Understanding QuickBooks: A Beginner's Guide
Get started with QuickBooks and learn the essential features every business owner should know.
QuickBooks Online is the most widely used accounting software for small and mid-size businesses. With over 7 million subscribers worldwide, it's become the de facto standard — and for good reason. This guide will help you get up and running quickly.
Setting Up Your Company File
When you first log in to QuickBooks Online, you'll be guided through a setup wizard. Take your time here — the decisions you make during setup affect how your financial reports look and how easy it is to find information later.
- Enter your company name, address, and EIN
- Select your industry (affects default chart of accounts)
- Choose your fiscal year start month
- Connect your bank and credit card accounts
- Import your customer and vendor lists if available
The Chart of Accounts
The chart of accounts is the backbone of your accounting system. It's a categorized list of every account used to record transactions. QuickBooks creates a default chart of accounts based on your industry, but you'll likely need to customize it.
Resist the urge to create a new account for every minor expense. A clean, simple chart of accounts makes financial reporting much easier. Aim for 50-100 accounts maximum for most small businesses.
Recording Transactions
Invoices and Sales Receipts
Use invoices when customers pay later and sales receipts when they pay immediately. QuickBooks makes it easy to create professional-looking invoices, track who owes you money, and send payment reminders.
Bills and Expenses
Enter bills when you receive them (even before paying) to track what you owe vendors. Use the expense form for immediate payments. Connect your bank account to automatically import and categorize transactions.
Bank Reconciliation
Monthly bank reconciliation is one of the most important accounting tasks. It ensures that your QuickBooks records match your actual bank statements, catching errors and fraud early. QuickBooks makes this process straightforward with its reconciliation tool.
Essential Reports
- Profit & Loss (Income Statement): Revenue minus expenses over a period
- Balance Sheet: Assets, liabilities, and equity at a point in time
- Cash Flow Statement: Cash in and out over a period
- Accounts Receivable Aging: Who owes you and how long
- Accounts Payable Aging: What you owe and when it's due