Accounting, Bookkeeping, and QuickBooks Tips for Small Businesses

QuickBooks Tutorial: How to Write Off Bad Debt in QuickBooks





Yes, it’s an unfortunate part of doing business. Occasionally you will have those stinky customers who refuse to pay for the products and/or services your business sells. After you have exhausted all possibilities of trying to collect payment from your nonpaying customer (called them, emailed them, mailed past due statements, charged late fees, offered to work out a payment plan, etc) you realize they are not going to pay. You can write this off as Bad Debt and get the sale off of your books in 2 simple steps.

IMPORTANT – There are several ways to write off bad debt in QuickBooks. However, the way I’m about to show you is the ONLY way to adjust your sales taxes payable liability account (if applicable to your business). Even if your business does not collect sales tax, this is a pretty easy way to write off bad debt and I highly recommend it.

Step 1:
Click on the Reports menu and select Customers & Receivables from the drop-down menu. Then choose the Open Invoices report. This report will show you all the open invoices you currently have (customers who owe you money). Find the customer you want to write off. Write down the customer’s name, the noncollectable invoice number, and the amount due.

Step 2:
Next, go to the Customers Menu or go to the Customer Center located on your main home screen. From there select Create Credit Memos & Refunds. The Credit Memo window will open.

  • Enter your customer’s name, choose the date you want to write off the invoice, and leave the credit memo number alone (QuickBooks will automatically assign that number for you).
  • Choose the “Bad Debt” Item. You will want to have an Item specifically set up for Bad Debt. If you don’t have one, you will need to set one up.
    • If you need to create a new Item, click Add New, select Other Charge, the Item Name can be Bad Debt, in the description box you can type in Bad Debt or Noncollectable Funds, and then for the account select your bad debt expense general ledger account. Click OK to set up the new Bad Debt Item.
  • In the description box, I like to reference the invoice number we are writing off. It’s not required, but it makes it a lot easier to go back if you ever need to quickly reference what invoice number you wrote off. You can simply put “unable to collect invoice #…”.
  • The amount will be the amount of the invoice you are unable to collect and want to write off your books.
  • If you are using QuickBooks’ class tracking feature, select the appropriate class.
  • Sales Tax – If your business tracks Sales Taxes Payable, this is where you will adjust your sales taxes payable account. Please note, there are various ways to write off bad debt in QuickBooks, but using a Credit Memo is the ONLY way to adjust your Sales Tax Payable account.
  • Click Save and Close.
  • A new window will open informing you that you have a remaining balance on this credit. QuickBooks will want to know if it can help you apply it somewhere else, offer a refund and help you write a check (i.e. customer overpaid), or apply the credit to an invoice. Select the Apply to Invoice option.
  • Find the invoice number you are writing off, check off that invoice number, and click done.
  • Your invoice has been written off. Meaning it will no longer show up as an Accounts Receivable on your Balance Sheet and will appear on your Income Statement as an expense (bad debt expense). This expense is used to reduce your income since you are unable to collect this sale.

Free Tip!
I recommend double checking your work. This is a great way to make sure you wrote off your noncollectable invoice correctly.

  • View your Open Invoices report again (step 1). The invoice you just wrote off should no longer appear on the Open Invoices report.
  • If you look at your Balance Sheet, your Accounts Receivable will be reduced by the amount of the invoice you just wrote off.
  • Your Income Statement will report an expense line for Bad Debt. This expense should equal the amount of your uncollectable invoice.

You’re good to go! That is the correct way to write off bad debt (noncollectable invoice) in QuickBooks.

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Michelle Edwards, CPA - QuickBooks Consultant Written by Michelle Edwards, CPA
Certified QuickBooks ProAdvisor

Michelle Edwards, CPA is the owner of Trailhead Accounting Solutions CPA, LLC, an Erie, CO based CPA firm focused on providing small and mid-sized businesses with day-to-day accounting, bookkeeping, and Virtual CFO solutions. Michelle is a CFO turned consultant who loves working with small businesses and entrepreneurs. When she’s not crunching numbers, she can be found hiking, remote camping, gardening, home brewing, quilting, and hanging out with her family.


QuickBooks Tutorial: How to Create an Invoice in QuickBooks

Let’s say you operate a business and one of your customers just bought one of your products or services. So now you need to send them an invoice to collect payment from them. QuickBooks makes it super easy to create and send invoices, let’s get started!

Step 1:
From the main home page in QuickBooks, click on the “Create Invoice” button located in your customers section. Then the QuickBooks create invoice window will open.

Step 2:
Fill out the invoice with information pertaining to your business, products and services.

  • Enter the customer you want to invoice. Pick from the list of your current customers or click “add new” to set up a new customer and enter their billing information.
  • Choose your invoice date. This can be today, the date your product ships to your customer, the first day of the month for rent billings, etc.
  • QuickBooks will automatically generate the Invoice Number. So it’s best to leave this field alone.
  • If you wan to track PO numbers, sales reps, change the customer’s payment terms (due in 15 days…), etc feel free to update those fields.
  • Next you will want to select an Item Code.
    • In simple terms, QuickBooks items are all the products and services your business sells. These are the items you bill your customers for.
    • Select the appropriate item from your list or click “add new” to create a new item.
    • After you select an item, you will notice QuickBooks will automatically populate your description and selling price/rate fields for you. Double check the rate, update if needed. Add more details to your description, if needed.
    • Then fill in the quantity sold and QuickBooks will automatically calculate the quantity times the selling price/rate and populate the amount field.
    • Select the class, if your business uses the QuickBooks class tracking feature. In a nutshell, classes are a great way to track your company’s income/expenses by departments, store location, etc.
    • Select Taxable or Non-Taxable sale, if applicable to your business.

    Step 3:
    The last step is deciding how you want to save and send your invoice.

    • Save & Close will save your invoice to be sent at a later date and closes the invoice window. This works great is you just want to create one invoice and will print/send a batch of invoices at another time.
    • Save & New will save your current invoice to be sent at a later date and then open a new create invoice window for you to create another invoice. This is another option if you want to save your invoices to be printed/sent at a later time.
    • If you want to send your invoice now, click Save from the top of the invoice screen. Then you can select to either Print, Create a PDF, or Email your invoice. The emailing feature is pretty sweet as QuickBooks can connect to your web based email programs to email your invoices. Pick your choice and follow the QuickBooks prompts.

That’s it! Now you anxiously wait for your payment to arrive…

Free Tip! A little trick I’d like to share. At the bottom of you invoice window is an option to add a customer message. This is a great place to add a personalized note… Thank you for your business, Happy Holidays, etc… I love doing this because it adds a personal and friendly touch to your invoice.

The memo field will not show up on your invoice and is a place for you to keep internal notes.

Happy Invoicing!

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Michelle Edwards, CPA - QuickBooks Consultant Written by Michelle Edwards, CPA
Certified QuickBooks ProAdvisor

Michelle Edwards, CPA is the owner of Trailhead Accounting Solutions CPA, LLC, an Erie, CO based CPA firm focused on providing small and mid-sized businesses with day-to-day accounting, bookkeeping, and Virtual CFO solutions. Michelle is a CFO turned consultant who loves working with small businesses and entrepreneurs. When she’s not crunching numbers, she can be found hiking, remote camping, gardening, home brewing, quilting, and hanging out with her family.


How Much Does Your Employee Actually Cost?

Cubical Espionage

Are you are considering adding another member to your team? If so, do you think your employee will only cost you the $15/hour you plan to pay? Think again. Most business owners are surprised to learn that on average an employee will actually cost 25%-40% above their wages/salary amount. As you think about hiring your next employee, here are some additional employment costs to keep in mind.


Payroll Taxes


In addition to paying your employee their wages/salary, business owners are also responsible for paying employment taxes. On average, these employment taxes cost employers about 15% of an employee’s wages. Business owners are responsible for paying Social Security, Medicare, Federal & State Unemployment Insurance Tax, Workman’s Compensation Insurance, local payroll taxes, etc. These employment taxes happen to cost the employer about an additional 15% of the employees wages. Therefore, an employee making $15/hour will cost the employer about $17-$18/hour.
**Payroll tax figures subject to change**


Paid Time Off


To be a competitive employer, business owners also have to look at offering their employees paid time off benefits. These benefits can include vacation, sick leave, personal time off, paid holidays, and paid breaks (as required by local & federal employment laws). The cost of these benefits typically depends on the employees’ wages/salary, the size of the business, the company’s geographical location, and the industry standard.


Health Insurance


Most employees expect to receive health insurance benefits from their employers. It’s a wonderful benefit to offer employees, but can add a hefty price tag to the employer. Business owners need to consider the monthly premiums paid for their employees’ health insurance benefits. Some employers pay 100% of the monthly premium, while other employers pass along a portion of the cost to the employees. With the new Obamacare laws starting to take effect, these numbers could be even higher for businesses in the future.


Retirement Savings Benefit


Another consideration is whether or not you offer employees retirement savings plans or pensions, such as Simple IRA or 401(k). These retirement benefits are funded by both the employee and the employer. Typically, the employer offers to match the employee’s contribution, up to a certain percentage. On average, the employer contribution costs businesses 3-6% of the employee’s salary/wages. This does not keep in mind the cost of managing the retirement plan.


Overhead Costs


If that’s not enough, there are also additional overhead costs employers must consider when hiring an employee…

  • Work Space – computer, desk, chair, phone line, phone equipment, office space, etc.
  • Office Supplies – pens, paper, printer toner, whiteout, post it notes, etc.
  • New Hire Training – teach them how to do the job and work expectations.
  • Human Resources Department – hire additional employees to handle the hiring & firing, creating employment forms, drafting employment handbooks, and to keep up with the changing employment laws.
  • Payroll Processing – hire payroll processor to generate checks, calculate tax deductions, submit payroll tax deposits to government agencies, filing payroll tax forms, W-2’s, direct deposit fees, etc.
  • Insurance – Workman’s Comp Insurance, licensing & bonding, and other general business insurance.
  • Miscellaneous – uniforms, tools, protective gear, cell phone, computer servers, health club memberships, etc.

With all this in mind, an employee hired at an annual salary of $35,000, will cost the employer at least $45,500, if not more in the additional costs discussed above. Or based on the example above, an employee paid an hourly wage of $15/hour, will cost the employer at least $20/hour, if not more. When you decide to hire an employee, it’s important to keep in mind and budget for these additional hidden costs.

Helpful Resource:
IRS – Publication 15, Employer’s Tax Guide

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Michelle Edwards, CPA - QuickBooks Consultant Written by Michelle Edwards, CPA
Certified QuickBooks ProAdvisor

Michelle Edwards, CPA is the owner of Trailhead Accounting Solutions CPA, LLC, an Erie, CO based CPA firm focused on providing small and mid-sized businesses with day-to-day accounting, bookkeeping, and Virtual CFO solutions. Michelle is a CFO turned consultant who loves working with small businesses and entrepreneurs. When she’s not crunching numbers, she can be found hiking, remote camping, gardening, home brewing, quilting, and hanging out with her family.


Using QuickBooks to Track Outstanding Invoices

The other day I received a great question from a customer wondering how she can use QuickBooks to see which customers have outstanding invoices. It was such a great question, I thought I’d share the QuickBooks tips with my blog readers as well.

Here are 4 QuickBooks reports that will help you manage your outstanding customer invoices…

1. Customers Who Owe Money

Using QuickBooks 2013, there is a sidebar on the left side of your screen with useful tools.
–>Click on My Shortcuts
–>Click on Snapshots
–>Make sure you are looking at the “Company” tab
–>Check out the Customers Who Owe Money report

This report offers are quick snapshot to a list of customers who have outstanding invoices. You can quickly see which customers owe you money, when the invoice was due, and the amount due. By default, the report sorts by the oldest receivable first. However, you can click on the customer, date, or amount header to have the report quickly resorted the way you want.

Customers Who Owe Money QuickBooks Report

Managing receivables with QuickBooks

2. Open Invoices Report

–>Click on Reports from the menu across the top of your QuickBooks window
–>Select the Customers & Receivables option from the drop down report list
–>Choose the Open Invoices report

This report will show you all of the open invoices, sorted alphabetically by customer name. It’s a powerful report if you need to see the invoice number, the invoice date, due date, and amount due all in one report.

QuickBooks Open Invoice Report

3. A/R Aging Detail Report

–>Click on Reports from the menu across the top of your QuickBooks window
–>Select the Customers & Receivables option from the drop down report list
–>Choose the A/R Aging Detail report from the list of report choices

The A/R Aging Detail report will show you all open invoices, sorted by due date. So you can quickly see which accounts receivables (A/R) are 0-30 days, 30-60 days, 60-90 days, and 90+ days past due. It’s a great way to track late paying customers and see if you have any really old outstanding invoices that either need to be sent to collections or written off the books and expensed as bad debt.

QuickBooks A/R Aging Detail Report

4. Customer Balance Detail Report

–>Click on Reports from the menu across the top of your QuickBooks window
–>Select the Customers & Receivables option from the drop down report list
–>Choose the Customer Balance Detail report from the list of report choices

The Customer Balance Detail report in QuickBooks will show you all the invoices & payments for each customer, sorted by customer. Although this report is not the best one to look at outstanding invoices, I mentioned it because it’s an extremely useful report to gain an overall view of your customers activity. You can see your customers, their invoices, the payments you have received, and it tells you which customers have an open balance due.

QuickBooks Customer Balance Detail Report

QuickBooks Tip:

Want more information about the invoice you see on the various reports? Hover your mouse over the invoice you would like to see more details on, when the magnify glass appears, just double click on the invoice. QuickBooks will drill down and open the invoice window so you can view all the details for that specific invoice.

**Please note, the information included on the report samples in this blog post came from one of QuickBooks Sample Company Files. The reports display fictional data.**

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Michelle Edwards, CPA - QuickBooks Consultant Written by Michelle Edwards, CPA
Certified QuickBooks ProAdvisor

Michelle Edwards, CPA is the owner of Trailhead Accounting Solutions CPA, LLC, an Erie, CO based CPA firm focused on providing small and mid-sized businesses with day-to-day accounting, bookkeeping, and Virtual CFO solutions. Michelle is a CFO turned consultant who loves working with small businesses and entrepreneurs. When she’s not crunching numbers, she can be found hiking, remote camping, gardening, home brewing, quilting, and hanging out with her family.


Top 7 Tips to be a Successful Entrepreneur

The Key to Entrepreneurial Success

Let’s face it, being an entrepreneur is tough. It’s a risky endeavor, but comes with the dream of big rewards. Below are seven tips to be a successful entrepreneur. I can’t guarantee your success, but I can help steer you in the right direction. The rest is up to you!


1. Get the Cash Flowing


We all know that cash is king. Without cash flow, your business will not be successful. The first step to generating income is to sell a product or service that people want to purchase. Entrepreneurs are known for being dreamers and trying to sell their new big ideas. However, if there’s no market for your product or service, you will not be able to generate the cash flow your business needs to survive.


2. You Need a Profitable Business Model


Great, you have a product or service that people want to buy. Now it’s time to figure out a business model that works. Can you make a profit? Will the income you generate selling your product or service be more than the costs of running a business? If not, your business won’t survive for long. When running these projections, a good rule of thumb is to always overestimate your costs and underestimate your income.


3. Marketing is More Important than Mastering


You have a product or service that people want to buy and a successful business model. Now get out there and market yourself! I’m guilty of this one, spending too much time planning. Fear settles in and I spend lots of time trying to feel more qualified. Be confident, get out there, and sell your product. Funny thing, you actually learn more while you work on a customer’s engagement and interact with your clients. Not to mention, this helps get the cash flowing sooner than later.


4. Spend Time on Revenue Generating Tasks


If you’re coming from Corporate America, you’re used to being paid for sitting at a desk from 9-5. Let’s face it, your paycheck was deposited into your bank account regardless of how much you created or the results of your work. Entrepreneurs need to change this mindset. Now, your paycheck is directly related to the value you add to your customers lives. Wasting Time = No Paycheck. You need to be focused and spend your time doing revenue generating tasks.


5. Continually Look For Ways to Keep Costs Low


You have your marketing strategy down, are closing more deals, and spending your time wisely doing revenue generating tasks. Congrats, you have cash is coming in the door. Don’t forget to keep track of where your money is going. Keep track of what you spend, where you spend it, and see if there are ways you can cut these costs. The more entrepreneurs make, the less frugal they tend to become. Keep in mind, the more money that goes out the door means less money in your pocket. So keep a close eye on those pennies!


6. Measure Your Results


Unless you measure and track the results, there is no way to tell if what you are doing is actually working. As business grows, you might add a new department, change your product line, try a new advertising campaign, etc. Did this new department increase your profit margin? Did the new product line help convert more leads to buyers? Did the new advertising campaign bring in new customers? Without tracking and measuring the results of these changes, you have no idea if these programs or strategies actually worked. Meaning you could be wasting money and not even know it. Or on the flip side, you could have stepped into a gold mine and not even know it!


7. Learn From Other Successful Entrepreneurs


Surround yourself with people who are where you want to be. No need to spend your time reinventing the wheel. You can learn from their mistakes and from their successes. Take that knowledge and move forward with your own business! Consider hiring a business coach or find a mentor. Find someone who has done what you want to do. They can give you tips and hold you accountable for your own goals.

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Michelle Edwards, CPA - QuickBooks Consultant Written by Michelle Edwards, CPA
Certified QuickBooks ProAdvisor

Michelle Edwards, CPA is the owner of Trailhead Accounting Solutions CPA, LLC, an Erie, CO based CPA firm focused on providing small and mid-sized businesses with day-to-day accounting, bookkeeping, and Virtual CFO solutions. Michelle is a CFO turned consultant who loves working with small businesses and entrepreneurs. When she’s not crunching numbers, she can be found hiking, remote camping, gardening, home brewing, quilting, and hanging out with her family.


QuickBooks Keyboard Shortcuts

QuickBooks Keyboard Shortcuts

QuickBooks Keyboard Shortcuts

CTRL + A – Displays the Chart of Accounts window
CTRL + C – Copies your selected text
CTRL + D – Deletes your current list item or transaction. Please note, this CANNOT be reversed, so think long and hard before using this shortcut.
CTRL + E – Edit an item in a register or on an items list
CTRL + F – Brings up the Find feature
F3 – Opens the Search feature (can be used in place of the Find feature mentioned above. This shortcut works with QuickBooks 2011 and later versions)
CTRL + G – If you’re looking at a funds transfer in the register, this will open the register for the other side of the funds transfer.
CTRL + H – Opens the transaction History. Very useful if you’re looking at an invoice and want to see the customer’s payment history for this invoice.
CTRL + I – Opens the Create Invoice window
CTRL + J – Opens the Customer Center
CTRL + L – Opens a list. This works well if you’re entering a transaction and your cursor is in a field with a drop down list.
CTRL + U – Selects an item from the the drop down list your just opened using CTRL + L and adds this list item to your transaction.
CTRL + M – Opens the Memorized Transactions window
CTRL + N – Creates a new transaction or list item
CTRL + P – Print
CTRL + Q – Opens the Quick Report for the selected transaction
CTRL + R – Displays the Register window
CTRL + T – Displays the Memorized Transaction List, so you can create a new transaction from the memorized transactions
CTRL + V – Pastes copied text
CTRL + X – Cuts your highlighted text and stores it on your clipboard to paste elsewhere
CTRL + Z – Undo – usually undoes your last action
CTRL + Delete – Deletes the selected line in a transaction
CTRL + Enter – Saves your current transaction. FYI – this selects the “best” save option from the buttons at the bottom of your screen – “Save & Close”, “Save & New”, “Clear”, Etc. Pressing “Enter” without the CTRL will cause QuickBooks to select the botton that is highlighted, and not necessarily the “best” save option.
CTRL + Insert – Inserts a line into a transaction
ESC – Closes current window
F1 – Opens the Help Window

QuickBooks Amount Field Keyboard Shortcuts

If the cursor is in an amount field, you can use these shortcuts to make calculations in QuickBooks
+ – Adds numbers together
– Subtracts numbers from each other
* – Multiplies numbers together
/ – Divides the numbers

QuickBooks Date Field Keyboard Shortcuts

If the cursor is in a date field, you can use these shortcuts to change the transaction date in QuickBooks
+ – Adds one day to the date shown
– Subracts one day from the date shown
T – Replaces the date shown with Today’s date
Y – Changes the date to the first day in the Year
R – Changes the date to the last day of the yeaR
M – Changes the date to the first day in the Month
H – Changes the date to the last day in the montH
W – Changes the date to the first day in the Week
K – Changes the date to the last day in the weeK
[ – Changes the date to the same day in the previous week
] – Changes the date to the same day in the upcoming week
; – Changes the date to the same date, but for last month
– (apostrophe) Changes the date to the same date, but for next month
Alt + Down Arrow – Opens the calendar so you can easily select the date

Starting QuickBooks Keyboard Shortcuts

CTRL – Starts QuickBooks without opening a company file.
ALT – Starts QuickBooks without opening the windows you previously left open last time you shut down QuickBooks.
ALT + F4 – Closes QuickBooks

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Michelle Edwards, CPA - QuickBooks Consultant Written by Michelle Edwards, CPA
Certified QuickBooks ProAdvisor

Michelle Edwards, CPA is the owner of Trailhead Accounting Solutions CPA, LLC, an Erie, CO based CPA firm focused on providing small and mid-sized businesses with day-to-day accounting, bookkeeping, and Virtual CFO solutions. Michelle is a CFO turned consultant who loves working with small businesses and entrepreneurs. When she’s not crunching numbers, she can be found hiking, remote camping, gardening, home brewing, quilting, and hanging out with her family.


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