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Avoiding Beginner Mistakes While Learning QuickBooks Online
Published February 2010 | Edited October 17, 2024
by L. Kenway BComm CPB Retired
NEXT IN SERIES >> A Beginner's Guide to Learning QuickBooks Online
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What's in this article:
- Accounts Receivable
- Recording Sales
- Entering Online Business Income
- Accounts Payable
- Posting Expenses
- Banking and Your Cash
- Learning Keyboard Shortcut Keys
Quick links to other articles on the site:
- Hubdoc-QBO bank feed data integration
- Optimize QBO workflow with a Chrome browser
- PayPal data sync to QBO
Learning QuickBooks Online to avoid beginner's mistakes ... gives you a hint about what this chat is all about ... tips on how to use QuickBooks® Online software modules correctly. A fair bit is intuitive, but there are few things you need to avoid if you don't want messy books.
While I will chat about tips about learning how to use QuickBooks Online, please understand that this page is directed to work from home small business owners who do their own bookkeeping. This chat is not intended to instruct the "power" users or advanced users of QuickBooks Online ... there are a lot of sites out there that cover that material better than I ever could.
Avoid beginner mistakes while learning QuickBooks Online toA Word of Caution: Intuit continually revises QuickBooks Online to make it more robust. It's likely that how I did something in 2013 does not work in 2024. That said, you should be able to figure out where menu item sits now, make the adjustment, and still stay on track following my steps.
We are not going to be shooting the breeze about QuickBooks® POS software ... or a whole lot about advanced inventory ...
... just useful QuickBooks® tips, tricks and traps that will hopefully make your bookkeeping time more efficient ... and enjoyable ... so you have accurate financial information to make smart business decisions.
So fill up your water glass so you stay hydrated and let's get started.
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Learning QuickBooks® ... The Workflow Tips
I want to start by saying that you need to be kind and patient with yourself as you are learning QuickBooks®. The program was designed for small business owners and is user friendly ... but there are a few things that have to be done a certain way.
Here are links to a few tips on QuickBooks® procedures that you should learn to ease your learning curve and make your bookkeeping go smoothly:
Vendors - Accounts Payable - Expenses
- When to use Pay Bills vs Write Cheques
✔ Pay Bills is used if the bill you are paying is sitting in Accounts Payable
✔ Write Cheques/Expense is used if the bill you are paying was NEVER entered into AP - How to adjust GST ITCs for meals and entertainment
✔ CRA only allows you to claim 50% of your input tax credits for meals
Customers - Accounts Receivable - Sales
- When to use Invoice vs Sales Receipt
✔ Invoice is used if YOU are extending credit to your customer. It places the amount in Accounts Receivable.
✔ Sales Receipt is used if the customer is paying you with cash, debit card or credit card at the time of the sale. The amount does not get posted to AR. If a credit card is used, the AR is the credit card company's problem, not yours. - When to use Receive Payments vs Make Deposits
✔ Receive Payments is used if the invoice being paid is sitting in Accounts Receivable
✔ Make Deposits is used if an invoice was NEVER issued and entered into AR - The Bookkeeper's Alert on customer payments and Make Deposits
- How to enter customer prepayments / deposits on account in QuickBooks
- How to record net online sales revenue (less any service fees) directly deposited to your account
The Bookkeeper's Tip
How To Record Online Business Income
NEVER use Bank Deposit (QBO) or Make Deposits (QBD) in QuickBooks to record online business income. Interest income ... okay. Earned business income ... not okay. Why?
An important concept when learning QuickBooks is to remember it has modules ... one for customers, one for suppliers, one for employees, one for banking.
You need to use the correct module to enter your data if you want it to report properly. Otherwise garbage in, garbage out as they say.
In the case of online business income such as affiliate fees, eBook sales and webinar sales, you must enter it into the customer module if you want your sales tax reports to federal, provincial, state and/or territorial governments to report correctly.
Most affiliate income earned online is not paid out immediately. If you use the accrual basis of accounting, you should be creating a bill at the end of each month for the amount you have earned. When the money is deposited to your account anywhere from 10 days to 6 months later, use Receive Payment to record the receipt of cash.
If the amounts you are earning are immaterial, for example you receive a $50 payment about every 6-12 months, it would be acceptable to not setup Accounts Receivable each month and just create a Sales Receipt when the money is deposited to your account or you receive the cheque/check in the mail.
Other information on doing business online:
- How to setup your chart of accounts to capture online income
- How do you classify web related outlays like domain registrations, web hosting services, and web design services?
- CRA and eBay income earned online
- Recording out-of-province sales
- Canadian business and US online purchases
- GST/HST rules for internet income (online sales)
H E L P ! My A/R ledger is out of balance!!!!
When learning QuickBooks, sometimes you goof. (GASP) If your Accounts Receivable ledger balance does not equal your Accounts Receivable subsidiary ledger balance, then you know you've goofed somewhere in your process. Check:
- Your Open Invoice report to ensure payments were applied to invoices. If they haven't, they will show up in the Open Invoice report. Tip - there should be no 'deposit' transaction type. Any 'Payment' transaction types are likely due to overpayment of the account but you need to verify.
- Your Open Balance report (only available in QBD) if your Undeposited Funds account is growing or you can't find customer payments. Look to see if any deposits were made directly through Make Deposits or even the banking register bypassing the Accounts Receivable subsidiary ledger. You can create your own custom report in QBO using the 'Transactions by Account' report.
The Bookkeeper's Tip
A Good Bookkeeping Practice
Naming Convention For AR and AP
QuickBooks doesn't allow you to use the same name for a person or business who is both a customer and a vendor. Here's the workaround:
When you have a business or person that is both a customer and supplier, use this naming convention:
Joe's Plumbing - c ... for the customer (c) name and Joe's Plumbing - v (or s) for the vendor (v) / supplier (s) name.
No more guessing the various names, initials, abbreviations!
Banking - Cash
- A good way to record cash taken when it is not deposited in the bank
- How to reimburse the owner for expenses paid with personal funds
- How to handle stale dated cheques in QuickBooks
- How QuickBooks undeposited funds account works
- How to deposit loan proceeds received in QuickBooks
- How to handle NSF (bounced) cheques
- How to handle a refund to a debit card In QuickBooks desktop and online
Company - Period End Closing
Government Compliance
- When to delete vs void a transaction
- How to write-off a bad debt
- The best way to make adjusting entries in QuickBooks
- How to file GST/HST in QuickBooks® using the Quick Method
Learning QuickBooks® ... The Shortcuts
The QuickBooks Online accounting system has keyboard shortcuts to make data entry more efficient.
Access this list by simultaneously holding down the Control + Alt (Option on Mac) + '?' keysA few activity shortcut keys that are very useful in QuickBooks Online ...
- Ctrl + Alt + A ... brings up your COA but I prefer use my bookmark on the left navigation bar to get to my COA.
- Ctrl + Alt + I ... quickly opens a customer invoice.
- Ctrl + Alt + X ... quickly opens an expense transaction form.
Date Shortcut Keys
Applies to QBO & QBD
In any date field, these keys are the best way to quickly and accurately enter a date:
- Today = T
- YeaR: Y = beginning of year R = end of year
- MontH: M = beginning of month H = end of month
- WeeK: W = beginning of week K = end of week
- + or – = forward or back quickly
As you can see, the keys are easy to remember because they are tied to what you want to accomplish and they are not case sensitive ... one of the reasons these are my favorite keys ... I can actually remember them with no effort. That is great accounting system design.
Viewing A Transaction Journal In Accountant Friendly Format
Intuit makes it product to be user friendly to small business owners who most likely don't know technical accounting terms. That's why the data entry forms in the various modules makes data entry so easy.
Bookkeepers and accountants often prefer to see a QBO transaction entry form in a journal format so they can see the debits and credits booked by the QBO friendly form 'behind the scenes'. QBD had the shortcut key 'Ctrl Y'. QBO does not have this shortcut key. So how does QBO it?
In the QuickBooks online, look for "More" in the transaction you are in ... usually found at the bottom center of the form. (See screen 1 shot below.) You will see "transaction journal" in the popup menu. Click on it to get the journal report for the entry. (See screen 2 shot below.)
Screen 1 - How to Access the Transaction Report Using The 'More' Button
Screen 2 - Accountant Friendly View of the Transaction JournalLearning QuickBooks® ... The Reporting
Follow these links for customized QuickBooks® reports and other useful information to assist the management of some of your balance sheet accounts.
- What Are QuickBooks® Closing Procedures
- How to Track Top Customers
- How to Track Customer Deposits
- How to Track Construction Holdbacks
- How to Track Cheques Issued (and invoices)
- How QuickBooks® Handles HST/GST
- if you are an HST/GST registrant
(GST collected vs GST paid [ITC]) - if you are NOT an HST/GST registrant
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That's it for today. I hoped you enjoyed this introduction to learning QuickBooks® and found the information useful, practical ... and not too overwhelming.
It's been great chatting with you.
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