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A Guide to the Essentials
QB_05/2005_01
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QuickBooks Business Benefits
Maximize Profits Minimize Costs Cash Flow Management
Minimizing Bad Debt Inventory Control Tax Compliance-IRS, FTB, SBOE, City
Prepare Financial Documents to Obtain aBank Loan
Can Be Optimized to your Business
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QUICKBOOKS BUSINESS APPLICATION
QUICKBOOKSEXCELWORD
CUSTOM REPORTSINDUSTRY QB DATA
FILES
FEDERAL TAXSTATE TAXSALES TAXCITY TAXPAYROLL TAX
INCOME STATEMENTBALANCE SHEETCASH FLOW STATEMENTBANK RECONCILIATION
COST ANALISYSPROFITABILITY REPORTSINVENTORY REPORTSCASH FLOW MANAGEMENT
BOOKKEEPINGINVOICINGWRITING CHECKSPAYING SALES TAXPAYING BILLS
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QuickBooks Simple StartFeatures
Track Sales, Expenses and Sales Tax Create Invoices and Estimates Run Financial, sales and tax reports Payroll Download Credit Card and Bank Transactions Automatically Populate and Print Tax Forms Import Data from Excel
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QuickBooks Pro Features
Advance Job Costing Multi-User Integration with Word, Excel, & Outlook Inventory Create and Customize Professional-Looking
Forms Cash Flow Projector Fixed Asset Tracker
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QuickBooks Premier Features
Sales Orders/Back Orders Inventory Assemblies More Powerful Reports for Accountants Export Reports Templates Business Planner Tool Create Purchase Orders from Estimates and
Sales Orders Improved Invoicing for Time and Expenses
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QuickBooks Enterprise Solutions
Up to 30 Simultaneous Users Enhanced Security Expanded List Capacity QB Employee Organizer Combine Reports from Multiple Companies Intuit Statement Writer Enhanced Custom Field Capability Additional Reports
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1. Introduction to FinancialManagement2. Why Accounts are Important3. Using Reports4. Managing Essential Tasks:
Practice Session5. Tips and Resources
6. Appendix: AdditionalConcepts & Terms
Financial Management Essentials
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1. What is Financial Management?
Process of:
Running yourbusiness
Recording moneycoming in and out
Using reports to :
Understandhow yourbusiness isdoing
Make decisions
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Six Ways Financial ManagementHelps Your Business Succeed
4. Compliance.Report your
companys incomes,expenses, and payrollaccurately to the IRS.
5. Insight and Decision Making .Make informed decisions and price your product or
service for profitability with financial reports
6. Funding.To be considered fora loan or investment,
youll need completefinancial statements.
1. Cash Flow.Track the moneygoing in and out ofyour business.
2. Manage Customers and Sales.
Know and understand your customersthrough consolidated records.3. Production.
Obtain goods andservices. Apply for and
establish credit withyour vendors.
YOURBUSINESS
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Information is Power
What do you want to know about your business ?
How much money am I bringing in?
How much am I spending?
Is my business making any money?
Whats the value of what mybusiness owns?
How much does my business owe toothers?
What is my business worth?
Sales
Expenses
Sales Expenses
Assets
Liabilities
Equity
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2. Financial AccountsWhy They Matter to Your Business
Accurate record keeping lets you understand and useall your information
Money in frompayments received
Data on customersand vendors
Record of yourbank accounts
Money out forchecks written,refunds and otherexpenses
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Cash Flow:Money In and Money Out
CUSTOMERS
Sales
Services /
ProductsOut
YOURBUSINESS VENDORS
Expenses
Services /ProductsIn
Money In Money Out
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Major Account Types
Assets Current (cash, inventory,
accounts receivable, etc.) Fixed (property, vehicles,
machinery, etc.)
Liabilities Current (within one year) Long Term
Equity Contributed capital: owners
investment Retained earnings (profits)
Assets = Liabilities + Equity
Everything yourbusiness
possesses
Everything yourbusiness has
borrowed
Everything yourbusiness owns
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Categorize Your TransactionsWith a Chart of Accounts
Chart of Accounts
Master account lists a chart ofaccounts are used to sort your
transactions into categories Each account category containssub-accounts
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Chart of Accounts:Your Master List of Accounts and Sub-Accounts
INCOME ASSET
Sales Income Checking Bank
Other income Other income Accounts Receivable Accounts Receivable
EXPENSE Undeposited funds Other Current Asset
Advertising Expense Equipment Asset
Car and Truck Expenses Expense LIABILITYContract labor / payroll Expense Loans Liability
Cost of goods sold Expense Sales Tax Payable Other Current Liability
Entertainment / meals Expense EQUITY
Office expenses Expense Contributed Capital Equity
Repairs and maintenance Expense (Owners invested funds)
Supplies Expense Retained Earnings Equity
Taxes and licenses Expense (Business profits)
Utilities Expense
Other expenses Other expenses
NAME TYPE NAME TYPE
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Accounts:What Weve Learned
Consolidate yourrecord keeping
Use a standard set ofaccounts or categoriesto file awaytransactions there isa common language
Keep it simple:Significant accountsonly
Use Industry SpecificAccounts
Master account lists a chart of accounts
are readily available formost types ofbusiness. Choose onespecific to your
industry, and makeminor changes ifneeded.
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3. ReportsUnderstanding Your Business and Decision-Making
Use reports as aplanning tool
Gain insight intoyour sales
Income statement(P&L) shows yourprofitability
Balance sheetshows assets,liabilities andequity
Regularly monitoryour profitability and your cash flow
Reports help you understand how your business isdoing
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Make the Most of Your Reports
What do you want to know about your sales ? What is selling? Who is buying? Who owes me money?
Gain insight intothe health ofyour businesswith reports: Sales by item Sales bycustomer
Unpaidinvoices bycustomer
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Summarizes therevenue andexpenses of acompany over aperiod of time
Also called aProfit & Loss orP&L
Income Statement
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Shows the assets,liabilities, andequity at a givenmoment in time
Assets =Liabilities + Equity
Balance Sheet
Equity also referred toas Owners Equityor Retained Equity.
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4. Manage Essential TasksPractice Session: Marks Atomic Graphic Designs
Money inA. Record a saleB. Invoice a customerC. Receive a paymentD. Make a depositMoney OutE. Write a check / record an
expenseF. Use a credit card / record an
expense
Remember, the betteryou understandyour cash flowsituation, the
better youll beprepared to makethe right businessdecisions.
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A. Record a SalePractice Session Money In
Money In: Record a Sale
Customerbuys
businesscards.Pays on spot
with cash.You issue
salesreceipt.
1
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A. Record a SalePractice Session Money In
Issue salesreceipt
Record:1. Customer2. Item3. Quantity4. Payment type
5. Date
1
2 3
4
Track Your Business
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A. Record a SalePractice Session Money In
See Where Your Business Stands Profit & Loss6. Sales increaseby $200.00
Balance Sheet7. Assets
increase by$215.50
8. Liabilities(sales taxpayable)increase by
$15.509. Equity
increases by$200.00
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B. Invoice a Customer Practice Session Money In
Money In: Invoice Customer
Customer buysgraphic
designservices.You complete
the design.You invoice
customer.1
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B. Invoice a Customer Practice Session Money In
Track Your Business
Create invoiceRecord:1. Customer
2. Service3. Quantity/hours4. Payment terms5. Date
1
2 3
4
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B. Invoice a Customer Practice Session Money In
See Where Your Business Stands
Profit & Loss7. Sales
increase by$90.
Balance Sheet8. Accounts
receivable
increase by$90.9. Equity
increasesby $90
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C. Receive a PaymentPractice Session Money In
Money In: Receive Payment
Customer paysby check for
businesscard designservicesinvoice.
Record receipt
of payment.
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C. Receive a PaymentPractice Session Money In
Track Your Business
Receivepayment
Record:1. Customer2. Payment
type3. Enter
amount
1
2
3
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C. Receive a PaymentPractice Session Money In
See Where Your Business StandsProfit & Loss4. Unchanged.Balance Sheet5. Accounts
receivabledecrease by$90.
6. Undepositedfunds
increase by$90.
7. Equityunchanged.
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Undeposited fundsappear in Other Current Assets
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D. Make a DepositPractice Session Money In
Money In: Make a Deposit
Go to bank todepositcheck for
designservices andcash forbusinesscards.
Make deposit.1
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D. Make a DepositPractice Session Money In
Track Your Business
Make depositSelect:1. Cash and
Check2. All funds to
deposit
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2
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D. Make a DepositPractice Session Money In
See Where Your Business StandsProfit & Loss3. Unchanged.Balance Sheet4. Checking /
Savingsincreases.
5. Other currentassetsdecrease.
6. Equityunchanged.
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Undeposited fundsappear in Other Current Assets
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E. Write a Check / Record an ExpensePractice Session Money Out
Money Out: Write a Check
Pay yourtelephonebill by
check.Write check /
recordexpense.
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Track Your Business
E. Write a Check / Record an Expense Practice Session Money Out
Write checkSelect:1. Payee2. Amount3. Transaction
type(Expense Utilities)
1
3
2
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E. Write a Check / Record an Expense Practice Session Money Out
See Where Your Business StandsProfit & Loss4. Expense
(Utilities)increases by
$45.Balance Sheet5. Checking /
Savingsdecreases
by $45.6. Equity
decreasesby $45
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F. Use Credit Card / Record an ExpensePractice Session Money Out
Money Out: Use a Credit Card
Buy officesupplieswith credit
card.Use credit
card /recordexpense.
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Track Your Business
Update creditcard register
Select:1. Payee2. Transaction
type (Expense-- Supplies)
3. Amount1 3
2
F. Use Credit Card / Record an ExpensePractice Session Money Out
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F. Use Credit Card / Record an ExpensePractice Session Money Out
See Where Your Business StandsProfit & Loss4. Expense
(Supplies)increasesby $95.
Balance Sheet5. Credit cards
increasesby $95.
6. Equitydecreasesby $95.
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6. Tips and Advice
1. Getting Started2. Helpful Resources
3. Online Resources4. Congratulations!
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Getting Started
1. Build your toolkit Consider software packages such
as QuickBooks Simple Start(Trial Edition is available)
2. Structure your accounts Start with a minimum # of accountsand add as needed
3. Establish an accountingroutine and stick to it
Reconcile accounts monthly Update financial statements
quarterly
Establish GoodAccountingHabits
Recordtransactionsregularly
Accuracy andconsistency areessential
Fix mistakes asthey happen
Manage andreconcile bankaccountregularly
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Helpful ResourcesAdvance Your Knowledge
Professional Help Accountants
Look for knowledge of your industry QuickBooks ProAdvisors
Expert set-up can save you time Free 1-hour consultation
Small Business Development Center(SBDC) counselors
Training Tools Take classes (either online or at local
colleges) QuickBooks Learning Solutions (lookunder Training at www.QuickBooks.com)
Expert help can makethe process of setting-up and maintainingyour books mucheasier. Be sure to lookfor a professional withknowledge of yourindustry and ofcourse, dont be afraid
to ask for references.
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Online Resources
Small Business DevelopmentCenterswww.sba.gov/sbdc/sbdcnear.html
Internal Revenue Service www.irs.gov/businesses/small/
U.S. Chamber of Commercewww.uschamber.com
QuickBooks FinancialSoftwarewww.quickbooks.com
Find a Certified QuickBooks
ProAdvisorwww.usequickbooks.com/locateadvisor)
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Congratulations!
You now know: Why financial management is critical to
effectively run a business How to set-up and manage your accounts The usefulness of financial reports
Time to put your knowledge towork! Good luck!
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A Simple Start to Managing YourBusiness Finances
Fi i l M g t
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1. Business types2. Cash or accrual3. Debits and credits
4. Journal5. Ledger
Financial ManagementTerms and Concepts
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1. Sole Proprietorship One owner
2. Partnership or LimitedLiability Corporation
Two or more owners3. S Corporation
Small business with one ormore shareholders
4. C Corporation Large business with one or
more shareholders
5. Non-profit Organization
Determine Your Business Type
There are more than
23.7 million smallbusinesses in theUnited States.572,900 new firmsare founded eachyear.
Source: SBA, Office of Advocacy.Based on 2003 data.
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Cash or Accrual?A. Cash accounting The practice of recording sales and
expenses only when cash is actuallyreceived or paid out
B. Accrual accounting The practice of reporting income when
earned and expenses when incurred Businesses with inventory (e.g.
retailers) must use this method
Most businesses opt for accrualmethod of accounting
At any given time, gives a more realisticpicture of the health of the business
Choosing an Accounting Type
Choose whicheveraccounting methodworks best for you the important thing isto be consistent onceyouve selected anaccounting type
D bi d C di
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Debits and CreditsDouble Entry Accounting
Accountants use debits andcredits to describe howtransactions are recorded inthe general ledger
Each transaction increasesone account and decreasesanother
System balances itself
You dont need to betoo concerned withthe mechanics ofdouble entryaccounting, debits
and credits, assoftware programshandle automatically.But as a businessowner, you might runinto these terms.
Marks Atomic Graphic Design:
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Mark s Atomic Graphic Design:
Journal
Journalentriescapture allcash in
and allcash outactivity.
Marks Atomic Graphic Design:
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Mark s Atomic Graphic Design:
General Ledger
Generalledger(GL)shows all
activity byaccounttype.
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Intuit would like to thank the following advisors for their help developing this presentation: Peter Pappas, Regional Director,
Connecticut Small Business DevelopmentCenter, Groton, CT
Neal Nelson, Counselor, MaricopaCommunity College Small BusinessDevelopment Center, Phoenix, AZ
Charles Eason, Director, Solano CollegeSmall Business Development Center,
Fairfield, CA
Acknowledgements
Do you have feedback, success stories or suggestions for improving this course? Email us at sbdcsupport@intuit.com.
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