5 Ways Your Small Business Should Be Using Quickbooks
Ah, Quickbooks. It’s one of the most popular pieces of accounting software on the market. In fact, according to Business News Daily entrepreneurs and small business owners use Quickbooks more than any other software to help manage their finances. However, just because you’re using Quickbooks doesn’t mean that you’re using it correctly. As it turns out, the software has much more utility than just keeping track of your receipts and helping with your taxes. For example, here are five clever ways you can use Quickbooks to grow and manage your business.
1) Analytics Through Aging. By using the aging function on your ‘accounts receivable’ and ‘accounts payable’ pages, you can prepare reports that analyze trends in your income and expenses over time. You can use these reports to help refine your practices in regards to collecting and spending money so that you head into the new quarter with a more profitable plan of action.
2) Reconciling Cash on a Monthly Basis. Admit it – you don’t update your accounting software as often as you should. If you’re using Quickbooks software for Mac, make it a point to reconcile your cash at the end of every month. This will confirm that your cash totals are accurate, which will help ensure that the rest of your activities are reported accurately as well.
3) Draw and Contribute. If you’re the sole proprietor of a single-person LLC, then you need to careful when adding or subtracting money from your account. Whenever you withdraw money from the company, you need to post it against an equity account called Owner’s Draw. Conversely, when you infuse money you should be posted against an equity account called Capital Contribution. Doing this will help keep your reports accurate and your taxes easy to manage.
4) Customize Your Chart of Accounts. If you’re still using the default Chart of Accounts that was created during your initial setup, it’s time to get with the program. Customize it to remove features you don’t need and add some features that you do. Many business owners don’t realize that the interface can be almost completely customized however you see fit. Make sure that the program works for you rather than the other way around.
5) Keep a Journal. Every time you need to adjust a credit card charge or alter an account, make a note of it using the Journal feature. When you review your finances at the end of the year, you’ll be able to see why and how each account was changed so that you aren’t left wondering where money went.
Quickbooks can be a powerful tool for your small business, but only if you use it correctly. If you haven’t taken a few hours to really get acquainted with the program, now is the perfect time to start. Use these tips to help create a customized and efficient system of managing your finances. Bad habits can be hard to break, but in the end altering the way you use Quickbooks will make your accounts much easier to track and manage.