How does QuickBooks work – Set up process
Following is the guide, as to how to use QuickBooks while running basic operations of the business:
1. Access QuickBooks Online: Visit the QuickBooks website and select a plan. If you’re managing finances solo, simple Start offers core functionality.
Essentials or Plus are suitable if you have one to two employees. Plus is also helpful for inventory management. Advanced is best for medium-sized businesses.
2. Personalise Your Experience: Upon signing in, QBO will ask questions about your business to customise your experience.
QuickBooks Online Setup.
3. Connect Your Bank and Credit Card Accounts: To import transaction history, navigate to the transactions view and click “Connect Account.”
Then, type in the name of your bank or credit card. Connect all accounts used for your business.
QuickBooks automation connect account .
4. Categorise Transactions: QBO needs to understand your transactions for budgeting, reporting and tax compliance. Assign categories to each transaction.
– Customer/Vendor: Select the appropriate customer or vendor. Add new ones if necessary.
– Category: Choose a category for the expense. Consult with an accountant to determine the right categories for your business.
– Tags: Use tags to search for specific transactions and slice reporting data.
– Memo: Add clarifying information to each transaction.
1. Create Rules for Recurring Expenses: Automate categorisation with rules. Set criteria to find matching transactions. Assign the transaction type, category, and vendor automatically.
– Opt to automatically categorise and confirm transactions. Alternatively, review them before confirmation.
Invoicing Customers
1. Create an Invoice: Navigate to Sales > Invoices and click “Create Invoice”.
2. Select Customer: Target the customer for the invoice.
3. Add Products/Services: Select the products you are providing from the list. You can also save line items from the last invoice you created. Update the quantity to calculate the total amount.
– If you have Apple fritters but do not have them in your inventory, you can add them to your product list.
Add to product list> Select item type > Set the product/item name>Set the SKU (optional) > Select product category > Provide a customer-facing description of the product > Set price rate and the income account.
4. Payment Options: Enable payment options such as Apple Pay, credit cards and bank transfers. You will need to set up these options separately.
5. Send Invoice: Review everything and click “Send Invoice”.
Paying Vendors
1. Add a Bill: Go to Expenses > Bills and select “Add Bill”.
2. Upload Bill: Upload a PDF of the invoice. QBO will try to extract information from the document.
3. Review Information: Make sure that the total amount is correct. Create the bill to schedule a payment.
Schedule Payment: Pay bills through QBO by selecting an add-on service. A basic version is available with five free direct transfers monthly.
– Note: To pay bills through QBO, set up your bank account for direct vendor payments.
Sales Tax
– QBO calculates sales tax automatically. The taxes are calculated on every invoice. The software tracks what you owe to government agencies. This simplifies tax time.
Financial Reports
1. Access Reports: Click on “Reports” in the main menu.
2. Profit and Loss Report: See income and expenses over a timeframe. Track financial metrics like gross profit and net income. You can also compare it to past performance.
– Customise these reports in different ways.
– Choose to compare the current year’s performance to previous years.
QuickBooks Profit and Loss!
3. Other Reports:
Balance sheet: Tracks your total assets and your total liabilities. It’s a good way to see the health of your business at a glance.
Sales by customer summary : It helps identify your best customers.
Sales by product or service summary: It helps identify your best products.
Expenses by vendor summary: Helps you identify your vendor costs.
This was all about “how does QuickBooks work”, now let us move ahead and see how QuickBooks compare to other accounting software.
QuickBooks vs. Other Accounting Software
| Feature | QuickBooks | Xero | FreshBooks |
|---|---|---|---|
| Pricing | Varies by plan | Varies by plan | Varies by plan |
| User Interface | Straightforward | User-friendly | Simple |
| Inventory Management | Robust | Limited | Not Ideal |
| Reporting | Extensive | Comprehensive | Basic |
| Integrations | Numerous | Numerous | Limited |
| Ease of Use | Steeper Learning Curve | Easier to Learn | Very Easy |
| Customer Support | Extensive | Good | Excellent |
| Best For | Growing Businesses | Small Businesses | Freelancers/Small Teams |
FAQs
1. How does QuickBooks work for small businesses?
QuickBooks simplifies financial management for small businesses by automating tasks such as invoicing, expense tracking, and bank reconciliation. It allows businesses to connect their bank accounts, categorise transactions, and generate reports like profit and loss statements.
Small businesses can also use QuickBooks for payroll processing and inventory management, making it a comprehensive tool for bookkeeping.
2. What is QuickBooks inventory management?
QuickBooks inventory management helps businesses track stock levels, sales, and purchases in real time. It provides alerts for low stock and generates detailed reports on bestselling items and total sales.
3. Is QuickBooks free to use?
QuickBooks is not free but offers a free trial for new users. Pricing depends on the plan chosen, such as Simple Start or Essentials, which cater to different business needs.
While it’s a paid service, the features provided, like automation, reporting, and integrations—make it a valuable investment for businesses of all sizes.
4. How does QuickBooks Online work for freelancers?
QuickBooks Online is perfect for freelancers as it allows them to track income and expenses, create customised invoices, and manage cash flow from anywhere using the mobile app.
5. What are the best QuickBooks features for beginners?
Beginners can benefit from QuickBooks’ user-friendly features such as:
– Invoicing: Create and send professional invoices quickly.
– Expense Tracking: Organise expenses with categories and attach receipts.
– Bank Feeds: Automatically sync transactions from bank accounts.
– Reports: Generate simple financial reports to understand business performance.
Conclusion
The financial management capabilities of QuickBooks include automated invoicing together with detailed reporting features which benefit businesses that are expanding. Its advanced inventory management system and multiple platform connections distinguish QuickBooks from alternative accounting tools in the market.
Organisations that use QuickBooks effectively minimize operational costs while decreasing mistakes and channel their efforts into company expansion. Hope this article helped you get answer to the question “how does QuickBooks work?”.
Parul is a dedicated writer and expert in the accounting industry, known for her insightful and well researched content. Her writing covers a wide range of topics, including tax regulations, financial reporting standards, and best practices for compliance. She is committed to producing content that not only informs but also empowers readers to make informed decisions.
