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How to Create a Budget in QuickBooks Online: Step-by-Step

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Creating a budget that works can be challenging. Income can be unpredictable, and expenses can be hard to estimate. However, a well-crafted budget is essential for running a successful business. By using QuickBooks Online’s budgeting tools and following the steps below, you’ll gain a clear picture of your finances and be able to make informed decisions throughout the year.

Creating Your Budget

Click the gear icon in the upper right corner, then select Budgeting under Tools. Click Create budget. For Budget type, select Profit and Loss. This is most typical. It allows you to plan your budget around income and expenses over a specific time period. 

***Note: you can also setup a budget for a Balance Sheet which can help you track your company’s assets, liabilities, and equity and plan for short- and long-term goals.

You’ll have to make other decisions about your new budget, such as:

  • Time period. We’re going to create our budget for the upcoming fiscal year that starts in Jan of 2025. So, we’ll select FY 2025 (Jan 2025 – Dec 2025).
  • What Budget format do you want to use? We’ll select Consolidated, since we want an organization-wide plan. A Subdivided budget would allow you to create individual budgets based on location, class, department, or customer.
  • Do you want QuickBooks Online to pre-fill data? If so, select the year of actual data you’d like to use from the drop-down menu.
  • Prefer to start from scratch? Select Custom budgets to manually enter your own data. This is especially helpful for new businesses with limited historical data or for companies revamping their finances.
  • Already have a budget outside QuickBooks?Use the Import budget option to bring in your budget from Excel or Google Sheets.

For this article, we will set up a budget from scratch.

QuickBooks helps you prepare the budget you want.

Click Next when you’re done. Your budget table will open.

Filling In Your Budget

Before you start filling in your budget, make sure the information at the top of the page is accurate. Is the fiscal-year correct? The button in front of Compare reference data should be turned off, since we’re starting from scratch. If you have past budget data or a year’s worth of income and expenses that you want to bring in, make sure this option is turned on. QuickBooks Online will then ask you whether you want to transfer your Actuals (real money you received or spent) or your budget, and for what year. 

Make sure the time span is set correctly for your initial work (Yearly, Quarterly, or Monthly), though you can switch back and forth among them without losing data. Click the gear icon in the upper right to see your options there. You can Autosave budget (recommended), Hide empty rows (you won’t want to do this until you have your budget set up), and make the Display density compact. 

To create your budget, you simply enter numbers in the small boxes supplied. Columns are divided by months or quarters, depending on what you specified, and rows are labeled with budget items (Design Income, Fees Billed, Advertising, Legal & Professional Fees, etc.). You simply enter numbers in the boxes that apply. You can either:

  • Enter an annual total in the Budget totals box and let QuickBooks Online divide it into 12 monthly numbers (click the small “split” icon), or,
  • Put the monthly amount in the first month’s (or quarter’s) column, and QuickBooks Online will multiply it by 12 and enter the annual number (click the small arrow).

You can also enter different numbers in each box to reflect changing budget needs.

You can enter numbers manually in individual boxes or enter annual or monthly numbers. QuickBooks Online will divide or total them.

When you’re done working with your budget, save it. You can come back anytime and make adjustments as needed.

Budgeting Tips

  • Remember seasonal upswings and downswings.
  • Make your goals as realistic as possible and distinguish between essential and non-essential expenses. Enter your budget items for the bills and other expenses that must be covered before you add optional categories.
  • Keep it simple. Don’t budget down to the last paper clip. You risk budget burnout.
  • Build in some backup funding. Just as you’re supposed to have an emergency fund in your personal life, try to create one for your business.
  • Plan for Periodic Expenses like annual insurance premiums, property taxes, or holiday gifts can catch you off guard. Estimate these costs and set aside money each month so you’re prepared.
  • Overestimate your expenses, at least a little. This can help prevent “borrowing” from one budget category to make up for a shortfall in another.
  • Make your employees part of the process. You shouldn’t be secretive about the expense element of your budget. Try to get input from staff in areas where they have knowledge.
  • Revisit your budget frequently. You should evaluate your progress at least once a month. You’ll learn a lot about your spending and sales patterns that you can use for future periods. The Budget Overview report displays all of the data in your budget(s). Budget vs. Actuals shows you how you’re adhering to your budget.
  • If you’re feeling unsure, working with an accounting professional can provide clarity. They can help you fine-tune your budget, offer insights into tax strategies, and suggest ways to make your money work more efficiently.
  • Staying motivated can be tough so make sure you reward yourself and celebrate small victories along the way, like paying off a credit card or hitting a milestone in your savings. These positive reinforcements make it easier to maintain good habits.

By creating a detailed budget in QuickBooks Online and following these simple tips, you can gain a clear view of your finances and plan strategically for the future. Remember that a budget isn’t set in stone; it should grow and adapt alongside your business. Regularly review your budget, adjust as needed, and celebrate your progress. With a well-organized plan and the right tools in place, you’ll be better positioned to reach your financial goals and keep your business on track.

How to Link Your Bank and Credit Card Activity into QuickBooks Online

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If you’re still manually entering your banking and credit card activity into QuickBooks Online, we suggest you consider setting up connections to your online bank and credit card accounts. Once your transactions are delivered to QuickBooks Online, the site provides tools that allow you to view them and make sure they’re complete before you record them.

Here are step-by-step instructions to how this all works.

Making a Connection

In order to do this, you’ll need to have set up a username and password for your online bank/credit card accounts. In QuickBooks Online, click Transactions | Bank transactions. Click Link account over to the right.

A page opens with suggested financial institutions. If yours isn’t there, enter it in the search field at the top. If there are multiple options, be sure to select the correct one and click it.

If your bank isn’t listed on the page of options, enter its name, and then click on the correct one if there’s more than one entry.

Click Continue and go through any of the security steps your financial institution may have. You’ll get to a page that says, Which accounts do you want to connect? A drop-down list displaying options from your Chart of Accounts will appear. Select the type of account you’re creating (checking, credit card, etc.) and continue to follow the onscreen instructions until your connection is complete and QuickBooks Online has downloaded your transactions.

WARNING: It’s important that you set up your linked accounts correctly since you’re dealing with the Chart of Accounts. If any step is confusing, we can schedule a session to go over online account connections with you.

Bank Transactions Page (Feed)

Once you’ve connected to all your online accounts, you’ll see that they appear on the Bank transactions page, displayed in small boxes containing their balances and the number of transactions they contain (there might be quite a few when you first download). You can also see how recently each account was updated (click Update anytime you want to refresh an account).

Once you’ve connected to an online bank account, you can see how many transactions were downloaded and what its balance is.

Click one, and its register will appear below. Above that, you’ll see three labeled bars:

  • For review. QuickBooks Online puts all downloaded transactions in this list.
  • Categorized. Your transactions will move to this list after you’ve assigned categories to them.
  • Excluded. If you happen to run into duplicate transactions, you can move them here.

Below that, you’ll see that you can filter your transactions by date, by type, or by description, check number, or amount.

WARNING: As you continue to work with accounts, you may occasionally find that a connection has been unlinked. When that happens, just repeat the connection process again.

Working with Individual Transactions

You’ll want to set some time aside the first time you download transactions so you can look at each one and add or edit its content. Click one to open the detail box, as shown below. The top line defaults to Categorize. First, select the correct Vendor/Customer (or  + Add new), then check the Category and change it from the drop-down menu if it’s incorrect.

You can add or edit a lot of details for your individual transactions.

There’s one more field here that’s very important. If you’re purchased something on behalf of a customer, be sure to select the correct one from the drop-down list under the Customer field and click the Billable box. QuickBooks Online will make this transaction information available to you the next time you invoice the customer. Other fields in the above image are optional, like Tags, Memo, and Add attachment. When your transaction is complete, click Confirm to move it to the Categorized list. The transaction is now posted in QuickBooks.

There are two other options in these individual transaction boxes besides Categorize: Find match and Record as transfer.

Categorize: Find Match

When you use “Find Match,” QuickBooks is looking for a transaction that’s already been entered in your records, such as an invoice you’ve received payment for or a bill you’ve paid.

For example:

  • Let’s say a customer paid you $500, and you already entered that payment as “Received Payment” in QuickBooks.
  • When the $500 deposit shows up in your bank feed, you use Find Match to connect that bank transaction to the existing record in QuickBooks.

Record as Transfer

The “Record as Transfer” option is used when you’ve moved money between your own bank accounts, like from your checking account to your savings account.

For example:

  • If you transferred $1,000 from your business checking to your business savings account, you wouldn’t categorize it as income or expense—it’s just moving money within your accounts.
  • In this case, you use Record as Transfer to note that the transaction isn’t new; it’s just moving money between accounts.

Why These Options Matter

  • Find Match ensures your books match what’s in the bank without creating duplicate entries.
  • Record as Transfer keeps things clean and avoids accidentally categorizing your own money movements as income or expenses.

Setting up and using the bank transaction feed can feel overwhelming at first, but with practice, you’ll become more comfortable over time. If you’re feeling unsure, don’t hesitate to reach out to us for assistance. We’re here to help you set it up and guide you through the learning process to ensure you’re on the right track.

Unlock Deeper Insights: How to Utilize Classes in QuickBooks Desktop

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Class tracking in QuickBooks Desktop allows users to track financial information by business segments (locations, departments, programs, events, etc.). It also allows you to keep your chart of accounts simplified as you don’t need to duplicate elements of your chart of accounts to track multiple business segments.

To begin using the class tracking feature, you’ll first need to turn the feature on.

Turning on Class Tracking

Click on the Edit menu at the top of the task bar. Select Preferences from the dropdown menu. In the Preferences window, choose Accounting from the list on the left, then select the Company Preferences tab at the top. Check the box next to Use class tracking for transactions.

If you’d like QuickBooks to remind you to assign a class every time you enter a transaction, also check Prompt to assign classes. We highly recommend turning this feature on.

Create the Class List

Go to the Lists menu at the top of the task bar and select Class List. In the new window, click on the Class button (usually in the lower left corner) and select New. Give your class a name. For example, if you’re tracking type of business, you might name your classes “New Construction,” “Remodel,” or “Overhead” Click OK to save.

Tip: The Subclass of provides an option to create a grouping of classes. This gives you the ability to organize your class data in greater detail as keeping the data easier to view when you run the class report. You will also have the ability to filter classes when running reports.

Assign Classes to Transactions

When you enter a transaction (like a bill, invoice, or check), you’ll see a field labeled Class. Select the appropriate class from the dropdown menu. You can also add a new class by typing in a new one or selecting <Add New> from the dropdown menu. You can also split the transaction to multiple classes within one transaction.

Class Reports

Once you start using classes, you can run reports to see how each class is doing. Go to the Reports menu, select Company & Financial, and then choose Profit & Loss by Class. The report provides a clear breakdown of income and expenses for each class, making it easier to review and use the information to make informed decisions.

Tip: Pay attention to the Unclassified column as these are transactions that have not been assigned to a class. Double click on the total for any account that shows a balance to see if anything needs to be assigned to a class. If you have activity that doesn’t require a class, we suggest setting up a generic class such as N/A so you don’t continue to review activity you have previously double-checked.

If you are consistent in using the class tracking feature, you’ll have a clearer picture of how different areas of your business are performing and can make decisions in a timelier manner.

Scheduled Reports: What They Are and Why They’re Useful

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As a business owner or accounting professional, staying on top of financial data is critical for making informed decisions. QuickBooks Desktop offers a powerful tool to help with this: Scheduled Reports.

Scheduled Reports allow you to automate the delivery of financial reports directly to your inbox—or to your team’s inbox—on a recurring schedule. Instead of manually running and sharing reports every week or month, this feature ensures that your financial information is consistently delivered on time, without any extra effort.

This automation can be helpful for businesses with tight schedules or multiple partners.

To start using this feature, ensure QuickBooks is setup to email reports. To verify, go to Preferences, under the File menu, and select Send Forms. Under the My Preferences tab, click the Add button to setup your email if needed.

Customize Reports

Before scheduling reports to be sent automatically, customize the reports to meet your specific needs.

When you first run a report in QuickBooks, it displays with default settings. To adjust the report, click Customize Report in the upper left corner of the report window. Modify the Display and Filters to include the data you want. Once you’ve finished customizing, click OK to run the report with your updated settings.

You can customize QuickBooks reports to see just the data you want.

Memorized Reports

After clicking OK, click Memorize in the toolbar. In the window that opens, enter a descriptive name so you’ll recognize it later. If you want to save the report to a group (optional), check the box and select a group from the menu, such as Company or Customers, etc. Click OK to save your changes.

To find a memorized report, open the Reports menu and highlight Memorized Reports. Find your report in the list and click on it.

Scheduled Reports

Access the schedule reports by going to the Reports menu, select Scheduled Reports, and Schedule Setup. The following window will open:

Click Get Started then setup the schedule frequency (weekly, monthly, etc.) and delivery method. Save the schedule and confirm it is active.

Additional Notes

While this feature can save time if you frequently email reports, keep the following points in mind:

  • QuickBooks Desktop needs to be open at the time reports are scheduled to run.
  • If you need slightly different reports or need to send emails to various recipients, you will need to setup multiple customized reports and email templates.
  • If a report is scheduled without regular review, there is a risk of sending out outdated or incomplete information.
  • There are potential security risks, such as issues with encryption (consult your IT or email provider) and the risk of emailing sensitive financial data.

By understanding these limitations, you can take proactive steps to mitigate risks and ensure Scheduled Reports work effectively for your business. If these drawbacks are a concern, consider alternative third-party solutions to assist you in sending out scheduled reports.

Utilize Invoice Reminders in QuickBooks Online for Improved Cash Flow

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Managing unpaid invoices is often one of the least enjoyable tasks when running a business. While no one likes reaching out to customers for overdue payments, failing to do so can negatively impact your cash flow.

Setting up automated email reminders in QuickBooks Online can help streamline the process. Not only will it reduce the stress of chasing overdue payments, but it also saves you valuable time—both by easing your concerns and eliminating the need for manual follow-ups. Here’s how to set it up.

A Simple Process

Setting up automated reminders is straightforward. The trickiest parts are deciding on the timing of the reminders and crafting the right tone for your emails.

Start by clicking the gear icon in the upper-right corner. Select Account and Settings under Your Company menu. Scroll down to the Sales tab and click on it. Next, scroll to the Reminders section. If the Automate Invoice Reminders option is off, click it to turn it on.

QuickBooks Online allows you to set up to three different reminders for various time periods. Click the down arrow on the Reminder 1 line:

QuickBooks Online allows you to customize your invoice reminders in a number of ways.

Three Different Reminders

QuickBooks Online offers three reminder options, each labeled with a suggested timing: before the due date, on the due date, and after the due date. However, you don’t have to follow this suggested schedule. For the first and third reminders, you can specify how many days before, on, or after the due date the email should be sent. You can only set the second reminder to send on or after the due date. If you prefer, you can set all reminders to send after the due date, which is a common approach.

Customizing Your Email Messages

You can customize the email greeting (e.g., “Dear”) and choose how the recipient should be addressed—by their full name, first name, or company name. You can also modify the subject line to suit your needs.

Below the greeting and subject line, you’ll find the email message that QuickBooks Online will send to the customer. QuickBooks Online provides a standard message, but you have the option to edit it completely or just adjust parts of it.

Preparing Your Email Messages

You’ll notice that fields like Invoice No. and Company Name appear in brackets ([]). If you’ve used mail merge before, you’re already familiar with this concept. If not, simply put, data in brackets will automatically be replaced with real information from your QuickBooks Online file. For example, if you’re sending a reminder to Cookies by Cathy, the company name will replace the placeholder text, and the correct invoice number will appear in that field.

You’ll want to tailor your message for each reminder based on when it’s being sent. For example, the tone should be firmer if the payment is 30 or more days late compared to just seven days late. For your first reminder, consider giving your customer the benefit of the doubt—they may have simply overlooked the invoice or missed the due date.

Once you’ve set up your reminders, remember to click Save. Note that automatic email reminders only apply to new invoices. However, you can modify or turn off reminders at any time. If you need to send a reminder to a customer about an existing invoice, hover your mouse over Sales in the toolbar and click Invoices. Then, click the down arrow in the Action column next to the relevant invoice and select Send Reminder.

Take Control of Your Collections with Automated Reminders

By setting up automated reminders in QuickBooks Online, you can ensure that your invoicing process runs more smoothly and efficiently. Take advantage of this feature and make overdue invoices one less thing to worry about.

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