can add customized fields you've set up for customers to any sales form and to the estimate form. If you want information you've entered in the customized fields to appear on a form, you must add the fields to the form. (For details on how to customize an invoice, see "Customizing an invoice" in this document.)

For more information, see the:

"Adding and using customized fields" topic in the "Working with lists" chapter of the User's Guide

"Creating custom forms overview" topic in the "Forms" chapter of the User's Guide

"Customizing form content" topic in the "Forms" chapter of the User's Guide

"Designing form layouts" topic in the "Forms" chapter of the User's Guide

Helping us help you

We'd like to know your special concerns and the problems you run into when trying to make QuickBooks work in your business. We also want to know how useful "Writers, photographers, and other artists" was in helping you fit QuickBooks to your needs.

Please use this sheet to mail or fax us your comments. If possible, please also attach specific comments marked on the printed version of this document. Mail the completed form and any attachments to:

Intuit Canada, Ltd.

Industry Feedback

P.O.Box 4165

Edmonton, Alberta

Canada

Or fax your comments to us at 1-800-387-4285

Some information about your business

Name:

Business name:

Address:

Phone:

Number of employees:

My business is a: __ Sole proprietorship __ Partnership __ Corporation

What other needs do you have, specific to your type of business, that were not covered in this document?

Do you have any tips for other people in your field who use QuickBooks?

Which two or three topics did you find most useful in this document?

May we call you to discuss your comments?

___ yes    ___ no


Architecture

Overview for architects

Before you begin

Setting up your QuickBooks company

Organizing your income, expenses, clients, and projects

Customizing your Chart of Accounts

Setting up clients as customers

Tracking projects as jobs

Creating items

Using classes to track different segments of your business

Creating project budgets or estimates

Tracking time

Entering change orders

Billing for architectural fees and costs

Customizing invoice appearance

Handling reimbursable expenses and employee advances

Understanding income and profitability with reports

Other QuickBooks tips for architects

Helping us help you

Overview for architects

As an architect, you have some basic needs from your accounting system. QuickBooks can help you meet many of those needs, including:

Sending your clients invoices that meet their requirements

Tracking reimbursable expenses and charging them back to clients

Tracking change orders

Running payroll cheques for your employees

Analyzing how your business is doing by creating financial reports

We recommend QuickBooks Pro for architectural firms

Although you can use QuickBooks to handle your accounting, QuickBooks Pro is particularly useful for architects. QuickBooks Pro has additional features that let you:

Write an estimate (project budget) that you can send to clients and later turn into invoices

Track the billable and unbillable time you spend on each project

Create client invoices based on billable time

Track time for each person in your office

Run payroll cheques based on employees' timesheets

Separate your costs for work done by subcontractors from the amount you charge your clients for that work

Get reports on actual time spent on projects, versus time billed or unbilled

Get reports on how much billable and unbilled time each associate in your office is accumulating

Before you begin

This document gives you information on how to use QuickBooks for your special needs - we won't repeat what's already in the standard information you receive with QuickBooks. Instead, you'll see references to show where you can find complete information and details on using QuickBooks features.

Printing your industry document

If you're looking at this document onscreen, you're now in a "QuickBooks and Your Industry" window.

To print this document:

From the File menu, choose Print... or Print Topic.

If you got to this Help window from the interview, close the Help window to return to the interview.

To see other industry documents:

Click any of the industries listed in the contents.

If you want to use QuickBooks for payroll

To use QuickBooks for your payroll, make sure the payroll preference is on, and follow the directions for setting up employees and payroll items in the EasyStep Interview or in the printed documentation.

For more information, see the:

" Set up payroll" topic in the "Setting up a QuickBooks company" chapter of the Getting Started Guide

Understanding QuickBooks terminology

QuickBooks uses a few special terms that you should be aware of:

Chart of accounts

A list of accounts that you use to track how much money your company has, how much money it owes, how much money is coming in, and how much is going out.

Item

Anything you charge a client for, such as an architectural service or administrative fee. In QuickBooks, any charges or discounts you want to include on an invoice should be entered on your Item list.

Service item

A specific type of item. Architecture firms should set up service items for any services they provide to clients, such as design development or construction supervision.

Class

A way to categorize income and expenses. For example, you can use the Class field to track the profitability of each partner in a firm.

QuickBooks also uses some generic terms which you will need to match to the terms you use. Here are some architectural terms mapped to QuickBooks terms:

A client would be a Customer in QuickBooks.

A project would be a Job in QuickBooks.

A project budget would be an Estimate in QuickBooks Pro.

Important

The information in this document was compiled from the experiences and suggestions of other QuickBooks users in architecture. Your own needs may vary considerably. Only you and your accountant understand the unique needs of your business. Ultimately, you are responsible for your own books.

We encourage you to have your accountant look over the setup suggested in this document. We suggest that you give QuickBooks a thorough "trial run" early in the process. The best way to ensure that QuickBooks will provide all the information you need, is to enter a small number of your standard transactions in QuickBooks. Then try running all the reports you may need.

While we will give you technical support on how QuickBooks works, our technical support representatives are not industry experts and cannot give you specific accounting advice. If you have questions regarding accounting issues specifically related to your industry, we recommend you consult either an accountant, industry expert, or professional association.

Setting up your QuickBooks company

The QuickBooks EasyStep Interview asks you questions about your business, and uses your answers to help you set up your architectural firm in QuickBooks. We recommend the interview as the easiest way to get started and to customize QuickBooks for your type of business.

If you choose not to use the EasyStep Interview, you should follow the setup directions in the "Setting up a QuickBooks company" chapter of the Getting Started Guide.

Organizing your income, expenses, clients, and projects

QuickBooks includes important features that let you analyze your architectural business in great detail:

Your Chart of Accounts, including balance sheet, income and expense accounts, tracks all of your transactions.

The Customer list, with optional customer types, lets you keep track of the types of clients you serve.

Job tracking lets you track the income and expenses for each project you do for a client, while the use of job types (available in QuickBooks Pro) lets you track the scope of your projects.

Items let you track the services you provide to your clients.

Classes let you track different segments of your business, and give you a way to break down your income and expenses for any client or any project.

The following sections give you more information about these and other features.

Customizing your Chart of Accounts

In QuickBooks, an account represents a group of transactions and is used for tracking and reporting purposes. The complete list of accounts for your company is called the Chart of Accounts. When you set up your QuickBooks company, you can choose a preset chart of accounts designed especially for architects. This preset chart of accounts gives you a head start in creating your balance sheet accounts, income account, and expense accounts.

You may find as you review the preset chart of accounts that you need to add, edit, or delete accounts from that list, or add subaccounts.

Important:	As a general rule, you should reserve the accounts on your Chart of Accounts for broad categories. Use items and subitems to see more detail about items you've sold or bought.

For more information, see the:

"Your chart of accounts" chapter in the User's Guide

Setting up clients as customers

You store the information about your clients and the individual projects you want to track for each client in the Customer:Job list. You should set up each client as a customer in QuickBooks.

Customer types

If you choose, you can also categorize your clients by giving them a customer type. The customer type lets you keep track of the different types of clients you serve, and gives you the information you need to analyze your client base. You can categorize each client in a way that is meaningful and useful for your business.

The customer types do not appear on QuickBooks forms, but you can create reports based on the information. You can also print mailing labels and summary statements based on customer type.

Important:	Don't use customer types for two different purposes. For example, don't create customer types for tracking client categories (residential versus commercial) as well as your referral sources. Choose the type of client information you want to track, and set up your customer types to suit that purpose.

Examples of customer types for architecture firms

You can use QuickBooks' optional customer types to track the information that is most meaningful for your business. For example, you can set up customer types to:

Track the different types of clients you serve (for example, Residential and Commercial). This lets you create reports that show exactly where you generate the most revenue.

Track how a client was referred (for example, Prev Client, Magazine Article, and Colleague). Knowing the sources of client referrals can help you decide how best to spend your marketing dollars.

If you want to further break down your customer types, you can add subtypes.

For more information, see the:

"Customers and jobs" topic in the "More QuickBooks lists" chapter of the User's Guide

"Customer types" topic in the "More QuickBooks lists" chapter of the User's Guide

Tracking projects as jobs

If you want to keep track of your income and expenses on a project-by-project basis, you may want the level of detail provided by job tracking. In QuickBooks you can track projects for each client by setting up the projects as "jobs" in the Customer:Job list.

For example, suppose you're designing a library addition for the residence of James and Diane Schneider, and you know that you'll later be designing a guest house for them. You can add two jobs for them on your Customer:Job list - one for the library, the other for the guest house. This lets you track the income and expenses separately for each project.

If you never do more than one project for a client (or you don't want to track each project's income and expenses), you don't have to enter jobs on the Customer:Job list. Instead, your list will contain only client names.

If you have QuickBooks Pro and you are using job tracking, you can also categorize your projects (jobs) by type by using the Type field in the New/Edit Job window. Tracking job types gives you an idea of the profitability of each kind of project you do. It can also help you determine what proportion of your firm's time is spent on different types of projects.

Examples of job types for architecture firms (QuickBooks Pro)

You can use QuickBooks Pro's optional job types to track any information about your jobs that you think is important. You can then filter reports to show only the data for specific types of projects (job types). For example, you can set up job types to:

Distinguish between New Construction and Remodel projects.

Distinguish between Fixed Fee and Time Billing projects.

You can add subtypes to break down your job types even further. For example, to the "New Construction" job type, you can add "Windsor" and "Tudor" as subtypes.

For more information, see the:

"Job types" topic in the "More QuickBooks lists" chapter of the User's Guide

Creating items

QuickBooks items represent the services or products that you buy, sell, or resell in your business.

When you record a sale or a purchase, you use items from your Item list to fill out the form quickly. When you choose an item in the Item column on the form, QuickBooks fills in the description, rate or price, and then calculates the amount.

QuickBooks uses information you've recorded about each item to assign the sale or purchase to the right income or expense accounts. Reports and graphs can then give you valuable information, such as your greatest sources of income and which items you sell most.

If you have outside expenses for which you want to be reimbursed (such as blueprint copying or travel expenses), you don't need to create a QuickBooks item to include them on an invoice. See "Handling reimbursable expenses and employee advances" in this document.

Important:	The way you set up items depends on how you want to bill your clients, and the information you want to show on your invoices. Following are some sample uses of items in QuickBooks. See "Billing for architectural fees and costs" in this document for information on setting up your Item list to handle specific billing needs.

Using Service items

Create a service item for each type of work you do for clients, whether it's done by a partner, salaried employee, subcontractor, or hourly employee.

You can set up your items all at once or as you're filling out an invoice. When you create the item, enter the rate you charge for that service.  If items are charged on a percentage basis, leave the Rate field blank.

Using subitems

How you set up your Item list depends on the information you want to show clients on the invoice. If you want your invoices to show each phase of a project, as well as the time spent on individual tasks (or the percentage of completion for phases or tasks), you should model your Item list on the list of tasks your company already uses.

Example uses of items for an architectural firm

To charge clients for architectural services

Create a service item for each type of service you provide to clients, such as:

Schematic Design

Design Development

Construction Documents

Construction Administration

See "Setting up items for billing" in this document for details.

To charge clients for non-architectural services, such as administrative fees (for example, for copying):

Create an other charge item for each of the administrative services you provide to clients. When you create the item, enter the rate you charge for that service.

To track forgiven charges (billable hours for which you decide not to bill the client):

Create a discount item called Courtesy. See "Forgiving charges" in this document for details.

(QuickBooks Pro) To track costs of services done by subcontractors as expenses, and revenue from those services (when the client reimburses you) as income:

Create service items for subcontractor services and select the "This service is performed by a subcontractor" checkbox. This lets you enter your cost and an expense account. You also enter what you charge your clients for the services, and an income account to record the reimbursement.

Setting up items specifically for subcontracted work helps you manage your books more effectively. When you use these items, QuickBooks Pro records expenses and income for subcontracted work in separate accounts. This lets you create reports that show the profitability of subcontracted work to your business.

For more information, see the:

"Items - your products and services" chapter in the User's Guide

Using classes to track different segments of your business

QuickBooks classes give you another way to track income and expenses in addition to customer type and (in QuickBooks Pro) job type.

Classes give you a way to track different segments of your business and to break down your income and expenses for each segment. For example, you can use classes to track the proportion of your income and expenses for two different locations.

How classes differ from customer types and job types

Classes can apply to all transactions, so they are not tied to any particular client or project. However, a job type or a customer type is associated with only certain projects or certain clients.

For example, an architect might have "Residential" and "Commercial" customer types to categorize her clients, and "Remodel" and "New Construction" job types to categorize each project for a client.

Financial reports could then be filtered by type of client or type of project. But if you need a classification that spans any type of client or project you can use QuickBooks classes. For example, if you have a partner, you can create a class for yourself and a class for your partner.  You would then select one of these classes on each transaction in QuickBooks. Later, you can get reports on income and expenses by partner (class), regardless of which types of clients or projects they each worked on.

Tips for when to use classes

Here are some tips for when to use classes:

Set up classes on the basis of the type of reporting you want to do, and consider how you want to see your business segmented on reports. For example, if you want to analyze the profitability of each of your project managers' projects, you can create a class for each project manager. Later, you can create a report that looks at income and expenses by class (for each project manager).

Classes are most useful when you can identify both income and expenses for each class you set up, because this makes the Profit and Loss report by class more meaningful. For example, if you do business in two different offices or locations, you can make each location a class if you can identify both your income and expenses by location. That way, you can see a Profit and Loss report by location (class).

Don't use classes for two different purposes. For example, don't create classes for tracking office locations as well as for tracking partners.

Examples of classes for architecture firms

You can use classes to:

Analyze the income and expenses for each project manager's projects, by creating a separate class for each project manager.

Analyze the income and expenses for each location, if you have offices in more than one location. Create a separate class for each business office.

If you want to break down your income and expenses even further, you can create subclasses. For example, if you want to track your project managers' projects and you have two business offices, you can set up classes for each business office and set up subclasses for each project manager:

4th Street (class)

Gail (subclass of 4th Street)

Richard (subclass of 4th Street)

Main Street (class)

Barry (subclass of Main Street)

Carol (subclass of Main Street)

If you decide to use classes, you can set them up all at once or "on the fly."

For more information, see the:

"Classes" topic in the "More QuickBooks lists" chapter of  the User's Guide

Creating project budgets or estimates

The initial phase of any architectural project is to estimate the tasks and hours involved in completing the project. A project budget usually includes information such as the following:

client name

project name and number

location and square footage of the project

a description of the services to be provided by the architect

an estimate of the hours (and fee) required to complete each phase of a project

the rate charged by different architects involved in a single project

total hours and total fees for the project

If you have QuickBooks Pro, you can use the estimate form to create your project budget. If you have QuickBooks, you can use a pending invoice.

QuickBooks Pro automates estimates

If you have QuickBooks Pro, you can use the estimate form to create a document similar to a project budget. Once you have all the project tasks entered on the estimate form, you can later use the estimate to prepare client invoices. (See "Invoicing from a project budget or estimate" in this document for details.)

You can also customize the estimate form to include only the columns and information you need. Here are some of the changes and/or additions you might want to make to QuickBooks Pro's estimate form:

Change the title of the form from "Estimate" to "Project Budget."

Change the name of the "Estimate No." field to "Budget No."

Change the name of the Item column to "Task" or "Phase."

Change the name of the Quantity column to "Hours."

Change the name of the Cost column to "Rate."

Remove the Markup column from the form.

For more information, see the:

"Estimates" chapter of the User's Guide

Creating an estimate without QuickBooks Pro

If you don't have QuickBooks Pro, you can use a pending invoice to create a project budget or estimate.

To create a project budget with a pending invoice:

1.	Create an invoice that details the work you plan to do for the client.

Enter the client name and charges as usual. (If you don't have all your charges set up in your QuickBooks Item list, you can add them as you go.)

2.	Type the words "Pending Approval" in the Customer Message field.

3.	While the invoice is displayed, choose Mark Invoice as Pending from the Edit menu.

QuickBooks displays the word "Pending" on the onscreen invoice (it does not appear on the printed invoice).

4.	Change the title of this invoice to "Project Budget" or "Estimate".

Select a customized invoice template on  which you have changed the default title to "Project Budget" or "Estimate". (See the "Customizing form content" topic in the "Forms" chapter of the User's Guide.) When you wish to convert this estimate back to an invoice, simply display it on your screen and select your usual invoice template.

5.	(Optional) If you may create more than one invoice from this estimate (because you are billing in phases), memorize the estimate by choosing Memorize Invoice from the Edit menu.

Give the memorized invoice a name such as "Jones Project Budget." Click the "Don't remind me" checkbox to select it.

By memorizing the estimate, you'll be able to easily convert it to an invoice later. (See "Invoicing from a QuickBooks pending invoice" in this document.)

6.	Print the estimate for the client's review.

You can get a report listing all pending invoices by choosing Sales Reports from the Reports menu, then choosing Pending Sales.

Tracking time

An architect sells time and expertise, so tracking time accurately and completely is important. Even if you do most of your projects for a fixed fee, you need to track the time you spend on each project in order to determine your profitability.

If you have QuickBooks Pro, you can track your time on QuickBooks Pro timesheets and transfer the hours directly to client invoices. If you have QuickBooks, you can track your time on a pending invoice.

QuickBooks Pro automates time tracking

QuickBooks Pro lets you track your time on projects or phases of a project, and analyze your time costs by client or project, person who did the work, or by type of work done.

Important:	If you do your books on an accrual basis, time you enter in QuickBooks Pro is not considered revenue until you actually bill for it; similarly, it is not considered an expense until you actually run payroll.

Keeping track of time

You can enter time for an owner, partner, or employee. On the time entry form, you choose the client and project for whom the work was done in the Customer:Job field. You then choose the "service item," which is the type of work you did (see "Creating items for billable services" in this document). Later you can pass the charges to your clients on invoices.

You have the option of entering individual activities on separate forms or using a weekly timesheet format. In either case, be sure to enter as complete a time record as possible so QuickBooks can translate those hours into billable hours on client invoices.

Which time entry form to use

QuickBooks Pro lets you track time using either the Single Activity window or the Weekly Timesheet window. The Single Activity window is for recording time spent by one person on a single activity for a single project on a single date. A weekly timesheet is a record of time spent by one person on any number of projects within a seven-day period.

Individual time entries are convenient if you will be continuously running QuickBooks Pro, and entering each activity as you do it, rather than entering all your time at the end of the week from a paper timesheet.

The weekly timesheet in QuickBooks Pro is useful when you want to work from a paper form and enter time for all your projects at once. If you want to continue using the timesheets you've been using in your firm, you can transfer the data from them to QuickBooks Pro's weekly timesheet form before invoicing clients.

Transferring time data and notes to invoices

When you are invoicing a client and have the invoice form displayed, you can click Time/Costs (and then click the Time tab) to see a list of the time entries you've recorded in QuickBooks Pro for that client's project. Clicking next to a time entry transfers it directly to the invoice.

You may also want the notes you've entered for each activity to be included on the invoice.

To use your time entry notes on the invoice:

1.	Select the client and project (Customer:Job), and click Time/Costs.

2.	Click the Time tab.

3.	If 'Transfer activity notes' does not appear under options, click the Change button, then click the "Transfer notes for each activity" box to select it, and click OK.

QuickBooks Pro has a limit on the number of characters you can enter in the notes field of the timesheet. That limit is the same on the weekly and individual time entry forms. If you transfer notes to invoices or statements, you may wish to manually adjust the appearance of the text on those forms. (This is especially true if you entered your notes and pressed the Enter key at the end of each line. When you're entering notes, it's better to type without pressing the Enter key, so that QuickBooks Pro can automatically wrap each line.)

Tracking time without QuickBooks Pro

If you don't have QuickBooks Pro, you can keep track of your time on a pending invoice. Use a separate invoice for each client's project.

To keep track of time on a pending invoice:

1.	Create the invoice as usual, entering the client name and project.

2.	While the invoice is displayed, choose Mark Invoice as Pending from the Edit menu.

QuickBooks displays the word "Pending" on the onscreen invoice (not on the printed version).

3.	Whenever you work on this project for this client, enter the time and charges on the pending invoice.

4.	When you're ready to invoice for your time, display the invoice and choose Mark Invoice as Final from the Edit menu. Then print the invoice as usual.

Tip: When you're ready to mark the invoice as final, you can find the invoice quickly by creating a pending sales report and using QuickZoom to display the original invoice form. (To do so, choose Sales Reports from the Reports menu, then choose Pending Sales. In the report window, double-click the invoice you want to see.)

Tracking non-billable time

To get a true picture of firm profitability, many architects track their non-billable hours as well as their billable ones. For example, if you spend part of your day marketing your firm's services, or presenting proposals to clients, you may want to track the total amount of time you spend on such activities.

QuickBooks Pro lets you track the actual number of hours you spend on projects, not just the amount for which you bill clients. By tracking your non-billable hours, you can get a better idea of your business's profitability. If your business has employees, you may want to track each person's billable hours versus non-billable hours.

To keep track of non-billable time (for activities you never plan to bill clients for), you need to set up "service" type items for each of your non-billable activities. Then, on your time entry form in QuickBooks Pro, you can choose from your list of service items to fill out the form. If the activity is non-billable, just deselect the Billable checkbox (in the Single Activity window) or the Billable column (in the Weekly Timesheet window) by clicking it. QuickBooks Pro places an 'X' over non-billable items.

For example, if you spend four hours researching an architectural period for one of your clients (a billable activity), and two hours working up an estimate for a new project for the same client (a non-billable activity), you enter 4.0 for the Design Devel item and 2.0 for the Marketing item on your time entry form. Because marketing activities are not billable, you can click next to the Marketing item on the time entry form, to mark that line with an 'X.' This tells QuickBooks Pro that you don't want to invoice the client for that activity.

You can see how much of your time is spent in billable versus non-billable activities by creating a Time by Item report (one of the Project reports).

For more information, see the:

"Time tracking" chapter of the User's Guide

"Invoicing customers for time worked" topic in the "Time tracking" chapter of the User's Guide

"Charging for reimbursable expenses" topic in the "Sales and sales forms" chapter of the User's Guide

"Charging for actual time and costs" topic in the "Sales and sales forms" chapter of the User's Guide (QuickBooks Pro)

Entering change orders

A large portion of managing an architectural project is tracking changes. When the scope and details of a project change, you need to issue a change order, and then bill for those extra charges on the invoice.

The best way to handle change orders in QuickBooks is to give each change order a number or name. If your Customer:Job list contains client names only (no projects), you can create a QuickBooks job to track each of your change orders. For example, a change order for the Jones project could be Jones:CO3, where Jones is the client name and CO3 (change order #3) is the job.

If your Customer:Job list already uses customer and job names, you can create subjobs for each change order. For example, a change order for the Jones remodel could be Jones:Home Remodel:Change Order 1:

Jones (customer name)

Home Remodel (job)

Change Order 1 (subjob of Home Remodel job)

Change Order 2 (subjob of Home Remodel job)

After you create the job or subjob, you enter the change order by using the estimate form (in QuickBooks Pro) or the invoice form (in QuickBooks).

To enter a change order in QuickBooks Pro:

1.	Create a job or subjob for the change order. (Begin by choosing Customers:Jobs from the Lists menu, clicking the Customer:Job button, and selecting Add Job.)

2.	Change the title of the estimate form to display "Change Order" rather than "Estimate."

To change the title, see the "Customizing form content" topic in the "Forms" chapter in the User's Guide.

3.	Create an estimate (now "change order") form, and select the client, job (project), and subjob (change order) in the Customer:Job field.

4.	Fill in the line-item area of the estimate by listing the scope of the work to be covered by this change order.

You can set up any new items as you go. You should also edit the description to indicate that this is a change order. (When you use the change order to create an invoice, you'll want to retain this information on the invoice.)

When you're ready to invoice for the additional fees, you can turn the estimate into an invoice as described in "Invoicing from a project budget or estimate" (under the "Billing for architectural fees and costs" section) in this document.

To enter a change order in QuickBooks:

1.	Create a job or subjob for the change order.

2.	Create a customized invoice template, changing the title from "Invoice" to "Change Order."  You can call this template "Change Order."

For more information on customizing templates, see the "Customizing forms content" topic in the "Forms" chapter of the User's Guide.

3.	Create an invoice using the "change order" template. Select the client, job (project), and subjob (change order) in the Customer:Job field.

4.	Fill in the line item area of the invoice by listing the scope of the work to be covered by this change order.

You can set up any new items as you go. You should also edit the description to indicate that this is a change order. (When you convert the change order to an invoice, you'll want to retain this information on the invoice.)

When you're ready to invoice for the additional fees, display the invoice and change the title of the form back to "Invoice" by selecting your regular invoice template.

Billing for architectural fees and costs

When you fill out a QuickBooks invoice, you list each service you've provided for the client, along with its associated fee. You may want your invoices to show some or all of these details:

the phase of the project you're invoicing for (for example, schematic design or design development)

the number of hours spent on each phase of the project

the percentage of completion for each phase of the project

if you are billing by time and more than one architect was involved, the hourly rate for each person

expenses for which you want to be reimbursed (such as delivery and blueprint reproduction)

Architects typically bill their clients using a combination of these methods:

Time billing

 Invoices based on time billing typically show the phase of the project and the services provided, the number of hours spent on each service, the hourly rate, and the total fee. If you invoice clients using this method, see "Billing clients for time" and "Billing for work done by several architects" in this document.

Fixed-fee billing (according to percentage of completion)

Invoices based on flat-fee billing typically show the phase of the project, the percentage completed, and the fee. If you invoice clients using this method, see "Billing clients for a percentage of completion" in this document.

Setting up items for billing

Each fee you include on an invoice (each service you provide) should be a separate item on QuickBooks' Item list. (See "Creating items for billable services" in this document.) The way you set up your Item list depends on the information you want to show clients on an invoice. For example, most projects consist of these phases:

Existing Condition Survey

Schematic Design

Design Development

Construction Documents

Construction Administration

Within each of these phases are specific tasks that need to be accomplished. For example, part of the Existing Condition Survey phase may be to inspect the site, review zoning/code requirements, and develop a design program with the owners.

If you want your invoices to show each phase of a project, as well as the time spent on individual tasks (or the percentage of completion for phases or tasks), you should model your Item list on the list of phases/tasks your firm already uses.

To set up the Item list to show project phases/tasks:

1.	Create "service" type items for each phase of a project, such as Design Devel. Do not enter a Rate for the item.

2.	For each service item just created, create subitems for each task included in that phase.

For example, if one of the tasks underneath Design Development is "Prepare design development drawings," you can create a subitem for Design Devel called Prep Drawings.

3.	Type a description that you want to appear on the invoice.

Because the item name usually requires abbreviation, you'll want to provide a complete description that will be understandable to your clients.

If you are charging by percentage of completion, the description should include a placeholder for the percentage amount. (For example, "Schematic design, 20% complete.) See "Billing clients for a percentage of completion" in this document.

4.	Enter a Rate for the new subitem.

If you are charging by time (hours worked), enter your hourly fee for the Rate.

If you are charging by time, and your firm employs several architects, leave the Rate at 0.00. You'll want to create subitems underneath this task for each of your architects, as described in "Billing for work done by several architects" in this document.

If you are charging by percentage of completion, leave the Rate at 0.00. You can enter the amount directly on the invoice, as described later in "Billing clients for a percentage of completion."

On the invoice, when you choose Design Devel:Prep Drawings from the Item list, QuickBooks displays the item and subitem name (separated by a colon), the description, and the rate.

For more information, see the:

"Items - your products and services" chapter of the User's Guide

Billing clients for time

For a project charged on a time basis (number of hours worked), you'll want your Item list to include the hourly rate you charge for each service (see Step 4 in the previous section).

If you have QuickBooks Pro, you can track your time within QuickBooks Pro, and transfer that time directly to your invoices, as described earlier in "Tracking time."

If you have QuickBooks, you can track your time on a pending invoice and turn that into a final invoice when you're ready to bill, as described earlier in "Tracking time without QuickBooks Pro."

Billing for work done by several architects

If your projects typically involve the work of more than one architect, and you bill their time at different hourly rates, you'll want to set up your Item list to include those rates.

For example, suppose your firm has three architects, all with different hourly rates. If you want your invoices to show the time worked by each architect, you can set up your Item list like this:

Design Devel ("service" item with 0.00 rate)

Prep drawings (subitem of Design Devel; 0.00 rate)

Partner (subitem of Prep Drawings; 100.00 rate)

Sr. Architect (subitem of Prep Drawings; 85.00 rate)

Jr. Architect (subitem of Prep Drawings; 60.00 rate)

When you're ready to invoice, just choose the appropriate subitem from the list, and QuickBooks enters the task description and rate for you. All you have to do is enter the time worked by each architect (or, if you have QuickBooks Pro, click Time/Costs and then click the Time tab).

Billing clients for a percentage of completion

Projects done on a fixed-fee basis typically assign specific percentages to each phase of the project. For example, a project with a budget of $100,000 may assign percentages to phases like this:

Schematic Design at 30% (value of phase: $30,000)

Design Development at 20% (value of phase: $20,000)

Working Drawings at 50% (value of phase: $50,000)

Now suppose you're ready to bill the client, and schematic design is 100% complete, while design development is 50% complete. Here's how you set up your Item list:

Schem Design ("service" item with 0.00 rate; enter a description such as "Schematic design, 0% complete)

Design Devel ("service" item with 0.00 rate; description is "Design Development, 0% complete")

Working Draw ("service" item with 0.00 rate; description is "Working Drawings, 0% complete")

Notice that you include the percentage of completion in the item's description. On the invoice, when you choose Schematic Design from the Item list, edit the description to show the actual percentage of completion (100%). Enter 30,000 as the Amount. On the next line of the invoice, choose Design Development from the Item list, and edit the description to show 50% as the completion rate. Enter 10,000 as the Amount.

Invoicing from a project budget or estimate

If you created a project budget or estimate in QuickBooks or QuickBooks Pro (see "Creating project budgets or estimates" in this document), you'll want to use that estimate as you invoice your clients.

Invoicing from a QuickBooks Pro estimate

If you have QuickBooks Pro, you can use your estimate to create an invoice. Then you can modify the invoice if necessary.

To create an invoice from a project budget or estimate:

1.	Locate the estimate by displaying the Customer:Job list, selecting the project (or the client, if there is no separate project for that client), and clicking Activities, then View Estimate.

2.	Click Create Invoice at the bottom of the Create Estimates window.

3.	Delete all sections from the invoice that you don't plan to bill the client for at this time, and add any other information as necessary.

You can edit the invoice by deleting lines, changing rates or hours, and adding new charges or services.

You can create multiple invoices from the same project budget or estimate (in order to bill for different phases of the project), by repeating the above steps.

For more information, see the:

"Turning an estimate into an invoice" topic in the "Estimates" chapter of the User's Guide

Invoicing from a QuickBooks pending invoice

If you created a project budget by using a pending invoice, the way you invoice from that budget depends on whether you want to create one or multiple invoices from the same project budget.

To create one invoice from a project budget:

1.	Display the pending invoice that contains your project budget.

Tip: You can find the invoice quickly by creating a pending sales report and using QuickZoom to display the original invoice form. (To do so, choose Sales Reports from the Reports menu, then choose Pending Sales. In the report window, double-click the invoice you want to see.)

2.	Change the title from "Project Budget" back to "Invoice" by selecting your regular invoice template from the Custom Templates drop-down list.

3.	Edit the invoice as necessary to reflect the charges you want to bill.

Remember to change the Customer Message, if necessary.

4.	Choose Mark Invoice as Final from the Edit menu.

When you turn the estimate back into an invoice, the original estimate no longer exists in QuickBooks.

To create multiple invoices from a project budget:

1.	Follow the steps for creating an estimate using a pending invoice. (See "Creating an estimate without QuickBooks Pro" in this document.)

If you followed the steps listed in that section, you should have memorized your estimate.

2.	From the Lists menu, choose Memorized Transactions.

3.	Select the memorized project budget for your client and click Enter Transaction.

QuickBooks displays the project budget in the Create Invoices window.

4.	Select your usual Invoice template from the Custom Template drop-down list to change the title from "Project Budget" back to "Invoice."

5.	Edit the invoice as necessary to reflect the charges you want to bill.

Remember to change the Customer Message, if necessary.

The next time you're ready to bill the client, you can repeat the above steps, beginning at Step 2.

Forgiving charges

When you invoice a client, you may sometimes decide to "forgive" certain charges; that is, you decide not to bill the client for a number of billable hours. For example, you may have estimated that a design sketch would take four hours, but it actually took you six. For an important client, you may decide to forgive the two extra hours, and only invoice for four hours of time. If you want to show this forgiven time on your invoice (some service professionals call this a "courtesy" item), you can handle it in one of two ways:

If you don't want to track forgiven charges for each of the services you perform, you can create one "discount" item called Courtesy. For example, if you create an invoice for six hours of design time (the "Schem Design" service item), you can choose the Courtesy discount item and subtract two hours of time off the client's charges.

If you want to track your forgiven charges for each of your services, you can create a "service" item called Courtesy, with a Rate of 0.00. Then you can create subitems for each of your services (Service A, Service B, and so on). When you enter the amount of the forgiven charges on the invoice, you must enter a negative number (so that the forgiven charge subtracts from the normal service charge).

You can see how many billable hours you've forgiven by creating a Sales by Item report (one of QuickBooks' Sales reports).

Tracking retainer fees

At the onset of a new project, some architects require their clients to submit a retainer fee, which is applied to the final bill at the conclusion of the project. If you have retainer clients who pay an up-front or advance payment, the payment is considered a liability. (This is because you owe the service to the client, and will be working off the liability.) You can track the liability in QuickBooks by setting up these three things:

A liability account for tracking retainers

An "other charges" type item, for showing the retainer on invoices

A "payment type" item, to show the original payment received

For more information, see the:

"Retainers" topic in the "Receiving and depositing payments" chapter of the User's Guide

Sending summary statements to clients

As you enter invoices and client payments day to day, QuickBooks tracks the information to create summary statements that you can send to your clients. Summary statements are like a mini-report of the charges and payments made on a client's account; you just review them, decide whether to add finance charges, and print them.

Important:	Do not confuse summary statements with billing statements. A billing statement is a second method QuickBooks provides for you to bill your clients (invoices are the other billing method). You should choose whether to use invoices or billing statements and use that method consistently.

For more information, see the:

"Using billing statements" topic in the "Sales and sales forms" chapter of the User's Guide

Customizing invoice appearance

Invoices used by architects require lots of space for descriptions. Some architects include their hourly rate as part of the description, while others want a separate rate column. Many architects also want their invoices to include the project number.

Depending on how you've done invoices in the past, you may want to remove or add information to QuickBooks' standard invoice forms. You can add or delete fields or columns, widen or change the order of columns, and include your own customized fields on the invoice. For example, you can:

Remove the Item column from the printed invoice form (not from the onscreen form). If you provide a detailed description for each item you set up, you don't need to display the item name to clients.

Change the title of the Quantity column to "Hours."

Remove the Rate column, if you always bill according to a fixed fee. (The Amount column is all you need.)

Add a customized field for a client's project number. (To do this, you must first add the field to your Customer:Job list. See "Tracking information about your clients" in this document for details.)

For more information, see the:

"Adding customized fields" topic in the "Working with lists" chapter of the User's Guide

"Creating custom forms overview" topic in the "Forms" chapter of the User's Guide

"Customizing form content" topic in the "Forms" chapter of the User's Guide

"Designing form layouts" topic in the "Forms" chapter of the User's Guide

Adding multi-line descriptions

When you type text in the Description column, you can set exactly where your lines break by pressing Down Arrow to move to a new line.

To enter several lines of description:

1.	On the invoice form, position your cursor in the Description column.

2.	Type your lines of description, pressing Down Arrow to move to the next line of the description.

Each line has a limit of 99 characters. Although you can't see a line this long on the onscreen form, QuickBooks displays the entire line on the printed invoice. (You can click the Preview button to check how a line will print.)

Handling reimbursable expenses and employee advances

Architects often incur reimbursable expenses for items such as travel and blueprint copying. This section tells you how to track your own reimbursable expenses in QuickBooks, as well as how to handle employee advances for client expenses.

Tracking your own costs for reimbursement

When you incur expenses that you plan to pass along to clients, you pay for the expense by cheque, credit card, or cash. You can track these transactions as job costs in QuickBooks, and pass them along to your clients when it's time to bill them.

If you pay for items by cash, use the Splits feature in your Petty Cash account register to indicate the appropriate expense account and Customer:Job for this expense. Enter any necessary memo information.

If you write a QuickBooks cheque or use the credit card form to pay for reimbursable expenses, select the appropriate expense account and Customer:Job for this expense. Enter a memo in the detail area of the cheque, also; this description will appear in the Description column of the invoice when you select that expense.

When you're ready to invoice the client, and you have the invoice form displayed, click the Time/Costs button, and then click the Expenses tab (in QuickBooks Pro) or click the Expenses button (in QuickBooks). QuickBooks shows you a list of expenses not yet invoiced. If you want to include the expense on the invoice, click in the Use column next to the reimbursable expense and click OK.

For more information, see the:

"Charging for reimbursable expenses" topic in the "Sales and sales forms" chapter of the User's Guide

"Charging for actual time and costs" topic in the "Sales and sales forms" chapter of the User's Guide (QuickBooks Pro)

Tracking costs and reimbursements for employees

You may have employees who incur expenses for clients. You need to reimburse those employees, then pass on the costs to the client. Here's how to handle this situation in QuickBooks.

To reimburse employees and bill clients:

1.	Have your employees track their expenses in expense reports.

You can use the paper forms you're already using.

2.	From the Activities menu, choose Write Cheques.

Write a reimbursement cheque to each employee (not a pay cheque).

In the cheque detail area, itemize each expense by client and project (Customer:Job).

Click OK to record the cheque.

3.	From the Activities menu, choose Create Invoices.

Write an invoice to the client.

If you have QuickBooks Pro, click Time/Costs, then the Expenses tab to choose the reimbursable expenses you want to include on the invoice. If you have QuickBooks, click Expenses to choose the reimbursable expenses you want to include on the invoice.

Click in the Use column next to the expenses you want included on the invoice, and click OK.

For more information, see the:

"Charging for reimbursable expenses" topic in the "Sales and sales forms" chapter of the User's Guide

"Charging for actual time and costs" topic in the "Sales and sales forms" chapter of the User's Guide (QuickBooks Pro)

Issuing employee advances

If you prefer to issue your employees an advance for client costs (rather than reimbursing them later), here's how you can handle it in QuickBooks.

To issue employee advances:

1.	Create a new "other current asset" account called Advances. (From the chart of accounts, click Accounts, then select New.)

Leave the account's opening balance at zero.

2.	Create one "other current asset" subaccount for each employee for whom you expect to be issuing advance cheques.

For example, if you will be issuing advances to Anna Tomasson, create an other current asset subaccount called "Anna."

In the New Account window, click the "Subaccount of" checkbox, and choose the Advances account as the parent account.

Leave the subaccount's opening balance at zero.

3.	From the Write Cheques window, write an advance cheque to the employee (not a pay cheque).

4.	In the detail area of the cheque, assign the amount of the cheque to the subaccount for that employee's advances (for example, Advances:Anna).

You can also enter a memo describing what the advance is for. Do not assign a Customer:Job to the advance cheque.

QuickBooks puts an increase transaction in the Advances:Anna account register.

5.	When the employee later turns in an expense report, enter each expense as a decrease in the employee's asset subaccount. For each expense transaction:

Leave the Payee field blank.

Assign the expense to the appropriate expense account (for example, travel).

Enter the amount of the expense in the Decrease column.

6.	Assign the expense to the appropriate Customer:Job.

Select the expense in the account register and click Edit.

At the General Journal Entry window, enter the Customer:Job in the Name column on the line for the expense transaction.

Click OK.

When you're ready to invoice the client for expenses incurred by your employee, follow the procedure described earlier in "Tracking costs and reimbursements for employees," Step 3.

If the employee spent more than the advance, you can pay the amount you owe by writing a QuickBooks cheque and entering the employee's "other current asset" subaccount in the detail area.

For more information, see the:

"Charging for reimbursable expenses" topic in the "Sales and sales forms" chapter of the User's Guide

"Charging for actual time and costs" topic in the "Sales and sales forms" chapter of the User's Guide (QuickBooks Pro)

Understanding income and profitability with reports

QuickBooks has over 70 preset reports (QuickBooks Pro has even more), which you can customize to fit your needs. Here are some of the reports architects may find especially useful, along with instructions on how to create them in QuickBooks.

To create a Standard Profit & Loss report:

From the Reports menu, choose Profit & Loss, then choose Standard.

To create a Balance Sheet report:

From the Reports menu, choose Balance Sheet, then choose Standard.

To determine amount billed for each item (for each service item, other charges item, and so on) in a specific period:

From the Reports menu, choose Sales Reports, then choose By Item Detail to see a report organized by service headings (phase/task). At the report window, change the date range to cover the billing period you want to see.

To determine amount billed for each client in specific period:

From the Reports menu, choose Sales Reports, then choose By Customer Detail to see a report organized by client/project. At the report window, change the date range to cover the billing period you want to see.

To determine profitability for each of your projects, including change orders (if you have set up change orders as jobs or subjobs):

From the Reports menu, choose Profit & Loss, then choose By Job, to see the income and expenses for each job and subjob.

(If you have set up customer types) To see a report of sales by customer type:

From the Reports menu, choose Sales Reports, then choose By Customer Summary. At the report window, click the Filters button. In the Customer Type field, choose the customer type you want to report on.

(If you have set up classes for each of your project managers) To see accounts receivable by project manager, so project managers can ensure that project invoices have been paid:

From the Reports menu, choose A/R Reports, then Open Invoices. At the report window, click Filters. In the Class field, choose Selected Classes and select the project manager you want to report on.

(If you have set up classes) To determine the profitability of each segment of your business:

From the Reports menu, choose Profit & Loss, then By Class.

Partnership equity detail, to analyze each partner's capital:

From the Reports menu, choose Transaction Detail Reports, then By Account. Click Filters. In the Account field, choose "Selected accounts," and choose the specific equity accounts you want to report on.

(QuickBooks Pro, if you have set up job types) To see a report of sales by job type:

From the Reports menu, choose Sales Reports, then choose by Customer Summary. At the report window, click the Filters button. In the Job Type field, choose the job type you want to report on.

(QuickBooks Pro) To determine how projects are proceeding compared to estimates:

From the Reports menu, choose Project Reports, then choose Job Estimates vs. Actuals Summary.

(QuickBooks Pro) To see billable versus non-billable hours by employee:

From the Reports menu, choose Project Reports, then Time By Name. At the report window, click the Customize button. For "Other Columns," select the Billed, Unbilled, and Not Billable checkboxes.

(QuickBooks Pro) To see hours spent for each type of service item:

From the Reports menu, choose Project Reports, then Time By Item. Filter the report to show columns for Billed, Unbilled, and Not Billable time (click the Customize button at the report window).

(QuickBooks Pro) To see hours spent for each project:

From the Reports menu, choose Project Reports, then choose Time By Job.

(QuickBooks Pro, if you have set up items to track subcontracted services) To see a report on the profitability of your subcontracted services:

From the Reports menu, choose Project Reports, then Item Profitability. At the report window, click the Filters button. Then click the Invoice Opts. button. In the Items field, choose the items you have set up for subcontracted services.

For more information, see the:

"Reports" chapter of the User's Guide

Other QuickBooks tips for architects

Here are some other QuickBooks features you may find useful in your architectural firm.

Keeping track of conversations and tasks

Architects often make decisions with clients over the telephone. It's important to keep track of your conversations with clients, whether they occur in person or by phone. QuickBooks lets you enter notes for each client in your Customer:Job list. The customer notes give you a quick way to jot down important details of a meeting.

To enter a note related to a specific client:

1.	Display the Customer:Job list.

2.	Double-click in the Notes column to the right of the client name.

QuickBooks displays the Notepad for that client.

3.	Enter your notes.

You can use the To Do list in combination with the customer notes. Suppose your client wants you to fax an interior elevation of the foyer, and you've agreed to send it in three days. You can enter a note about your conversation in your customer notes, and you can also have QuickBooks remind you of the due date by entering it in the To Do list.

To add a note to the To Do list:

1.	From the Lists menu, choose To Do Notes.

If you already have the Notepad displayed for that customer, you can click the New To Do button.

2.	Click the To Do button, then click New to add a new note.

3.	Enter the note and the date you want to be reminded.

If you have reminders turned on, QuickBooks displays your "to do" note in the Reminders window when you start QuickBooks.

Tracking information about your clients

The QuickBooks Customer list lets you add extra fields to each client's record for any purpose. You can use these customized fields to track dates, personal information, and so on. Architects may want to add customized fields to track additional client information such as:

How client was referred

Client's project number

Personal information relevant to the project (for example, if you are designing a residence, you may want to note the number/ages of client's children)

Name of client's administrative assistant

Information you enter into the fields can be just for your use (for example, you can look up a client's record to see the name of his administrative assistant), or you can add the customized fields to your sales forms and have the information appear on your invoices and estimates.

If you want to add customized fields to a client's record, see the steps below. If you want to then add the customized fields to your invoices, see "Customizing an invoice" earlier in this document.

To add customized fields to a client's record:

1.	Select the client's name in your Customer:Job list, click Customer:Job, then choose Edit.

2.	At the Edit Customer window, click the Additional Info tab.

3.	Click the Define Fields button to specify the custom fields you want to add to each client's record.

Enter the name of the field and where you want it to be used (you can have it displayed for your customers, vendors, and/or employees).

4.	(Optional) Fill in the fields for this client, vendor, or employee.

You'll see the new fields on the Additional Info tab. If you fill in a field, and have added that field to your sales forms, the information you enter transfers automatically to any customized form where the field appears.

Leave a field blank if you'd prefer to fill it in at the time you invoice.

5.	Click OK.

What's next

You can add customized fields you've set up for clients to any sales form (invoice or sales receipt) and to the estimate form. If you want information you've entered in the customized fields to appear on a form, you must add the fields to the form. (For details on how to customize an invoice, see "Customizing an invoice" in this document.)

For more information, see the:

"Adding and using customized fields" topic in the "Working with lists" chapter of the User's Guide

"Creating custom forms overview" topic in the "Forms" chapter of the User's Guide

"Customizing form content" topic in the "Forms" chapter of the User's Guide

Helping us help you

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