How to Assign Sales Tax Codes in QuickBooks QuickTip

October 12th, 2012

Assigning New Sales Tax Codes in QuickBooks

QuickBooks uses sales tax codes to track the taxable or non-taxable status of the products and services that you sell, and of your customers. QuickBooks starts with two sales tax codes—Tax (which means liable for sales tax) and Non (which means not liable for sales tax). For many businesses that’s enough. But in some cases those two tax codes aren’t enough, because some taxing authorities want more information—such as why a customer isn’t liable for sales tax; is a customer nontaxable because it’s out of state and the rules say you don’t have to collect taxes for out-of-state sales, or is the customer nontaxable because it’s a nonprofit organization, or a government agency? If your state requires this information, you must create tax codes to match the reporting needs required by your state. For example, you could create an NPO code for nonprofit organizations, or a GOV code for government agencies that don’t pay tax. To assign sales tax codes for sales tax in QuickBooks:

  1. Choose Edit | Preferences from the QuickBooks menu bar.
  2. Click the Sales Tax icon on the left pane and click the Company Preferences tab.
  3. In the Assign Sales Tax Codes section in the middle of the page, click on the Taxable Item Code drop-down list and select <Add New> to open the New Sales Tax Code dialog.
  4. Enter the name of the new code, using up to three characters.
  5. Add a description to make it easier to interpret the code.
  6. Select Taxable if you are entering a code to track taxable sales or select Non-taxable if you’re entering a code to trace nontaxable sales.
  7. Click OK to save this code.



How to Back Up Your QuickBooks Data Tip

October 10th, 2012

Configuring Backups in QuickBooks

Backing up your QuickBooks data is an incredibly important task and you should do it daily. And at least once a week, use removable media (flash drive, CD, DVD) as an additional backup. You can create a manual backup, an automatic backup, or you can schedule your daily backups. Using the scheduled or automatic backups of your company file is preferred—no excuses, no waiting around the office, no possibility that you will forget to do the back up.

An automated backup takes place either while working in QuickBooks you open a different company file or close your company file, or if you exit QuickBooks. Even if you set up the automated backup for every four or five times you close, this can becomes an annoying event. If you have created scheduled backups and you create a manual backup whenever you perform a major task on your file, it’s not necessary to use the automated backup feature.

If you decide to use the preferred QuickBooks scheduled backups feature, the best time to schedule a backup is at night, when nobody is using the software. However, that plan doesn’t work unless you remember to make sure your computer is running when you leave the office. If you’re on a network, schedule the backup from the QuickBooks software installed on the computer that holds the company file. Make sure that computer is running when you leave the office. Also, before you leave, make sure you close QuickBooks (or close all company files if you leave the software running) because open files can’t be backed up.

To configure your QuickBooks backups:

  1. Choose File | Create Backup from the QuickBooks menu bar.
  2. In the Create Backup dialog, select Local Backup.
  3. Click the Options button to set default options for the backup.
  4. Click the Browse button to select the location for your backups. [The optimum location is a USB drive, a CD/DVD, or a drive on another computer on your network (if you have a network). If you select a local drive, QuickBooks will issue a warning message when you click OK. QuickBooks does this because the whole purpose of a backup is to restore data when the computer dies.]
  5. Choose Add The Date And Time Of The Backup To The File Name if you want to be able to identify which backup was made when.
  6. Select the verification setting you want by choosing from the options listed in the Select An Option To Verify If Your Company Data Is OK When You Save.
  7. Click OK to save these settings and then click Next to continue, which will open the When Do You Want To Save Your Backup Copy page.
  8. To only do a manual back up, choose Save It Now. QuickBooks opens the Save Backup Copy dialog with your location selected, and the backup filename in the File Name field. Click Save.
  9. To set up automatic—not scheduled—backups, choose Only Schedule Future Backups. A dialog displays an option to back up your company data file ever X times that you close that file (where X is a frequency you select). Click Finish.
  10. To configure scheduled backups click New to open the Schedule Backup dialog. You can give the backup a descriptive name if you like.
    • Enter a location for the backup file by clicking Browse, choosing the location, and clicking OK.
    • If you don’t want to overwrite the last backup file every time a new backup file is created, select the option Number Of Backup Copies To Keep, and specify the number.
    • Create the schedule for backups by selecting a time and frequency and click OK to save these settings.

How to Enable Sales Tax in QuickBooks QuickTip

October 1st, 2012

Set Up a Sales Tax Item in QuickBooks

If your business collects sales tax, you must set up your sales tax preferences in QuickBooks. QuickBooks uses the Sales Tax Items to calculate the Tax field at the bottom of sales forms and to prepare reports for tax authorities. When you enable sales tax in the Preferences dialog, the first step is to specify the most common sales tax, which means you must create a sales tax item in QuickBooks. To do this:

  1. Choose Edit | Preferences from the QuickBooks menu bar.
  2. Click the Sales Tax icon on the left pane and click the Company Preferences tab.
  3. Click the Yes radio button in answer to the question Do You Charge Sales Tax.
  4. In the Set Up Sales Tax Item section, click the button labeled Add Sales Tax Item to open the New Item window. Sales Tax Item will be preselected in the Type drop-down list.
  5. Enter a name for the sales tax. [You can make it descriptive. For instance, use your state abbreviation if your state has a single sales tax structure.]
  6. QuickBooks has an optional space for more information in the Description section for this sales tax.
  7. Enter the sales tax rate.
  8. Select the Tax Agency That You Collect For using the drop-down list if you have already created a vendor for the tax agency. If the vendor does not yet exist, select <Add New> from the drop-down list and add the tax agency to your vendor list.
  9. Click OK to return to the Sales Tax Preference dialog.
  10. When QuickBooks asks if it should configure all of your existing customers, non-inventory items and inventory items as Taxable, say Yes if most of your customers and items are taxable.

How to Set Up Aging Reports in QuickBooks QuickTip

September 27th, 2012

QuickBooks Due Date or Transaction Date Reports

QuickBooks can generate your aging reports either by using the due date of your invoices and bills, or by using their transaction dates. Aging reports track unpaid invoices or bills by showing how much is currently due and how much is overdue. You can tell QuickBooks whether you want to generate your accounts receivable and accounts payable aging reports starting from the due date on your invoices and bills, or from the date you wrote an invoice or received a bill. To specify which type of aging report you want QuickBooks to generate:

  1. Choose Edit | Preferences from the QuickBooks menu bar.
  2. Click the Reports & Graphs icon on the left pane and click the Company Preferences tab.
  3. In the Aging Reports section, choose Age From Due Date or Age From Transaction Date by clicking the corresponding radio button.
  4. Click OK to save this setting.

Assigning Accounts to the Statement of Cash Flows Report in QuickBooks QuickTip

September 22nd, 2012

See Which Accounts QuickBooks Uses for Reports

In QuickBooks, a Statement of Cash Flows is a report that displays the history of your cash position over a period of time. It is an accrual report that self-modifies to report on a cash basis, and it shows you the adjustments that were made behind the scenes to provide cash-based totals.  QuickBooks allows you to choose which accounts you want to use to display the automatically generated Statement of Cash Flows reports—but you shouldn’t mess around with the available selections without checking with your accountant. To see which accounts QuickBooks uses for the Statement of Cash Flows:

  1. Choose Edit | Preferences from the QuickBooks menu bar.
  2. Click the Reports & Graphs icon on the left pane and click the Company Preferences tab.
  3. Click the Classify Cash button in the Statement of Cash Flows box to display the Classify Cash dialog.
  4. Select or deselect the accounts you want to include on the report.
  5. Click OK when you are finished.