Use Accounting Ratios to Stave Off Financial Problems
Does the mere mention of accounting ratios may put your teeth on edge, and bring back bad memories of Accounting 101? It shouldn’t as ratios can help your quickly determine how your business compares against others.
Banks often use ratios to analyze your financial statements as part of the loan approval process, so it’s helpful to know in advance how you’ll be measured. Even better, ratios allow you to compare your business against your peers since many trade groups publish lists of average ratios within an industry.
Although ratios may have made you drowsy during accounting class, they can be a fascinating way to measure your company’s financial performance.
Profit & Loss Report Versus Statement of Cash Flows
If you’re like most QuickBooks users, you rely on the Profit & Loss Standard report to monitor how your business is doing. However, you may have overlooked an even more valuable report: the Statement of Cash Flows.
The Profit & Loss Standard (P&L) report is important in its own right, but it only provides partial insight into the health of your business. While the P&L shows what you earned and spent, the Statement of Cash Flows shows you where the cash came from and went to, also known as sources and uses.
As you’ll see in this article, you can use the Statement of Cash Flows to determine the how various activities increased or decreased your cash balance during a given report period.
QuickBooks Helps You Navigate Tricky Waters
The price of gasoline is just one of many factors putting pressure on our economy as a whole. Now it’s more important than ever to keep a close eye on your company’s performance. Many business owners compare financial results to an annual budget. If you don’t have your budget in place yet, we’ll show you how to get started. Even if you have, we’ll show you how to use last year’s results as a measuring stick with comparative financial reports. Once you understand these techniques, we’ll explain why you should create a monthly appointment with yourself to ensure that your results continue to measure up and take action if they don’t.
Use QuickBooks Pro to Manage Your Business and Personal Checking Account.
QuickBooks Pro can be used to manage many different files. In your case, you could have a QuickBooks file called “Business”, and a completely separate QuickBooks file called “Home” to manage the separate checkbooks. For more information on the creation of a new company file, click on File in the menu bar, then New Company.
How To Easily Track Your Inventory
Do you know where your physical inventory items are? Whether you keep them in a closet, in an unused office, or a warehouse, you need to keep a close watch on how many products you have, how many have been ordered, and when it’s time to reorder. Fortunately, QuickBooks has tools that help you track all of those numbers. If you’re conscientious about making use of them, you should have a good sense of the state of your inventory, wherever you store it.
How to Take the Pain Out of Paying Your Bills
Some of the financial crystal ball-types are telling us there are signs that the recession may be drawing some of its last breaths. But those bills are still coming in, and you may have had a long, dry summer and less income that you can use to meet those business obligations.
The desktop versions of QuickBooks can help. They can’t magically make more money appear in your coffers, but they can help you manage your bills so you’re always aware of what’s coming up and don’t get any nasty surprises. This keeps both you and your vendors happy, and minimizes the chance of affecting your credit report adversely. You can also maximize cash flow by being hyper-aware of when each bill is due and timing them appropriately. (These bill-paying tools are available in all QuickBooks versions above Simple Start.)
4 Ways to Manage Prices in a Down Economy
We are living in a period of “accelerated change”. Indeed, the ground does seem to be shifting beneath us almost faster than we can comprehend, so it’s important to stay nimble in these difficult times.
One way you can do so is to closely manage your prices. In some cases you may need to ratchet your prices up to cover a commodity cost-spike. Or, you may want to offer special deals to your best customers to help retain their business. In this article we’ll discuss four methods you can use to manage prices (and change) within QuickBooks.
Billing for Time and Expenses: How It Works
Billing for inventory parts is easy. Pick the items from a list and specify a quantity. Poof. Done. Billing for costs, time or mileage is a little more complex. QuickBooks has built-in tools to help you do this, but it’s a bit of a process.
Do You Need to Use QuickBooks’ Fixed Asset Tools?
Much of the work you do in QuickBooks is short-term. You send an invoice and it gets paid. Your purchase order is fulfilled, and the products move into your inventory. You run payrolls and submit their related taxes and other payments.
Managing the life cycle of your fixed assets is an exception. Fixed assets are physical entities that you purchase to help your business generate revenue, like property, a vehicle or a commercial oven. By definition, they must be in use for over 12 months.
Using Sales Receipts: When and How
How do you let your customers know how much they owe you, and for what products or services? In these days of ecommerce and merchant accounts, your customers may provide a credit card number over the phone or on a website. Or perhaps you send invoices after a sale and receive checks or account numbers in the mail. QuickBooks can help you both create the invoices and record the payments.
There’s another type of sales document that you can use in certain situations: the sales receipt. You’d probably be most likely to use one of these when customers pay you in full for products or services at the same time they receive them.
What Are Payroll Items in QuickBooks?
Are you considering processing your own payroll in QuickBooks? Whether you’re moving from a payroll service or getting ready to pay your first employee, you’re taking on a complex set of tasks that requires a great deal of setup and absolute precision. But the reward is complete control over your compensation records and transactions, and constant access to your payroll data.
If you have no experience dealing with paychecks, deductions, and payroll taxes, we strongly recommend that you call the office before you get started. While QuickBooks simplifies the actual mechanics of setting up and running payroll, there’s still a lot you need to know.
It goes without saying that accuracy is critical here. You’re responsible for your employees’ livelihoods and for maintaining any benefits they receive. Federal, state and local taxing agencies will count on you to submit the proper payroll taxes and filings on time; failure to do so can result in stiff penalties and worse.
Working with Checks in QuickBooks
“I don’t write checks anymore.” You hear a lot of people say that these days, and for many consumers, debit cards, smartphone payment apps, and online banking have all replaced the old paper checkbook.
That’s fine if you’re at Starbucks or the grocery store, but many small businesses still prefer to issue paper checks to pay bills, cover expenses, and make product and service purchases. QuickBooks provides tools that help you create, print, and track checks.
But you don’t just head to the Write Checks window every time something needs to be paid. There are numerous times when you would record a payment in a different area of the program. For example, if you’ve already created a bill in Enter Bills, you’d go to the Pay Bills screen to dispatch a check.
What Sales Orders Are and When to Use Them
When you want to document sales that you can’t (or won’t) fulfill immediately, but you plan to do so in the future, you can’t create an invoice just yet. This is where sales orders come in.
You may never need to create a sales order for a customer. Perhaps you have a service-based business, or you never run out of inventory. Or you simply don’t enter an order unless you know you have the item(s) in stock.
But if you plan to use sales orders, you must first make sure QuickBooks is set up to accommodate them. Open the Edit menu and select Preferences, then Sales & Customers. Click the Company Preferences tab to open that window.
All About Sales Receipts in QuickBooks
You know how important it is to obtain receipts for the expenses you and your employees incur. You need to record them, analyze their impact on your cash flow, and claim some of them on your income taxes.
Your customers, too, expect to receive forms documenting purchases they’ve made from you. When they pay you immediately for goods or services, you’ll give them a sales receipt, rather than invoicing them for future remittance. Not only will your customers have a record of the transaction â?? you will, too.
QuickBooks supports the creation and tracking of sales receipts. It manages the mechanics of this important task incredibly well and eliminates the need to enter receipt data twice, once on a paper copy for your customer and again in your accounting system. This QuickBooks feature not only minimizes errors, but saves time and lessens the possibility of disputes down the road.
Creating Statement Charges in QuickBooks
Depending on what kind of business you have, you probably have a preferred way of billing customers. If they walk into your shop and present a credit card or cash, you create sales receipts. If they order off your website, they might receive an electronic receipt. Or your arrangement may be such that you send invoices.
There’s another way that’s especially useful if your customers are responsible for paying recurring charges, like an ongoing service contract that’s billed monthly. You can enter those financial obligations directly as statement charges.
As you know, QuickBooks can create statements, summaries of a customer’s activity. These are generated automatically from the invoices, receipts, payments, and other transactions you’ve recorded over a given period of time. But did you know you can manually add charges to statements? Here’s how it works.