Quickbooks| Bookkeeping| Finances| Money| Self Employed| Accounting| Small Business

Signed up for QuickBooks Online? Opened up the program ready to get started? Took one look at the interface and ran for the hills? Yea, I get it. Because, real talk, there’s a lot of stuff to know about QuickBooks Online.

Let me tell you about the time that I ruined a beautiful desk from IKEA as soon as I started putting it together. I was SO excited about executing my home office set up that I skimmed the instructions. And I failed to notice that there were two types of screws that looked the same. I also failed the notice when I put one of those screws into the wrong hole.

Then I failed to notice when the drill stopped moving when it hit the top of the table. And THEN I failed to notice when I screwed it right THROUGH my table top.

I was heartbroken. Only 20 minutes out of the box and I had already ruined my desk- which I meticulously planned for months.

Why am I telling you this story?

Because setting up QuickBooks Online is like setting up Ikea furniture with no instructions. There’s a bunch of nuts and bolts and, if you don’t know what to do with them, you’ll seriously mess up your bookkeeping.

Which is why I made this guide for all you badass self-employed warriors. I want you to get to started with QuickBooks Online the RIGHT WAY. This post is your complete guide to getting your file setup so you can start doing your bookkeeping.

I recommend working through this guide ONE step a day. If you don’t, you’ll likely get overwhelmed and burned out by QuickBooks. Pace yourself and spend 1 hour a day setting up your account for the next week.

And now, you’re complete guide to setting up QuickBooks Online.


Step 1: Update your business settings

The first step is to update your business settings. Here’s how:

  1. Go the top navigation bar in QuickBooks Online (the dark gray bar at the top of the screen)
  2. Click on the Gear
  3. A drop down menu will appear
  4. Go to the first column called Company
  5. Click on Accounts and Settings

You’ll see a window with 6 sub tabs on the left- Company,  Billing and Subscription, Sales, Expenses, Payments, and Advanced. There are multiple sections of settings within each sub tab. You’ll edit each section by click on the pencil icon.

Here are the settings you will adjust in each tab:

Company

  • Company Name
    • Upload your company logo, edit the name if needed, and add your EIN or SSN
  • Company Type
    • Update the type of tax form you use. If you’re unsure, leave this blank. It won’t mess anything up!
  • Contact Info
    • Update your contact info and add a customer facing email if you need to. The company email is the email linked to Inuit. The customer facing email is what customers will see on invoices. This is helpful if you have a different support email.
    • Update your company phone number and website. Again, this info may appear on your invoices.
  • Address
    • Update your company address and add a customer facing address if you need to. Again, this is the address your customers will see. If you only have one address you don’t need to fill in the customer facing address or legal address.
  • Marketing Preferences
    • Tell QuickBooks if they can contact you via email, phone, or mail about promotional offers (I like to opt out of all!)

Billing and Subscription

  • Company ID
    • At the top, in green, is your company ID. If you ever call Intuit support they will ask you for this ID number so it’s a good idea to copy and paste it somewhere safe
  • QuickBooks
    • You won’t need to change any of these settings unless you want to upgrade your version of QuickBooks, switch to annual billing, or change your payment method

Sales

  • Customize
    • Skip this! We will be working on your invoices later
  • Sales form content
    • Edit your default invoice terms- You can always change this on the invoice manually, but it’s nice to set your most used terms so don’t constantly edit your invoices. Net refers to how many days someone has to pay you. For example, Net 30 means the invoice is due in 30 days.
    • Preferred Delivery Method- None
    • Shipping- Check to add a shipping address field to your invoice (best for product based businesses and wholesalers)
    • Custom Transaction Numbers- Check to use your own invoice numbering system and override QuickBooks default numbering system
    • Service date- Check to show the date of your service on your invoice (people to see WHEN you did the work)
    • Discount- Check to show a discount field on an invoice. I generally leave this unchecked.
    • Deposit- Check to show a deposit field on an invoice. Best for those who require deposits.
  • Product & Services
    • Show Product and Services list on Sales Form- Checked/ On
    • Show SKU column- Only check if you use SKU codes for your products and want them to appear on your invoice. If you don’t know what I’m talking about, keep this unchecked.
    • Track Quantity and Price Rate- If you bill hourly or per item, check On. If you bill a flat rate per project then check off. If off your invoice will JUST show the price for each line, not a break down like 3 hours x Hourly Rate.
  • Messages
    • Edit the default message that is sent to clients with your invoices. You can add your own message or use QuickBooks’ default message. You can also edit this message when you send the invoice. I like to add my template in here and then add a personal line when I send invoices.
    • You can also opt to have a copy of the invoice automatically emailed to you or to a person of your choosing.
  • Reminders
    • Edit the default invoice reminder email that you will send to your customers. Again, I like to put a template here and add a personal line when I send the reminder.
      You can opt to have the reminder automatically emailed to yourself.
  • Online Delivery
    • Check to attach your invoices and sales forms as PDFs to the emails or to send a digital invoice that clients open in their browser. I like to use QBOL’s default settings here.
  • Statements
    • Show aging table at the bottom of statements- On

Expenses

  • Bills and Expenses
    • Most people reading this article are subscribed to QuickBooks Simple Start and will see an upgrade button.

Payments

  • If you want to accept online payments on your invoices through Intuit’s payment processor, apply here for their processing service.

Advanced

  • Accounting
    • First month of fiscal year- January unless your fiscal year starts in July (super rare)
    • First month of income tax year- leave as same as fiscal year
    • Accounting method- Cash
    • Close Books- Off
  • Company Type
    • Tax form- Choose the type of tax form you use
  • Chart of Accounts
    • Enable account numbers- Off
  • Automations
    • Leave default setting for entire section
  • Currency
    • Home Currency- Edit if you use a currency other than the default
  • Other preference
    • Date format- Edit if you prefer a different date format than the default
    • Number format- Edit if you prefer a number format without commas
    • Customer Labels- Edit based on your business. For service based business I change it to Clients. and for product based businesses I use Customers.
    • Warn if duplicate check number is used- On
    • Sign me out if inactive for- 1 hour


Step 2: Set Up your Chart of Accounts

Now THE most important part of your bookkeeping program- your Chart of Accounts. A Chart of Accounts is the backbone of your financial system. Think of it as a master outline of your business finances. If you have a clear and concise outline, your bookkeeping is guaranteed to be more organized and streamlined.

To get to your chart of account:

  1. Click on Accounting from the menu on the left of the screen
  2. Your Chart of Account will open

QuickBooks has automatically pre-filled your chart of accounts. Some of these categories you’ll keep and others you’ll delete.

Before you change the default categories it’s important to map your Chart of Accounts on paper so you know exactly what you want to add and delete.

Map your bank accounts
First, make a list of all of your business bank accounts. These will be:

  • Business checking
  • Business savings
  • PayPal (which is a virtual bank account)
  • Petty Cash

Don’t worry if you have multiple business savings or checking accounts- you can add as many bank accounts as you want. The key is that they should be BUSINESS only.

Map your credit card accounts
Now you will list out all of your credit card accounts. Remember, these are business ONLY credit cards.

Map your assets
Write out all of your assets, if you have any. Assets are tangible and intangible resources that your business owns that add to its value. If you could sell it and make substantial money (not like $5)- it’s an asset.

Businesses that rely on equipment and machinery have A LOT of assets, while industries like coaching, consulting, and therapy will have few to no assets.

Some types of assets you may have are:

  • Furniture and Fixtures
  • High-End Photography Equipment
  • Special machinery for your industry
  • Inventory

Map your liabilities
Make a list of all of your liabilities. Liabilities are what your business owes to others. Again, some businesses have liabilities and others do not.

Some types of liabilities you may have are:

  • Business loan from a bank
  • Business loan from a friend

Map your income
Make a list of your income categories. Keep in mind these are the umbrella of all your products and services. You don’t need to list every single thing you do or sell here.

Instead, focus on the umbrella under which your product and services live. 

For example, in a year a coach might sell one-on-one coaching, run 3 coaching groups, sell 5 digital products, host multiple retreats, and have earned income from 5 affiliates. Their income categories would look like this:

  • One on One Coaching
  • Group Coaching
  • Digital Products
  • Retreats
  • Affiliates

Notice that we’ve left out the names of every single digital product or affiliate, but instead focused on the overarching category.

Map your Cost of Goods Sold 
Cost of Goods Sold is the direct costs related to the production of a product or service you sell. This can range from materials to labor and is a required cost in order for you to produce a product or service that you sell.

Examples of Cost of Goods sold are:

  • Cost of materials
  • Cost of labor
  • Inventory costs
  • Manufacturing costs
  • Packaging costs

Map your expenses
Write a list of all of your business expenses. In QuickBooks, your expenses are synonymous with your tax deductions.

A good place to start is to refer back to your previous year’s tax return and look at your Schedule C. This will show you your deduction categories and you can add these to QuickBooks.

If you are like tax deductions- WTF!- then check out this blog post that walks you through the most common deduction categories for self-employed biz owners. There’s also a cheat sheet you can print out and use to map your expenses.

Add your mapped accounts to QuickBooks
Now that you have made an intentional list of your accounts, it’s time to add them to your Chart of Accounts.

Here’s how (remember to start in the Chart of Accounts window):

  1. Click on the green New button, a window will appear
  2. Category type- use the drop down and select the type of account you are adding. The common categories you’ll use are: Bank, Fixed Assets, Credit Card, Other Current Liabilities, Income, Cost of Goods Sold, and Expenses.
  3. Detail Type- use the drop down to select the detail
  4. Name- give your account a detailed name, like Chase Business Checking (XXXX) or Amazon Credit Card (XXXX). This will help you immediately identify what the account it
  5. Description- leave blank
  6. Subaccount- check if this is a sub account/category of another account. Once checked you can select the parent account from the drop down.
  7. Balance- Enter in the opening balance. Unless you opened the account after the first of the year, try to enter in the opening balance as of January 1st. If you opened the account on May 3rd, enter in the opening balance as of that date (hint- the opening balance can be $0!)
  8. Save- Click on the little triangle on the green Save button and choose Save and New

Delete the accounts you aren’t using
The final step of setting up your Chart of Accounts is deleting any default categories you aren’t using. This will keep your bookkeeping streamlined.

  1. Find the category/account you want to delete. Click on the triangle on the far right of the category (right next to Run Report)
  2. Choose Delete
  3. Click Yes in the confirmation window

Step 3: Connect Your Bank Accounts

The next step is to import your transactions into QuickBooks by connecting your bank accounts for automatic syncing and downloading.

  1. On your dashboard go to the far right of the screen where it says Bank Accounts
  2. Click Connect Accounts. A new window will appear
  3. Choose your bank from the list or type in your bank’s URL
  4. Sign in your bank with your user name and password
  5. Once your bank is connected, QuickBooks will ask you which accounts you want to connect. There will be a list of all your accounts that can be accessed via that login. ONLY choose the accounts that are for your business. To select an account. To select an account, Click on it.
  6. Match the bank account to the corresponding bank account in your Chart of Accounts by click on the drop down box called Enter Account Type and selecting the account.
  7. When all of your business accounts have been selected and matched, press Connect

Note: QuickBooks ONLY imports the past 90 days of transactions into your account. If you have transactions that are more than 90 days in the past, you’ll need to manually enter them in. 


Step 4: Add your Products & Services

If you are using QuickBooks to invoice or send sales receipts to customers then the next step is to enter your master products and services list. If you don’t invoice your customers, you can skip this step.

To access your Products and Service List:

  1. Go the top navigation bar in QuickBooks Online (the dark gray bar at the top of the screen)
  2. Click on the Gear
  3. A drop down menu will appear
  4. Go to the second column called Lists
  5. Click on Products and Services

To add a new product or service:

  • Click on the green button that says New
  • There are 2-4 products and services types you can enter, depending on the version of QuickBooks you have:
    • Non-inventory- Physical or digital items you sell that you are NOT tracking as inventory
    • Service- Services performed
    • Bundle- A group of existing products or services that you sell together
    • Inventory- Physical or digital items that you sell that you ARE tracking as inventory
  • Choose your type of Product or Service you will add
  • Enter in the product or service information
    • Name- This is the name of whatever you are selling as it will appear on your invoice
    • SKU- If you use SKU numbers enter it in
    • Photo- Add a photo of your product or service
    • Category- You can assign additional categories to your products and services for your own tracking. The is good if you have A LOT of different types of products and services and you need another way to organize them
    • Sales Information- This is an additional description that will appear on your invoices or sales receipts for the customer to see. You can enter in the product or service details or leave blank and customize at the time of making the invoice
    • Sales price/rate- If you bill this service by the hour, enter in your hourly rate. If you sell this product or service for a flat rate, enter in the flat rate.
    • Income Account- Choose the income account that corresponds to this product or service. Remember, income accounts are the umbrella under which your products and services live, so this part is choosing the umbrella.
  • Click Save and Close when you are done OR click on the triangle on the green button and choose Save and New to enter another product or service.

Step 5: Customize your Invoices

Now it’s time to setup and customize your invoices. I prefer to do this before I start using QuickBooks so I’m not tied up correcting invoice setting when I’m billing clients.

To access the invoice editing window:

  1. Go the top navigation bar in QuickBooks Online (the dark gray bar at the top of the screen)
  2. Click on the Gear
  3. A drop down menu will appear
  4. Go to the first column called Company
  5. Click on Custom Form Styles

To edit your invoice template:
QuickBooks will have one invoice template set up for you. To keep things simple, edit the standard invoice by clicking on the Edit button. If you need more than one invoice style click on the green button that says New style at the top.

The invoice template editing window will appear:

Design

  • Change the template- Choose from 5 invoice layouts
  • Make logo edits- Edit or add your logo
  • Try other colors- Change the color on the invoice. You can use a hex code to brand your invoice
  • Choose Font- Change the font on your invoice. QuickBooks only offers 4 fonts so you cannot get super creative here
  • Edit print setting- Edit the margins of your invoice

Content
You will edit the content of each section one by one. To edit a section, click on the pencil. After you click on the pencil your editing options will appear on the left.

  • Header Section
    • Header- Check the fields you want to appear on your invoice
    • Form names- Check if you want your Invoice to say “Invoice” on it. You can also edit the name of your forms
    • Form numbers- Check if you want to number your invoices
    • Use custom transaction numbers- Check if you want to override QuickBooks invoice numbering system and use your own
    • Display- Check the fields you want to appear on your invoice
  • Activity Section
    • Account summary- Check if you want to show your customers entire account balance (not just the balance of the current invoice)
    • Columns- Check the columns you want to appear on the invoice
    • Rearranging column- Hover your mouse over the square of 9 dots. You mouse cursor will change to a 4 arrow diamond. Drag and drop the column to change the order
    • Edit labels and widths- Click on the word Edit Labels and Widths. A small slider will appear next to each invoice column. Slide to adjust the size of the invoice column
    • Show more activity options- Click to show more advanced invoice options
  • Footer Section
    • Display- Check to display a discount or deposit field
    • Message to customer on- Use the drop down to select which sales form the message will appear on. For invoices select Invoices and other sales forms. Now enter the message you want to appear on the invoice. I put payment options and late payment policies here.
    • Add footer text- If you want to include additional information in your footer, type it in here. Sometimes people will include their tax-id number here

Emails

  • Standard Email
    • Invoice- Click the drop down to choose the type of form you are editing the email form. You can choose from Invoice, Estimate, or Sales Receipt
    • Subject- Edit the subject line of your invoice
    • Use Greeting- Uncheck if you don’t want a salutation greeting in your email
    • Message to customer- Edit your message to your customer. You can also personalize this message when you send your invoice
  • Reminder Email
    • Subject- Edit the subject line of your invoice reminder email
    • Use Greeting- Uncheck if you don’t want a salutation greeting in your email
    • Message to customer- Edit the reminder message to your customer

Payments
To accept ACH and credit card payments on your invoice, check the grey square next to each option.

NOTE: You must apply for this option through Intuit Payments. If you haven’t applied yet, click on the link that says Finish your payments profile.

After you have edited your invoice, click the Preview PDF button at the bottom of the window to view a preview of your invoice.

If you are happy with your invoice, click Done.


Step 6: Setup your Integrations

The final step to setting up QuickBooks Online is linking any integrations you have to QuickBooks Online.

Here’s how:

  1. Start at your dashboard
  2. On the left navigation bar click Apps
  3. At the top, click All Apps
  4. Search for the apps your wish to connect
  5. Click on the app you want to integrate and follow the setup instructions

Some of my favorite app integrations are:

  • Sync with Square (free)- it isn’t perfect, but it does do a great job of syncing your transactions from Square into QuickBooks which was significant reduce the amount of data entry you have to do. It also imports and auto categorizes your Square fees. Here’s a PDF walk through of the app.
  • Stripe by Sushi.io (free for 100 transactions)- Again, this app isn’t perfect but it does bring in your Stripe sales as sales receipts which you can quickly edit within QuickBooks, eliminating the need to login in and out of Stripe every time you do your bookkeeping. It also imports and auto categorizes your Stripe fees.
  • Acuity Scheduling (with paid Acuity plan)- I haven’t used this yet, but this app will import payments made through Acuity and you have the option of sending automatic invoices to customers via QuickBooks after they schedule an appointment.
  • Zapier (must have paid Zapier plan)- There are SO MANY apps and zaps that you can connect to QuickBooks Online and Zapier! It will cost $20/month via the paid Zapier plan but is likely worth it in the time you will save.
  • T-Sheets (free)- Track your time by customer and import it to QuickBooks so the time syncs with customer invoices. Great for those who don’t want to upgrade to QuickBooks Plus for time tracking but want the benefit of linking billable time to invoices.

And now you’re set up and ready to start using QuickBooks Online!

Don’t forget to grab the QuickBooks Setup Cheat Sheet that will walk you through each of these steps and settings recommendations. 

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