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Bookkeeping

How to Set Up a Bookkeeping Cycle in QuickBooks Online

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Do you have a regular schedule you follow with your QuickBooks Online work?

Whether you’re a new QuickBooks Online user or a long-time user, having a regular accounting routine can make you more productive and confident that you’re addressing all of your accounting issues.

What Should You Do Every Day?

Even if you don’t have expenses to enter or invoices to process, it’s a good idea to log into
QuickBooks Online every day. If you’ve connected your online bank and credit cards to the
site (which you absolutely should), there will probably be transactions to go over. So after
you’ve taken a look at your Dashboard (especially your Tasks), hover your mouse over
Transactions in the toolbar and click Bank Transactions.

Click Update in the upper right to make sure you’re seeing the most recent transactions. If
you’re doing this every day, it shouldn’t take long to go over the income and expenses that
have been imported since you last logged in.

You should be looking at newly imported transactions daily and completing the fields
provided as comprehensively as possible.

If you don’t know what Match or Record as transfer mean, we should schedule a session
to go over how those work to avoid duplicate transactions in QuickBooks Online.

Every Week

You need to be monitoring your accounts receivable and payables on a weekly basis – at
minimum. There are two ways to do this. You can:

Run reports

  • Click Reports in the toolbar and scroll down first to Who owes you. Run Accounts receivable aging summary. QuickBooks will display past-due transactions in several columns (Current, 1-30 days, 31-60 days, 61-90 days, and 91 and over). If you’re keeping up with your receivables, you shouldn’t be seeing numbers in most of the columns, unless you’re in a known collections process.
  • Scroll down to What you owe and run Accounts payable aging summary. This works like the aging receivables report. Again, you shouldn’t be seeing much activity here unless you’re in a payment dispute with a vendor.
  • You can also run the Open Invoices report to quickly see the Due date and Open balance entries here. Ditto the Unpaid Bills report.

Consult the All Sales page

Hover your mouse over Sales in the toolbar and click All Sales. The colored bars and
numbers at the top of the page show you the status of your sales. Click the orange bar in
the middle to see a list of overdue invoices. If there are any, you can set a Send
Reminder by clicking the corresponding down arrow in the Action column. While you’re
there, look at estimates and unbilled income and take any action needed.

Every Two Weeks (or more often, depending on product volume) If you sell products and track inventory in QuickBooks Online, you should keep a close eye on your stock to see if you need to:

  • Reorder,
  • Bring in a larger supply because something is selling well, or,
  • Discount or discontinue a product because it’s not selling.

Click Reports in the toolbar and run Product/Service List under Sales and Customers
and look at the Quantity on Hand column.

Every Month

Reconcile your accounts (Transactions | Reconcile)

It’s really important that you reconcile your accounts every month.

No one likes to do this, but it’s way easier to do regular reconciliations than it is to have to
go back several months to track down a problem. If you’ve never done this in QuickBooks
Online, it works similarly to how you used to reconcile your accounts by comparing a bank
statement and your paper checkbook register. Only you’re comparing your bank or credit
card statements to your accounts in QuickBooks Online. Before you start, make sure
you’ve matched and categorized all of your downloaded transactions.

Run a Profit and Loss report for the last month

Click Reports in the toolbar and click Profit and Loss under Business Overview. Did
you make a profit last month?

Every Quarter

If you’re planning to apply for a loan or looking for an investor, or if you just want a deeper
understanding of how your business is doing, consider having us create and analyze
standard financial reports for you, like the Balance Sheet and Statement of Cash Flows.

Lastly, If you ever have trouble categorizing an expense, select Ask My Accountant as the
Category. If we’re meeting with you once a month, we can run a report on these and help
you categorize them correctly.

Give the above a try, review your results, and adjust the schedule as necessary to ensure all your accounting tasks are completed.

A Beginner’s Guide to Understanding the Balance Sheet

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Business owners tend to focus on the Profit and Loss Statement as it shows the income and expenses flowing through their business. Also, the categories (accounts) on the Profit and Loss Statement are terms they tend to use in their day-to-day business dealings.

The Balance Sheet however, uses accounting terms that might not be used on a daily basis and therefore, can be a little intimidating. If that’s how you feel, you’re not alone as We hear regularly from business owners, that they don’t fully understand the balance sheet. This article will breakdown the terms you might find on a balance sheet.

What Is a Balance Sheet?

Think of a balance sheet like a snapshot of your finances. It shows what a business owns (assets), what it owes (liabilities), and what’s left over for the owners (equity). This snapshot helps business owners, investors, and lenders understand how the business is doing financially.

The balance sheet follows a basic formula:

Assets = Liabilities + Equity

This equation is called the accounting equation, and it always stays in balance (hence the name “balance sheet”). Let’s explore each part of the equation.

Assets: What the Business Owns

Assets are all the things a business owns that have value. These can be physical items (tangible) or things that aren’t tangible (items that aren’t physical but have value). Here are some examples:

Tangible:

  • Cash: Money in the bank or on hand.
  • Accounts Receivable: Money customers owe the business.
  • Inventory: Products the business plans to sell.
  • Equipment: Tools, machinery, or computers used in the business.
  • Property: Land or buildings owned by the business.

Intangible:

  • Intellectual property: Patents, trademarks, copyrights.
  • Goodwill: Value from customer loyalty, public reputation.
  • Brand recognition: Logos, taglines, etc.

Assets are usually divided into two categories:

  • Current Assets: Items the business can turn into cash quickly, usually within a year (like cash or inventory).
  • Non-Current Assets: Items the business plans to use longer than a year (like equipment or property).

Liabilities: What the Business Owes

Liabilities are debts or obligations—money the business owes to others. Here are some common examples:

  • Loans: Money borrowed from a bank or other lender.
  • Accounts Payable: Money owed to suppliers or vendors.
  • Taxes Payable: Taxes the business owes to a government agency.

Like assets, liabilities are divided into two categories:

  • Current Liabilities: Debts that must be paid within a year (like short-term loans or bills).
  • Non-Current Liabilities: Debts that are due over a longer period (like a mortgage).

Equity: What’s Left Over

Equity is the owner’s share of the business. It’s what’s left when you subtract liabilities from assets. In other words:

Equity = Assets – Liabilities

If a business sold everything it owns and paid off all its debts, the remaining money would be the owner’s equity. Examples include:

  • Owner’s Contributions: Money the owner(s) has invested in the business.
  • Retained Earnings: Profits the business has kept rather than paying out to the owner(s).

Why Is the Balance Sheet Important?

A balance sheet is like a report card for your business. It helps answer important questions, such as:

  • Is the business financially healthy? Comparing assets and liabilities can show whether the business has enough resources to cover its debts.
  • How much is the business worth? Equity gives an idea of the business’s value to its owners.
  • Are there any red flags? For example, too much debt compared to assets could signal trouble.

The balance sheet report provides a snapshot of what your business owns (assets), owes (liabilities), and its overall value (equity). We recommend reviewing your balance sheet regularly to monitor the financial health of your business.

3 Ways to Receive Payments in QuickBooks Online

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QuickBooks Online offers several ways to receive payment on an invoice, documenting an instant sale, or selling on the road.

Delayed Payments

Do you send invoices for products and/or services? If so, there’s multiple ways to record payments when they come in. You can, of course, just open the invoice and click Receive payment in the upper right corner. We find, though, that going to the All Sales screen gives us a chance to check the status of other pending transactions. Click Sales in the toolbar, then All Sales.

If your list isn’t very long, you can just look for the invoice number. You can also use the Filter tool to find the original form. Click the down arrow next to Filter in the upper left to see your search options here (Status, Customer, etc.).

If you have a lengthy list of sales transactions, you can search for the one(s) you want in this drop-down window

Once you have found the invoice, look down toward the end of that row. In the Action column, you will see Receive payment. Once the Receive Payment window opens, select the Payment method that applies. Leave the Deposit to field showing Undeposited Funds and look over the rest of the screen to make sure everything is accurate. Print it if you would like and/or add an Attachment using the links at the bottom, then Save it.

Tip: Customers tend to pay invoices faster if you allow them to make payments online. If you are not yet set up for this, we can help you.

Instant Payments

Your business may collect payments at the time you provide a product or service. When this happens, you will want to supply your customers with a sales receipt instead of an invoice (this is also important for your own records). Click the +New button in the upper left and select Sales receipt under Customers to open a blank form. You will fill this out just like an invoice, by selecting the Customer first, then entering or selecting any data needed for the other fields.

If you do not anticipate needing all of the fields on your sales forms, you can remove some of them and even add your own.

When you have completed all of the fields in your sales receipt, you can preview and print it. You can also save and email it to the customer.

Going Mobile

If you generate sales on the road, you can still create sales receipts for customers using the QuickBooks mobile app. Just click the plus (+) sign at the bottom of the screen and select Sales Receipt. The form is similar to the one you would use on your desktop computer, though the layout is different.

Having a QuickBooks Payments account is especially helpful when you are making mobile sales. You can even swipe your customers’ credit and debit cards if you have a card reader.

Therefore, whether you are receiving payment on an invoice, documenting an instant sale, or selling on the road – QuickBooks Online provides some great tools for receiving customer payments.