Dear Client:
This is just a quick how to guide on using Quicken to manage your business. The instructions are very general but should be helpful. Microsoft Money is similar in its functionality as well. Also Quicken has several different versions and upgrades, but these general instructions should be close to what you see on your computer.
Quicken has a Help section (on the top of the screen at the far right) that can be used to reference specific instructions when you are stuck. However, it can be time consuming to find the topic you are looking for.
These instructions will address some of the most important steps you can take so that Quicken will be easier to use.
It is important to understand that Quicken is built for the average person or the average business. It allows some customization but is still limited. Having a computer program that addresses the specific needs of your business without the extras you do not need would be ideal. That being said, Quicken is a pretty good tool and once you have used it for a few months it is fairly easy to use.
The topics I will cover are:
You will need to set up accounts for all your personal and business accounts. These would include checking accounts, savings accounts, investments, assets, credit cards, loans, mortgages, account receivable etc.
If you go to Account list there should be an option to create an account or add an account. From there you will go through a wizard that will ask information about the account including the bank name, current balance, beginning date, etc. If there is information you do not know, just make a note of it. Later you can go in and edit the account to add the information. The current balance is critical to enter correctly. It should be the amount on the most recent statement you have. It can be changed later if needed.
When naming the account use the name that will help you remember what account you are using, e.g. Ralph's checking account. There is a separate place where you can put in the actual bank's name etc.
After entering all the accounts, view the account list to see if there are any duplicates.
Also look to see if you have forgotten to add any accounts. For instance you may have added your mortgage account but forgotten to add your House as an asset.
Try to get the account list as accurate as possible before you enter transactions. If you later find that you have entered a credit card account in twice, you might have some transactions under Chase Visa and some under Visa Credit Card. Once again this can be fixed but it is not easy if there are a lot of transactions. Go into the account that you want to delete and right click on the transaction. Select Move Transaction and then move the transaction to the correct account. Once you have moved all the transactions over to the right account, delete the bogus account.
From time to time, look through the account list to see if the information on them is accurate and complete.
Quicken gives a long list of built in categories. For the most part these will suffice. However it can be time consuming to scroll down the hundreds of categories that are provided. You could delete some of the categories that you will never use, thereby limiting your scrolling.
To delete a category, go to Category List under Finance. Click on the category you do not need and then click on delete.
To add a category, go to Category List under Finance. Click on New. Then you will go through a wizard to name the category, to put it into one of several groups, to classify it as income, expense or a subcategory, and to associate it with a tax form.
As you enter transactions, you will end up asking what category something belongs to. If you have deleted the categories you do not need and added the ones that are relevant, this should not happen too often. If you enter a transaction and need to create a new category, the wizard will create the new category and ask you the necessary questions.
It is important to have your category list accurate. The reports you will want to create, including the tax reports, all get there information from this category list.
You have options to add Groups to the category list. The Expense group might not be enough for you. You might want Personal Expenses, Rental Expenses and Business Expenses. You might even consider Business Overhead and Job Related as additional groups.
After selecting the right group you will select if it is an income or expense item. There is also an option to make it a sub category. Sometimes you can over use the subcategories. Then the category names become too long. For example, Miscellaneous Business is long enough with out it becoming Miscellaneous Business: Equipment Rental: Excavator. If it is a category you will use a lot, don't make it a sub category. It will just slow you down.
Associating the category with the right tax form is important. Quicken allows you to print tax reports, but if you did not create the category correctly, these reports will not be accurate. If you are not certain what tax form to associate the category with, then try to remember the following.
Usually there is one line in each schedule that has a description such as 'Other' or 'Miscellaneous' that you can use if you can not find the correct line to use.
From time to time, look through the category list to see if the categories are accurate and complete. You can click on Reports from the category list to see what transactions are listed under that category.
Also check to see if you have duplicates. You might have Equipment Rental and Rental of Equipment listed. Choose the one you want to get rid of. Go into each transaction and select the correct category. Once you are finished then delete the category you no longer need.
You will need to create an account receivable account for your business. You can have several different account receivables if you have distinct businesses. Generally I would recommend having all your invoices in one account. You can then capture the different types of jobs you do by creating different categories. For example create the receivable account as Income Receivable, but have different categories for Gross Sales: Landscaping, Gross Sales: Plowing, Gross Sales: Carpentry.
Before you create an invoice for a customer, you need to create a customer.
Click on Address Book under Finance or on Create Customer under Business. Click New to create a customer. Fill in as much information as possible. This will be the information that will merge over to any invoices, estimates or statements you create for the customer. If you are missing information, go back through the customer list from time to time to update the list. Usually you get the most accurate information once you receive a check from the customer.
Although Quicken is only capable of certain correspondence with your customers it is important to have complete information in your customer list. This information can be exported to other programs like Access or Excel to create a marketing list for Christmas cards or Marketing Letters.
The Address Book has fields for Name, Address, Email and other information. Add as much as you can.
Besides invoices and statements, you can also print labels and envelopes with Quicken.
Once you have your Account Receivable account, Categories and Customers set up, then you can start sending invoices. There is an option to change the layout of the basic invoice. You can put in your company information and change what information is included on the invoice.
Go into the Receivable account and enter the invoice just like a transaction on a check register. Then click on Form to open up the invoice. Assign the correct customer and then enter a project, description, etc.
It is important to do this several times until you get the hang of it. Once you have entered the invoice correctly, click on Save and Done. Then you can open it again, print it out, email it, etc.
Once the payment is received, open the invoice and click on Enter Payment. Make sure you apply the payment to the correct Bank Account.
If the payment was a full payment there will be a small 'c' next to the invoice and payment, meaning that the invoice is paid in full.
If you have several invoices for a client, when you enter a payment, make sure you apply the payment to the correct invoice. There will be a list of outstanding invoices. Make sure the check mark is on the correct invoice.
Expenses will generally be paid from your checking account or with a credit card. Simply open the account, enter the date paid, the check number, who the check was paid to, the amount and the correct category.
If an expense was paid from a credit card, enter the transaction from the credit card account.
If an expense was paid with cash, you should create a Petty Cash account. Enter the transaction just like you were entering it from a checking account.
In the memo section of the expense transaction, put what job the expense was for.
If you actually charge the customer directly for expenses, you can include the expenses on the customer invoice.
When you pay a credit card bill, you are actually transferring money from your checking account to your credit card. The expense is actually incurred when you use the credit card to pay for the expenses.
When you pay your mortgage, you are actually transferring money from your checking account to your mortgage account. The actual expenses are incurred when the mortgage company charges interest or pays your escrow bills. The difference between your mortgage payment and the interest and escrow charges is a decrease in the amount of the mortgage you owe.
When you receive your bank statement, you will need to 'Reconcile' your account.
Open the account and click on Reconcile.
You should enter the beginning and ending balances as reported on your bank statement. Then you will click on the debits and credits that appear on your bank statement. Once you complete this the account should be reconciled.
If there remains a difference you will need to correct the account.
You might have entered an amount incorrectly on a transaction. You might need to add bank fees or interest income. You might have forgotten to enter a customer payment or a check you wrote.
Once the corrections are complete, go back and finish reconciling the account.
If you reconcile your accounts soon after they are received this process should not take long. If you enter transactions correctly into Quicken and your check register, this will speed up the process as well.
Again this takes some practice. Once you have done it a few times it is pretty easy. It will also make you more concerned to enter the transactions correctly going forward.
This is the cool feature of Quicken. You can create many reports to assess your net worth, spending, and profitability.
You can save the reports you use most often. The challenges are that the reports will only be as accurate as the information you put in. Also it takes some practice to get the reports to do what you want. The important things to consider are
What dates do you want to include
What accounts do you want to include and
What categories do you want to include.
The most useful reports are
Once you have looked at these you can customize them to add or delete certain accounts or categories. You can also adjust the dates you are looking at. Once you have what you want you can memorize the report. Name it something that will make sense to you.
Also these reports can be exported to excel for additional analysis. For example you could calculate percentages and variances of the items or you could sort the report differently.