Your company has just purchased its first Quickbooks Online subscription. Now you need to get everything set up so you can start using the software for your accounting and bookkeeping. If you are working with an accounting professional, they should be able to onboard you and set everything up correctly right from the start. But if you are a DIY type of business owner, you can still get things up and running. This article can help assist you in setting up the key information you need to get started. If you haven’t yet purchased QBO and aren’t sure which version is right for you, click here to see our article on how to select which software version is right for your company.
When you first purchase your subscription Quickbooks will take you to a setup wizard where you can enter key information. Most of the information can be skipped at this step and entered later in the software. If you don’t know what information to enter at this point don’t worry. Enter what you know and move on.
Step 1: Enter your company information.
Company information can either be entered using the setup wizard or by going to the gear icon in the upper right corner of the screen and selecting the “Company settings” option. You will notice several tabs on the left-hand column where different information can be entered. Some of the key basic information you should enter includes your company name, contact information, EIN number, and accounting method (cash or accrual). This information is important because it translates to what is shown on customer invoices and other reports.
There are plenty of other fields where you can enter information and customize items, but the above information should be good enough to get you up and running quickly.
Step 2: Set up your chart of accounts.
This is a VERY important step. Your chart of accounts dictates how you will see your financial information on reports and financial statements. The setup wizard will allow you to select the type of industry you work in and will tailor a chart of accounts based upon your selection. Those accounts will likely be a good start, but you’ll probably want to customize accounts in a way that allows for optimal reporting and business decision making needs.
Accounts can be added or edited by going to the “Accounting” tab in the ribbon on the left-hand side of the screen and selecting “Chart of Accounts.” On this screen you can see all of your accounts and can search/sort them using different labels.
To add a new account simply click the “New” button in the upper right corner. Quickbooks requires the account type, detail type, and account name to be entered in order to create a new account. We recommend also entering a description of the account’s purpose as well to clarify to users how the account should be used. QBO has 15 different account types to choose from which will affect how the accounting is treated and reported. If you do not have an accounting background it may be wise to consult with an accounting or bookkeeping professional to complete this setup. In a nutshell, you have your balance sheet accounts:
- Bank (for bank feeds)
- Accounts Receivable
- Other Current Assets
- Fixed Assets
- Other Assets
- Accounts Payable
- Credit Cards (for CC feeds)
- Other Current Liabilities
- Long-Term Liabilities
And your income statement accounts:
- Other Income
- Cost of Goods Sold (if you have inventory)
- Other Expenses
If you have a good idea of what each of these means, feel free to tackle setting up the CoA yourself. You should be able to select the correct account type and detail type based on the purpose of the account. You can also create sub-accounts under a main parent account. For instance, if you wanted to track different classes of fixed assets (e.g., production equipment vs. office equipment) you could create a parent account called “Equipment” and have two sub-accounts for the different types of equipment.
You are also able to merge accounts that serve the same purpose by finding the accounts you want to merge and giving one of them the same name as the other account. To do this you can search for the specific account you want to find from the “Chart of Accounts” page, select the downward facing arrow under the “Action” header on the far right and selecting “Edit.” Change the account type, detail type, and name to match the account you want to merge with and select save. Quickbooks will ask you if you wish to merge the two accounts. Selecting yes will merge the accounts and any activity in both.
Accounts can also be made inactive by selecting the downward facing arrow under the “Action” header on the far right. Once made inactive no more transactions can be posted to those accounts unless the account is made active again.
Note that there are some limitations on editing for certain account types. The following accounts can be renamed but can not be merged or made inactive as QBO has processes that run through these accounts:
- Accounts Receivable
- Opening Equity Balance
- Retained Earnings
- Reconciliation Discrepancies
- Unapplied Cash Payment Income
- Cost of Goods Sold
- Sales Tax
- Sales of Product Income
- Uncategorized Expense
- Uncategorized Income
- Uncategorized Asset
- Owner’s Equity
Step 3: Add your products and services.
Now we’re getting to the good stuff. In order to track your income properly you will want to add your listing of products and services in QBO. The first thing you will want to do is review your account settings by clicking on the gear icon, selecting “Company settings” and going to the “Sales” tab. In the “Products and services” section you will see different options depending on which version of QBO you are using. You can choose to show your product or services on your sales forms (generally a good idea), show a SKU column (if applicable), track quantity and price rate and inventory quantity on hand (Plus and Advanced subscriptions only).
Once your settings are dialed in there are multiple ways to add products and services into QBO. You can manually enter an item by going to either “Gear Icon à Lists à Products and Services” or by clicking “Sales” on the left-hand ribbon and going to the “Products and Services” tab. Either way you will end up on this screen:
Selecting the “New” button allows you to enter a new product or service. There are four categories to choose from:
- Inventory: Products you buy and/or sell of which quantities are tracked (only available with Plus or Advanced subscriptions)
- Non-inventory: Products you buy and/or sell but don’t need to (or can’t) track quantities of, for example, nuts and bolts used in an installation.
- Service: Services that you provide to customers.
- Bundle: A collection of products and/or services that you sell together.
Depending on which category you choose you will be asked to enter slightly different information. No matter what you choose there are key elements which must be entered to create the item. You will always need to name the product or service and map it to correct income accounts. For inventory items you will also need to enter an initial quantity on hand as of a certain date and select an asset and cost of goods sold account. We also highly recommend entering a detailed description of the product or service as that will translate over to estimates, purchase orders, and invoices.
The other, and more efficient, way to add your products and services is to do a bulk import from an excel or csv file. This is done from the same products and services screen in QBO where you manually add items. Instead of clicking “New,” select the down arrow on the right side of the new button and click “Import.” A drop-down menu will appear that will ask you to upload your import file. The file must be in a specific format, and you can download a sample file with that format on this same screen.
Once you have added everything to the spreadsheet (don’t forget to map the accounts) you can go to the next step on the import screen which will map your data and check for any errors in the import. If there are any errors it is best to back out, correct them, and redo the import. Once everything looks good you can finish the import process and you are good to go.
Step 4: Add your customers.
The steps for adding a customer are very similar to adding a product or service. You have the option of manually entering them or doing a bulk import. Customers can be added by going to “Sales” on the left-hand ribbon and selecting the “Customers” tab. You will see the option to manually add a new client by clicking “New customer” in the upper right corner. The only required information is the customers display name, but we recommend filling out as much information as possible.
You can also perform a bulk import using a template similar to products and services. Simply click the down arrow next to the “New customer” button and you can go through the same steps of downloading the customer import template and uploading your customer list.
Step 5: Add your vendors.
This step is exactly the same as adding customers, just in a different place in QBO. To find where to add vendors, go to “Expenses” on the left-hand ribbon and select “Vendors.” Since the process is nearly identical to adding customers, we won’t go into additional detail. However, some good information to know is you can track payments to contractors for 1099 purposes and you can add attachments so it’s easy to keep w9’s and other pertinent information in one place.
Set up your bank feeds.
The key ingredient to any good accounting software is the ability to link your bank accounts and automatically import transactions for review. QBO is no different. You can link most major bank and credit card provider accounts directly to the software.
To add a bank to your feed, use the left-hand ribbon and select the “banking” tab. On this screen you will find a button in the upper right that says “Link account.”
On the next page you’ll search for your financial institution. If your bank is available the next set of screens will have you enter your account credentials for your institution. Once you have entered the information Quickbooks will attempt to connect with your bank. If successful, your feed will be up and running either immediately or after a 24-48 period depending on the institution. If your feed does not connect, we recommend reaching out to either Intuit support or support staff at your bank. If your financial institution is not supported by QBO there are other workarounds to adding transactions such as uploading statement information manually. We will cover that in a different article.
And that’s it! Now that you have your bank accounts linked you have a quick way of reconciling transactions added into QBO. When QBO recognizes a transaction in your bank feed you will have the opportunity to “Match” it to a transaction already entered in QBO. You can also add transactions onto your books directly from the bank feed, though we caution reviewing the transaction and making sure there is proper support in QBO to make sure nothing is being double-booked, is a personal transaction, is part of an installment payment, etc.
Quickbooks Online is relatively easy to set up. If you follow the instructions from the software itself, you can be up and running in less than an hour if you’re a small company. For part of the setup, particularly the chart of accounts, we always recommend having an accounting professional or at least someone with some savvy that can help enter things correctly the first time.
There are many other scenarios that may occur during setup which we will be adding articles for soon. We will also be offering a deeper dive into the individual features of QBO. Stay tuned for our next lesson: “Understanding and correctly using the undeposited funds account in QBO.” If you are looking to set up your QBO or other accounting software for the first time, consider letting Olympus CPA help you through the process or take it off your hands entirely. Our staff has the experience necessary to ensure your books are setup correctly from the get-go and will give you confidence you’re starting out on the right foot.