Handling Special Transactions in QuickBooks Online

So far, we have covered the most common transactions for which small businesses use QuickBooks. However, there are a few more topics that we would like to share with you. While some of these may not apply to your business when you are starting out, it’s a good idea to be aware that they exist.

First, we will discuss how to properly set up a business loan or line of credit. If you have a business loan or line of credit, you need to keep track of payments and overall outstanding balances in QuickBooks. Next, we will cover petty cash. Petty cash is often used for small purchases such as stamps or lunch for the office. Due to this, we will show you how to add a petty cash account, record petty cash transactions, replenish petty cash, and reconcile the petty cash account. While you always hope it doesn’t happen to you, there may come a time when you are unable to collect payment from a customer. If this happens, you will...

Setting up business loans and lines of credit

If you take out a business loan or line of credit, you need to track the payments that have been made, as well as the outstanding balance owed, in QuickBooks. This will ensure that your financial statements include the money that is owed to all creditors. If this information is not included in QuickBooks, it will not show up on your financial statements. If this information is not reported in your financial statements, you will have inaccurate reports and you could miss out on legitimate tax deductions.

In this section, we will cover how to set up a business loan or line of credit, how to track payments, and how to stay on top of the outstanding balances owed.

Adding a business loan or line of credit to the chart of accounts

The first step to properly tracking loans and lines of credit in QuickBooks is to set them up on the chart of accounts. We will do this next. Follow these steps:

1. Navigate to Transactions and...

Managing petty cash

Petty cash is a small amount of money that’s used to cover incidentals such as postage, lunch for the office, or other items. Petty cash is generally no more than $500 and is kept under lock and key and managed by the business owner or someone designated by the owner. Like all business expenses, you need to keep track of all your receipts so that you can record the expenses in QuickBooks.

In this section, we will discuss how to track petty cash, record petty cash expenses, and reconcile the petty cash account. Let’s get started by creating a petty cash account.

Adding a petty cash account in QuickBooks

In order to track petty cash in QuickBooks, we need to add a petty cash account to the chart of accounts.

Follow these steps to add a petty cash account:

1. Navigate to Transactions, as shown in Figure 16.6:

Figure 16.6: Navigating to Chart of accounts

2. Select Chart of accounts and then click the New button...

4 . Making depreciation journal entries

Depreciation is the reduction in the value of an asset, due to wear and tear after it has been in service for a period of time. To reflect the reduced value, you must record the depreciation expense in your books. Depreciation is also a tax-deductible expense, which can help to reduce your overall tax liability.

After adding fixed assets to QuickBooks, you need to record depreciation expenses for the period. As mentioned previously, if you subscribe to the QBO Advanced plan, QuickBooks will automatically compute and record depreciation for you. However, if you don’t have QBO Advanced, you will need to calculate depreciation manually or have your accountant do this for you. In the Recording journal entries section of this chapter, we will show you how to record journal entries in QuickBooks. If you do have QBO Advanced, please refer to Chapter 17, QuickBooks Online Advanced, where we will show you how the new fixed asset manager works.

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Tracking delayed charges and credits

Delayed charges and credits are used to keep track of services that are provided to customers so you can bill them sometime in the future. For example, if someone provides weekly pool maintenance to customers but does not want to bill them until the end of the month, delayed charges are ideal for keeping track of the services that are provided each week. These weekly services can easily be added to an invoice when it’s time to bill the customer.

Follow these steps to record delayed charges:

1. Click on the + New button and select Delayed charge, as shown in Figure 16.25:

Figure 16.25: Navigating to Delayed charge

2. Fill in the necessary fields to record the delayed charge, as shown in Figure 16.26:

   

   Figure 16.26: Completing the Delayed Charge form

   Brief descriptions of the fields to fill in are as follows:

   • Customer/Client: Select the customer from the drop-down menu.
   • Delayed...

Summary

In this chapter, you have learned how to handle many special transactions in QuickBooks Online. You may be able to take advantage of a few of these now or keep them in your back pocket for later on when you need them. To recap, you now know how to set up and track payments for a business loan or line of credit. For those incidental purchases, you can create a petty cash account, track purchases, and reconcile the account, just like bank accounts. We also discussed the importance of recording bad debt expenses, which you now know how to record in QuickBooks to ensure that your financials are accurate. Finally, you learned how to record delayed charges and credits to track services that are provided to customers that will be billed sometime in the future.

In the next chapter, we will provide you with an overview of some of the key features included in QuickBooks Online Advanced. While this subscription plan is more expensive, it offers some powerful capabilities to streamline...