Where to begin vol. 7

You are a service company. Set up your chart of accounts accordingly. It has been my experience, especially because I have created my own numbering format for my chart of accounts, to modify the accounts that QuickBooks Pro® assigns you. It isn't law or IRS regulation to use a number format, so if you end up setting up your Chart of Accounts without a numbering format and only the account name, that is absolutely fine as well. Chart of Account numbers are used for internal control: they are never duplicated on a Federal or State Tax Return. Some clients prefer to see the account name only, and a number will only confuse them. Use your best judgment by getting to know your client's likes and dislikes. Remember, as you're creating or editing your chart of accounts, to apply them to the correct account classification! One of the biggest problems I see when people are setting up accounting software of any kind is that they don't set up their accounts correctly. Here is a mindless question: when setting up a checking account, what would you classify it under? Bank/Cash? You would be surprised. I have actually seen it listed under Fixed Assets, occasionally Liabilities, and once a client had it under F.xpenses. It is not because these people are idiots: it's because they don't know how to properly set up their books. That's why they need you. Make sure that you're putting your Accounts Receivable under Accounts Receivable and your Accounts Payable under Current Liabilities. As soon as you print out a balance sheet, you will be able to tell where your errors are if you have any. Just a word to the wise. You don't want to make mistakes like that and submit the reports to your clients. That would be really embarrassing.

After you're done creating your chart of accounts, you can start entering in the expenses that you have incurred so far. If you are using your personal cash or checking account, you will need to debit the expense that the payment is applied to. such as Office Supplies, and credit your Fquity account - Capital Contributions, if that is where the money came from. You want to see how much money you arc putting into your business, and if you don't track it the correct way. you will never know. The easiest way to do this without making a journal entry and without really- having a good description of what the expense was or who it was paid out to, is by- going directly to your capital contribution equity account in QuickBooks®. Double¬click on the account to open it up. Just like in the checkbook register in QuickBooks®. all accounts look like a register. It would be a lot cleaner on your own financial reports to have a detailed listing of who you paid your expenses to. Enter the expenses that were paid by you to support your company in this account.
If you are using a credit card to start up your company, just create a liability account for "Credit Cards." Make sure you list each credit card that you will be using for this company as a sub-account. That way you can have a grand total of your credit liability along with each breakdown necessary. Also remember, with QuickBooks Pro®, you can reconcile even Credit Card Accounts! When you receive your monthly statement, reconcile it towards all of the entries you made to that particular account, and the interest is now tax deductible! Apply the interest to your expense account so you can recover that cost when you file your taxes. Try to designate one credit card to business only. Steer clear of using credit cards between both your personal and business life. I actually took one of my daughter's stickers that had letters, and put a deco silver В on one of my credit cards so I don't forget that the В is used for business expenses only. It makes for an easier life not having to sort through hundreds of credit card charges and receipts just to find the one that I used for business.