Considering QuickBooks for Mac?
More people are switching to Macs. If you plan to use QuickBooks and switch to Mac, you should be aware that although QuickBooks has made improvements to it’s Mac software, it’s not as robust as the Windows version.
- Most 3rd party add-on solutions are designed to work with the Windows version of QuickBooks, not Mac.
- Consultants are hard to find. Most QuickBooks experts use the Windows version because QuickBooks for Mac has never been as robust. Accountants and Bookkeepers have avoided it like the plague, preferring the version that allows them to best serve their customer. I’m pretty comfortable with the Mac version, it’s not THAT different to me. But I can’t exactly call myself an EXPERT because there are times when I have trouble locating my desired command.
- It’s best for companies for no more than 10 employees and Payroll is not integrated. You’ll use an online service, which is actually great. But without integrated payroll, proper job-costing is out.
- The Mac version does not have advanced inventory features like Units of Measure or Assembly Items.
- It doesn’t support sophisticated customer pricing scenarios. Although the latest versions do allow you to offer a sweeping price level to customers, it does not allow you to set price levels per item.
- The reports are more limited, especially industry-based reports, as there are no industry based Premier versions.
- Progress invoicing is not offered.
- Online banking is not as robust. Transactions have to be entered one at a time.
QuickBooks for Mac is not the best choice for many businesses, but is just fine for many. And if you love Mac, you can always keep a PC around just for your QuickBooks.
Intuit is recognizing the Mac trend and working to improve the program to meet the demand. This year they added Little Square, a great support site for Mac users.
Year End and Payroll in QuickBooks
Technically have until April 15th of the following year to “close out” your financials, but with W-2’s due Jan 31st, – January is crunch time to reconcile payroll.
QuickBooks has greatly improved the accuracy of their payroll system over the years, so if you are processing your own payroll in version 2006 and above, things should go smoothly. Because our work as payroll processors affects the tax returns of our company’s employees, it is critical that the payroll is processed correctly and that the W-2’s we provide our employees are correct.
Even if you are confident that your processing is sound, it’s important to check and verify your data prior to filing year end reports and passing out your W-2’s.
Step number one after December 31st is to be sure your California unemployment rates are updated for the new year. All California employers receive a notice some time in December with their new rate so be sure yours is updated prior to processing any payroll in the new year.
Step number two is to reconcile your payroll checking account and consider any out-standing payroll checks. After you have filed your year-end reports, to make any corrections, you will have to go through a complicated revision process! Most employees cash their payroll checks pretty quickly, so take a close look at any that are still outstanding. I once had a client who was processing their own payroll inadvertantly duplicate the final payroll of the year. He hadn’t actually passed out the duplicated payroll checks, but they were in the system. Luckily, I spotted the duplicated checks in the register so I could void them before we filed our payroll reports!
Step number three is to prepare all of your year end liability payments. You want your reports to show that all of your liabilities have been paid.
The fourth step is to verify that the payroll liability balance on your Balance Sheet and your current payroll liability balance match. If your liabilities are separated by item on your balance sheet, be sure each item matches in balance. Now is the time to make any adjustments and research any discrepancies. It may seem obvious that the payroll liabilities report would match your balance sheet, but I have seen many instances where they were thrown off by liability adjustments.
Next, run payroll summary reports for the fourth Quarter, and prepare your 941 and DE6 ( or other State) reports. Run payroll summary reports for the entire year and prepare my 940 and DE7 (or other State), double-checking the totals against the payroll summary reports. I always pay special attention to double check deduction and addition payroll items to be sure they are affecting the employee’s taxation appropriately. It is common to make errors in setting up wage garnishment; owner’s time to jobs, and retirement contribution items – now is the time to correct any errors in payroll item set up!
The final step is to prepare the W-2s. Again, I review each W-2 carefully and compare the totals to my entire year payroll summary report. Employees are always chomping at the bit for their W-2 because most are expecting a refund. I caution against taking any short-cuts to relieve the pressure, and when pressed I simply let everyone know they will get the information by Jan 31st. If you discover any discrepancies that you are unable to resolve, do not hesitate to contact a QuickBooks expert to assist you in resolving the issue.
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Cash vs. Accrual Based Accounting…. What does it mean to the Small Business Owner?
In my opinion, one of QuickBooks’ best features is its ability to run financial reports, like a Profit and Loss, on both a Cash and Accrual Basis. But I am often asked by my clients “What does that mean? What is Cash vs. Accrual?”. I’ll try to answer that question here on a level that applies to the Small Business Owner evaluating his or her Profit and Loss Report and Balance Sheet. I’ll try to leave out the accountant-speak and technicalities.
Your Profit and Loss Report is a snapshot of your business’ income and expenses for a specified period of time. Your Balance Sheet report is basically a report of what you own, what you owe, and your business’ Equity (the difference between what you own and what you owe) as of a certain date.
Let’s talk about Accrual basis first.
When you are looking at your Profit and Loss report on an Accrual basis,
- Your income will include everything you billed customers for during that time period, whether or not you have been paid by those customers.
- Your expenses will include bills from vendors that you have entered into QuickBooks for a that time period, whether you have paid the bills or not.
On an Accrual Basis, the Balance Sheet report will include:
- What is owed to you (customer invoices, called Accounts Receivable)
- And what you owe (outstanding bills to your vendors, called Accounts Payable).
In order to achieve good Accrual-based reports in QuickBooks, you need to use the Customer Invoicing and Enter/Pay Bills features. It’s also a good idea to pay attention to the dates you bill your customers and bills you enter from your vendors, to be sure they are posted in the period they were incurred.
Most small businesses file their taxes on a Cash Basis, so why would you want to evaluate your finances on an Accrual basis? I ALWAYS recommend evaluating your business’ financial performance on an accrual basis at least monthly, because what you have collected from your Customers and what bills you have paid aren’t necessarily indicitive of your business’ earnings performance.
Let’s look at a professional services business like mine, for instance. First of all, we bill many of our clients on an hourly basis, so I make sure to bill out as much time as possible on the last day of the month. That way, when I run our Profit and Loss Statement, I can see what we earned that month, not necessarily what we collected, but what we earned.
Like any business should, we know what we need to earn every month to break even. I may have cash in the bank because I haven’t paid all the bills yet, or because I collected on some old invoices from customers, but that doesn’t necessarily mean that our business has performed as it should.
Income is the largest consideration in our business, but it holds true with expenses as well. Expenses should be entered into QuickBooks as Bills for the date they are incurred. That way your Accrual-based Net Income (Income less Expenses) for the period you are evaluating is a true indicator of your performance for that time period. Did you spend more than you earned for that period? If so, it may take a month or two to catch up to you, and you want to be prepared. Are you showing consistent earnings yet your cash flow is suffering? You may have an issue with collecting on outstanding invoices from customers.
So what good are Cash basis reports? For one thing, many businesses file their taxes on a Cash basis, so you want to keep on top of what your income is going to look like for tax purposes. Cash basis reports are also more closely tied to your business’ cash flow. When you look at a Profit and Loss Report on a Cash basis, you are only going to see Income from customers that you have actually received in your hot little hands. You will only see expenses for things that you have actually paid. If your business operates on a cash basis – meaning you pay for your business expenses as you incurr them and collect money from your customers on the spot, your Cash basis and Accrual basis reports will be the same.
In QuickBooks, you can easily run Cash and Accrual Based Financial Reports, click here for a quick interactive video lesson: Switch from Cash to Accrual Basis Report in QuickBooks
Even with this information, financial reports can be confusing! The larger the business, the more complex the financial evaluation should be. There are many other aspects of your finances you need to evaluate, like the return on investment of your assets. Your industry may also require special attention to one or more aspects of your financial situation. Intelligent, competent, business professionals sometimes feel uncomfortable asking for assistance evaluating their finances. Don’t feel like you should know this stuff instinctively! Just like anything, it takes patience, practice and often professional help to understand. There are, of course, many books on the subject, as well as the occasional seminar. Don’t be afraid to seek assistance from your bookkeeper (they may know more than you think, but you just never asked!), your CPA, or a business coach.
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Today I want to share with you a new tool I discovered for QuickBooks and shopping cart integration. There are so many shopping carts out there these days and it’s pretty obvious that for most of them, QuickBooks integration is not their number one priority! Yet, if the QuickBooks integration stinks, your accounting system and your company’s operations can be crippled.
There is one shopping cart software that I am familiar with (of course there are new ones every day!) that has a great QuickBooks integration feature, and that is pdg http://www.pdgsoft.com, but pdg is not right for everyone. Recently, a brilliant programmer named Tyler introduced me to Webgility http://www.webgility.com , who makes a 3rd party program that allows very detailed integration with many different shopping carts including interspire and zen cart and QuickBooks! Check out their current compatibility list here http://www.webgility.com/ecommerce-connector-compatibility.php
As an example, Interspire shopping cart offers EXTREMELY limited mapping, you can basically choose between bringing orders into QuickBooks as Invoices or Sales Receipts and that’s pretty much it. It also sets up new “jobs” in QuickBooks under the customer called “cart customer”. What a mess! The Webgility software allows extremely detailed mapping, including “if/then” scenarios, like IF the payment status on Interspire is “terms” bring it in as an invoice, and allows you to choose at which “status” (shipped, pending, unpaid, etc.) you want to import orders into QuickBooks. AND it’s really easy to set up!
11/4/2010 UPDATE:
It’s been an interesting ride with ECC. We have experienced some glitches, and most have been fixed right away. I kind of get the feeling they are flying by the seat of their pants because they did not have an update ready when QuickBooks came out with 2011. Our main issue is that ECC doesn’t support different customer “types” with different pricing structures. It means the orders for our customers with special pricing show up in quickbooks as the wrong dollar amount! Really NOT GOOD. With that said, I am unable to find any other bridge program that works with Interspire. So I’m still going to have to recommend PDG as a better shopping cart choice for QuickBooks Integration.
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If you email documents from QuickBooks, use on line banking or run payroll in QuickBooks you will need to upgrade your software to at least the 2008 version, which for most means 2010. If not, you can continue to use 2007, but keep in mind that Intuit will stop issuing maintenance releases. Maintenance releases are different than program upgrades, maintenance releases “fix” program glitches and keep the program updated to work with the latest operating systems and other programs. Folks used to be able to use QuickBooks well past the sunset date, but the use of email and on line banking have made upgrading a necessity for most people.
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Contractors: Can you save money on Work Comp Insurance?
If you are a general or specialty contractor, you may be able to save money on your Worker’s Compensation insurance just by making sure you are reporting your employee’s wages under the appropriate classification.
Some examples are:
If you are a General Contractor whose employees perform a wide variety of work, you can break down their gross wages and report them by different classifications. Carpentry and roofing work premiums are much higher than painting and concrete work. If your employees break down the time spent on different classified tasks on their time cards, you may report their wages under a variety of classifications. There is a catch ‐ it is now REQUIRED when reporting this way that you have time cards with a time in and a time out for each type of work performed. If you do not have this documentation, in an audit you will be assessed at the highest rated classification and billed for the difference.
If you are a Specialty Contractor – be sure you are reporting your wages in the appropriate classification. One of our clients is a Solar Power contractor who saved significant premiums by investigating what classifications were appropriate for his type of work and changing his reporting classifications.
If you are a Corporation, you may exclude the payroll of Corporate Officer’s from your premiums. For all types of Contractors ‐ Evaluate the true cost of your labor source. Worker’s Compensation premiums are based upon the hourly rates paid to your employees and very by classification. If you are hiring lower‐skilled and lower‐paid employees to save money, you may end up paying them as much or
more as more experienced employees due to the difference in your Worker’s Comp premiums. It is a
good exercise to review the cost of all of your employee’s base wages plus the premium. Many
contractors actually pay their employees a little more in order to surpass this threshold. If this is the
case – be careful to review the hourly rate cut off when your policy renews. Often, the WCIRB
(Worker’s Compensation Insurance Rating Bureau) will raise the hourly rate for the lower
premium. You could end up with a large audit premium if you do not give your employees a raise or
report their wages under the right class code. There have been many cases where the hourly rate threshold changed and went unnoticed. Check your thresholds on your policy renewal statement every year!
Many people think that State Fund is the bad guy in making determinations regarding class codes, but
they are actually following the rules of the Worker’s Compensation Insurance Rating Bureau. The
WCIRB is not a government entity. It is a private, nonprofit association, and no state money is used to
fund its operations. To learn more about the WCIRB as well as how and why Worker’s Compensation
rates are determined visit: https://wcirbonline.org/wcirb/Employer_guide/index.html
To view a detailed listing and description of all classifications visit:
https://wcirbonline.org/wcirb/root/pdf/usrp_ic_regs_only.pdf
In any case, it is important to keep accurate, auditable, records of your payroll in order to ensure you
are not over‐paying for worker’s compensation insurance. QuickBooks does a great job tracking your
liability and report your wages efficiently and accurately. Any recent version includes a complete
Worker’s Compensation module that has streamlined the process completely. ( you must have the
Enhanced Payroll Subscription to access this module).
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Resolving Unapplied Payments and the Significance
One issue that many people – including bookkeepers – are not aware of is the way unapplied payments and credits in QuickBooks can affect your Financial Statements. I am talking about payments you have received from customers that were “received” in QuickBooks by using the received payments window, but not applied to an invoice during this process, or credit memos prepared but never applied to an invoice.
It is important to know that unapplied customer payments and credits will not show up as Income on your Cash-Basis Profit and Loss report. Even if you have created an invoice and received a payment, if the payment is not applied, your Income will be under-stated!
This could have some serious consequences if you bring your Profit and Loss report to your tax professional and ask them to estimate your income taxes for the year so far and you have a $30,000 customer payment that is not showing up as income. This ACTUALLY happened to one of my clients!
How could this happen? Normally, a customer payment will apply automatically to any outstanding invoices in the received payment screen. However if you create the invoice after you receive the payment, or for some reason void the original and re-create it, the payment often will not be applied. When you are receiving payments, it is also important to be sure that a check-mark appears next to the invoice you want to apply it to.
A quick way to find out if you have any unapplied payments is to run a report called “Open Invoices” under Reports – Customers and Receivables. If you see any negative numbers on this report you have payments or credits that are not applied as in this example:.
Fortunately, this potentially disastrous situation is easily reconciled:
Method 1: From this report you can drill down by double clicking on the negative number (if it is a payment) and once the received payment window pulls up, you can put a check mark next to the invoice you would like to now apply it to, save and close – you’re done.
If it is a credit memo, or you have a whole list of credits to apply to one invoice simply open the “received payments” window and type in the customer name, but leave the received amount as $0. Click on the “Discounts and Credits” button in the lower left hand corner and apply the out-standing payments or credits that appear in the “credits” tab. Save and close.
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It is also important that your payments are not dated prior to your invoices, so be sure to avoid this during your regular processing.
If you receive deposits, be sure to follow a procedure that does not leave unapplied payments in your system. (see my blog article Handling Customer Payments in QuickBooks).
On the Accounts Payable side, you have a similar issue, where you do not want to have Bill “payments” made to your vendors that are not applied to a vendor Bill.
Here you want to print out a “Vendor Balance Detail” from the Reports menu – Vendors & Payables. You can apply payments to bills through the “Pay Bills” by check-marking the bill and using the “set credits” in the lower left-hand section. I often find that there is no bill and one will need to be created – just be sure to date it on or before the payment date.
Unapplied payments are more common in pre-2006 versions because the system did not offer as many prompts for applying payments and credits as the more recent versions.
A quick way to find out if you have unapplied payments or credits in your Accounts Payable or Accounts Receivable system is to run a Balance Sheet report on a Cash Basis. If you see negative numbers in the Accounts Payable or Accounts Receivable here, you you have a problem.
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Progress Billing Solution for Sub-Contractors and Lump Sum Draws.
QuickBooks™ Premier Contractor Edition offers many options for invoicing and includes a pretty flexible Progress Invoicing feature. However, the Progress invoicing feature is definitely geared more toward line-item billing for General Contractors.
Specialty and many General Contractors run up against a customer billing issue when attempting to properly utilize detailed job-costing with QuickBooks™ Progress invoicing. To get good Estimate vs. Actual Job costing, the Estimate will need to be entered in detailed format with estimated labor, material, subcontractor and other costs. The issue arises when the Contractor is billing the Customer in a Lump Sum Draw schedule rather than by line item. Most often a Contractor in this situation would prefer to display on the invoice the Progress detail provided by QuickBooks™ progress invoicing such as the original contract amount as one lump sum, the current amount billing, and the previous amounts or percentage billed. However, they do not want to show several line item amounts like Labor, materials, etc. as detailed on the Estimate.
Because the Progress invoice pulls it’s data directly from the Estimate, there is a conflict. One solution is to create a custom Progress Invoice template that eliminates all columns except for the Description and manually typing in the detail, such as 20% Draw, etc. The disadvantage is of course is that you have eliminated one of the best features of Progress Billing, created manual entry, and the invoice just doesn’t look as professional.
Another solution, more preferable in my opinion, is to create Group Items that include your detailed job-costing items yet allow you to create a separate description. When you use this item on your Customer’s Estimate, you will retain the Item’s Job-costing and Revenue reporting, yet the Invoice created from the Estimate will Group the items together on one line with one amount. The main issue with this scenario is that it seems like you will need to set up a new group item for every group of items you use.
For instance if you always use the same combination of items, like Labor, Materials, Subcontractor, you will set up a group item that consists of these items. For more complicated re-models that include many different items for every job, how does this work? One of the best things about using Group items is the ability to add and subtract items in the group “on the fly”. Meaning, while you are creating the estimate, you can insert and delete the items in the group.
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This is an amazing feature and quite transformative for those who do lump sum billing and job costing.
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Perfect Payroll Option for Job-Costing in QuickBooks – Assisted Payroll
Many businesses prefer to use an outside payroll service for the peace of mind provided by someone else taking responsibility for the Payroll Reports and Tax Payments.
Many employers are more comfortable with this arrangement. I have personally known a few Employers who have gotten burned because the person responsible for paying the payroll taxes and filing the reports did not do the job. Unfortunately, the employer is ulitmately responsible. In some cases, these surprised employers owed a considerable amount of penalties and interest, in additon to liabilities they thought were paid!
For instance, last November I was hired by a General Contractor named Jonathan. His well-paid bookkeeper just stopped showing up, and he needed help. I discovered that not only had she not entered all of his banking transactions or reconciled his bank account for the entire year, but she had not paid his payroll taxes for 3 months, or filed his quarterly reports. Jonathan knew something was up, but he really had no idea that his payroll taxes were so far behind.
In a more dramatic instance, Patrick, an Electrical Contractor, came to me with an even worse situation. His bookkeeper had provided his employees with incorrect W-2’s, which we discovered while unraveling the disasterous bookkeeping. One of his employees ended up owing the IRS hundreds of dollars, and Patrick owed thousands. This employer really thought his bookkeeper was “taking care of everything”. What a nightmare!
If you know a payroll service is handling the taxes and reports, you can avoid a situation like this. For Contractors and other Professionals who use Job-costing, it is not always the easiest choice.
QuickBooks integrated payroll is the best way to extract comprehensive job-costing information. Extrapolating job-costing information from outside payroll services reports accurately is difficult at best and impossible without sophisticated spreadsheets for every job.
Fortunately, QuickBooks does offer a solution called QuickBooks Assisted Payroll. With this solution, Payroll is processed inside of QuickBooks and after each processing is sent electronically to QuickBooks Payroll Service, who takes care of remitting the payroll taxes and filing the reports. The cost is pretty reasonable, in the range of $50-$75/mo. You print your own paychecks or use direct deposit, so you no longer have to wait for that FedEx package.
If you are considering switching payroll services, before the first payroll of the year is the best time.
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Job Costing: The Key to Unlocking your Estimating Genius
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For years, Bookkeepers and Contractors have been utilizing QuickBooks™ to do effective job-costing. Intuit now offers a Premier Version of their software customized for Contractors. I have been asked by many businesses if this version is worth the extra cost. Having used both versions extensively myself, I would answer definitely yes if only for the reports offered exclusively in this version. Having said this, Contractors Edition or no, job-costing in QuickBooks™ is not without its pitfalls. The number one issue you must be aware of is that the fantastic jobcosting reports offered in QuickBooks™ are possible only through the use of Items. If you are a contractor, all job-related costs and income should be entered into your system using Items. It is critical that the Items be set up properly as a two-sided item allowing mapping to the appropriate Income and Cost of Goods Sold accounts. It is also important to realize that each item can only be mapped to one COGS or Income account. In order to get good job-costing reports every Vendor Bill, check written, and even petty cash expenses must be entered into the system under the Item rather than the Expense tab of the transaction screen. Invoices must be created using items for all income. Because the Deposit, Journal Entry and Direct Register screens do not allow for use of items, all job-related income or expenses must be entered through Transactions. This sometimes takes a little creative thinking. I always recommend hiring a professional and experienced consultant to set up your new company and set up some type of support and review process. Next QuickBooks™corner I will address Job-Costing and Payroll. Tip: If you occasionally pay for items with cash – capture these in a bank account called “Petty Cash”. Fund this account with Owner’s equity in small increments.
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