How To: Set Up the Books

by: Reece Freeman | ChooseWhat.com

Setting up your company’s books as soon as possible is important. Setting up the books will allow you to:

• Invoice customers
• Pay employees
• Keep track of inventory
• Budget and plan
• Forecast future revenue and expenses of your business

You should set up your books as soon as possible after starting your business. The longer you wait to get started, the harder it is to start. If you keep track of your financials on anything besides bookkeeping software, you will eventually have to transfer your data over to the software before an accountant will look at it. Business owners typically put off setting up the books until tax season, which leaves them with a large amount of work with little time to do it.

1. Decide between QuickBooks and other types of accounting software.
   
   

   • QuickBooks vs. Other Low-Cost Accounting Software

     While there are many different bookkeeping software providers, such as Peachtree or AccountEdge, statistics show QuickBooks accounts for 94 percent of all small business accounting software sales. Sometimes it might not matter if you purchase the most well-known software on the market. However, when it comes to accounting software, you should go with most widely-used brand because you will eventually have to employ someone to do your books, and we recommend using software the majority of accountants and bookkeepers are familiar with: QuickBooks. Should you ever need help with your books, or plan to hire someone to do them for you in the future, the cheapest and easiest way to find assistance is to use software that is known by the vast majority of bookkeepers and accountants.  In addition, QuickBooks offers a ton of support through their expansive knowledgebase and QuickBooks-affiliated websites.
     
     

     For more information about why you should use QuickBooks, see our forum topic: Why use QuickBooks?

   • QuickBooks vs. Industry-Specific Accounting Software
     
     For certain companies, like those in the construction industry, QuickBooks software might not be able to incorporate all of the features that you need in a bookkeeping program. We recommend that you find one of the many industry-specific bookkeeping software on the market, instead of trying to adapt your financials to fit into the QuickBooks software. If you aren’t sure whether QuickBooks is right for your business or not, the smartest and most cost-effective thing to do is to sign up for one of QuickBooks’ month-to-month plans that you can cancel at any time.

     For more information about industry-specific accounting software, see our article:  Doing the Books: To QuickBooks or Not?

2. Select the product that is best for your accounting needs. 
   

   • Online Simple Start – Covers basic bookkeeping needs. Great for anyone with a new business, who wants to get a jump start on recording books before there is a need for much functionality of the software (i.e. financial file uploads, estimate creation, multiple-user access).

   • Online Essentials – Great starting point for anyone with a company that is already in business, who needs to create estimates for customers or clients, upload bank and credit transactions into the software, or set permission levels for multiple employees to access the software.

   • Online Plus – Great for businesses who need to keep track of inventories and create purchase orders, as well as those who would like to create a budget and print tax forms for contract workers using the software. This is the most robust QuickBooks Online software.

   • Desktop Pro – Great for businesses who want to have a local copy of their books available, as none of the Online software products offer this. Also an excellent choice for those who want to track expenses in multiple currencies, manage inventory and set up alerts to reorder inventory, or easily view all of their customers’ information in a “Customer Snapshot,” along with all of the essential bookkeeping tasks included in less robust versions.

   • Desktop Premier – Great for growing businesses who want highly functional, comprehensive bookkeeping software that will allow them to forecast sales and expenses, create a business plan, and view reports specific to their industry, along with all of the essential bookkeeping tasks included in less robust versions of QuickBooks. And as with all QuickBooks Desktop software, this software creates a local copy of your books on your hard drive.

   • Desktop Plus Versions – Great for those who want all of the features of the Desktop products, as well as the online access features of QuickBooks Connect, 24/7 customer support, and online backup, all included in the monthly fee. (The online access included with the Desktop Plus versions gives you limited access to your bookkeeping software through QuickBooks Connect, unlike the full online access given by the online software.)

3. Set up your books. 

   We highly recommend that you have an accountant who is familiar with QuickBooks or a QuickBooks trained professional help you set up your books. While QuickBooks can be used by anyone on a day-to-day basis, the initial set-up and periodic review should be done by someone with experience. Although the file setup is relatively easy, entering all your bank accounts, assets, loans, and other complicated parts of the process can cause inexperienced QuickBooks users to create mistakes that will cost them time and money in the future.

   The Online Essentials, Online Plus, and any of the Desktop "Plus" versions include unlimited customer support by live chat or phone and can help you accomplish this very important task. If you don't have one of these versions or just feel more comfortable with face-to-face assistance, the cost to hire an accountant ranges from $150 to $400 per hour depending on the size of your business. This price might seem expensive, but it pales in comparison to the money that will be wasted if your books are set up incorrectly from the start.

   All QuickBooks products begin with three setup options: 1) Import data from other bookkeeping software, 2) Go directly into the software to set up your company’s information (if you’re an accountant or QBs expert), or 3) Enter information through a setup guide. Both the Online and Desktop software versions begin by asking you to enter your basic company information (i.e. type of business, tax ID, industry). Because the Desktop and Online software were developed separately, this is where the similarities between the two types of software end.

   Online Software Setup The Online software setup process begins with you entering your basic company information before you submit your payment information. Afterwards, the online setup wizard will direct you to a set of video tutorials that explain how to appropriately use the bookkeeping software. The video tutorial section also gives you the number for free expert setup, which means you can have someone walk you through your setup (which we highly recommend).  In addition to video tutorials, there are explanations of each of the different types of accounts in your software and their relation to each other. You can go directly into your QuickBooks accounts and start setting up everything, from look of your invoices to your bank account information. There are help windows connected to nearly every section of the software. If the on-screen assistance isn’t enough, the QuickBooks Online customer support team can offer guidance via phone, instant message or email.

   Desktop Software Setup The setup guide starts off with an extensive interview that sets up your basic company information: Type of business, tax ID, industry Types of bookkeeping accounts you wish to set up (e.g. types of assets, liabilities, inventory, etc.) Username and password to protect your files from being accessed by unauthorized individuals Once finished with the initial setup, you are given the opportunity to import any kind of customer, vendor, employee, or bank account information you would like to have in the system. After that, you can perform additional tasks of setting up your books like entering bills, invoices, and deposits, importing credit card and bank statements, as well as reconciling your bank account. If you need help setting up your books you can always call QuickBooks customer support for assistance, as all Desktop versions now come with 1 hour of setup support.

   

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• If you’re using online accounting software (as opposed to a desktop version), make sure you keep a backup of all your financial files.  If you’re using the online software, and either the QuickBooks website or your Internet connection goes down, you won’t be able to access your books or any of your financial files. Keep local copies of all your files on your computer. Also, if you cancel your subscription to the Online or Desktop Plus products, you won’t be able to continue accessing your books and financial information. But with the Desktop versions, you own the license to access your books anytime, starting from the moment you purchase the software.
• QuickBooks recommends you upgrade your Desktop software every three years, but new features are added every year. These upgrades are automatically included with the Desktop Plus products, but not with the regular Desktop software.
• QuickBooks’ Desktop Premier is the only product that allows you to view past bank reconciliations.  Every QuickBooks software product that allows you to upload your banking information also allows you to reconcile your bank accounts, but Desktop Premier is unique.

• QuickBooks Online software will not import all data from the Desktop software. (See Converting your QuickBooks desktop edition data to QuickBooks Online)