Journal Entries & Accounting Tasks

1. Go to the Lists menu and click Chart of Accounts.
2. Select the Opening Balance Equity account.
3. Click Activities at the bottom of the list and click Use Register.
4. Enter a transfer transaction:
   1. Enter the amount in the Decrease column of the register.
   2. In the Account field, enter the name of the equity account where you are transferring the money.
5. Click Record.

If your budget reports are blank, you probably imported a budget into a company file with a different chart of accounts. QuickBooks creates all the income and expense accounts referenced by the imported budget as "bank" accounts.

1. Export the budget again, making sure to also export the chart of accounts.
2. Import the budget and the chart of accounts.
3. Edit the chart of accounts to include the correct types and names, and remove unneeded accounts.

1. Make an "Other Asset" type account called Startup Expenses.
2. Then make a Journal Entry to Debit Startup Expenses and Credit the Owner's Contributions for the total paid.
3. You will need another "Other Asset" type account also called "Less Amortization" and you drag that account down under the Startup Expenses so it appears under it in the COA list.
4. Then you take amortization expense using the Straight Line method and a Journal Entry to Debit Amortization Expense and Credit Less Amortization for the current amortization portion. The Amortization begins the month you began actually doing business.

Chart of Accounts for nonprofit organizations that was developed by the California Association of Nonprofits (CAN) and the National Center for Charitable Statistics UCOA© is the Unified (NCCS). This standardized chart of accounts was designed so that nonprofits can quickly and reliably translate financial statements into the categories required by IRS Form 990, the Federal Office of Management and Budget, and other standard reporting formats. UCOA also seeks to promote uniform accounting practices throughout the nonprofit sector. UCOA was developed by a consortium of various nonprofit organizations.

Importing UCOA
QuickBooks includes a copy of UCOA. It is used automatically if you create your company file using the EasyStep Interview and select Nonprofit for your industry type. If you want to import the UCOA (for example, if you did not use the EasyStep Interview to create your company file, or if you created your company file with QuickBooks Pro), go to the Non-profit menu and choose Import Nonprofit Chart of Accounts (UCOA).

Using UCOA in QuickBooks
To add an account that is not in UCOA, add it as a sub-account of an existing account. For example, if your organization tracks membership dues for youth, adults, and seniors separately, you can create three sub-accounts of 5310 Dues and call them 5311 Youth, 5312 Adults, and 5313 Seniors.

In general, the accounts in the Unified Chart of Accounts are sorted by type in the following order:

1. Assets
2. Liabilities
3. Equity (net asset accounts in nonprofit terminology)
4. Income and expenses

What to do: On your sales form, list all of the items that have the same rate. Add a subtotal item below each set of items. The Tax field at the bottom of the form will clear when you add a tax line in the detail area. However, you can't record a sale if this field is empty. Create a new sales tax item with a 0% sales tax rate so you can fill in this field.

Results: QuickBooks includes the taxable items subtotaled above each line item in that sales tax line item's gross sales and taxable sales. Non-taxable items included in the subtotal above each sales tax line item are included in that sales tax item's gross sales and non-taxable sales.

What to do: List all of the items that are taxable at the different rate together on the sales form, and then add a subtotal item below that set of items. Add a sales tax line item for the additional sales tax rate below the subtotal line. In the Tax field, choose the sales tax item whose rate is charged for all the taxable items.

Results: All taxable items are included in taxable sales for the sales tax item in the Tax field. Items with the additional tax are included only in taxable sales for the sales tax line item.

This is what I do when I am starting a new file with existing data:

• If you have an accurate trial balance from a previous month/year, enter it as one journal entry. (Do not enter any opening balances when setting up new accounts in the COA.)
• For the Checking account, enter only the reconciled bank statement amount in that journal entry, but do not enter any a/r or a/p amounts.
• Let the variance hit Opening Balance Equity.
• Then, enter any outstanding checks/deposits and hit OBE. (use the write checks/make deposits windows)
• Then, enter Unpaid Bills and Open Invoices, one at a time with the vendor/customer name. . offsetting OBE. (use the enter bills/create invoices windows - you will have to set up an item which points to OBE for the invoices)
• When you complete these three steps, your OBE should be zero.
• This will give you the detail of outstanding checks/deposits so that you can reconcile next month's bank statement.
• This, also, will give you an accurate A/P and A/R with enough detail to move forward in paying bills and receiving payments.

The Sales Tax function in QuickBooks is a separate module from the rest of the program, even though it doesn't seem like it. Because it is a separate module, sales tax payments should be made according to how the module works.

The Wrong Way
The unsuspecting QuickBooks user computes the sales tax return. Then, he/she generates a regular check in QuickBooks (a regular check is always designated CHK in the register). Perhaps this check is even correctly posted to the Sales Tax Liability account. Regardless of which account it is posted to, using a regular check to pay sales taxes is not how QuickBooks was designed. Unfortunately, QuickBooks allows this transaction to occur.

The Right Way

1. Compute the sales tax return. Then, adjust the QuickBooks tax payment for rounding differences, if necessary.
   
   In California, the BOE-401 requires every line to be rounded to the nearest dollar. This will create a small difference in the amount of sales tax owed on the return, verses the amount of sales tax owed according to QuickBooks.
   
   In order to adjust for the difference, and if you are certain you are ready to record the payment in QuickBooks, from the Vendors menu select Sales Tax. Then select Pay Sales Tax. Click the button that says Adjust. Make the Adjustment Date the same as the final day of the tax reporting period. Put an Entry Number if you wish. In the Sales Tax Vendor box, select the sales tax reporting agency. For the Adjustment Account, select an expense account called Sales Tax Adjustments (create it if you don't already have one). Then, select the appropriate circle, depending if you are increasing or reducing the amount of sales tax to pay in QuickBooks. Fill in the correct amount of the adjustment. Record a memo if you wish. Click Ok.
2. Generate a Tax Payment check.
   
   At the Pay Sales Tax window, click the taxes you are paying, as well as the adjustment you just made. Make sure the all of the other information is correct, particularly the Pay Sales Tax Through box - this must have the same date as the final reporting date on the sales tax return. Save the transaction.
   
   The check you just generated appears now in the check register that you selected in the Pay Sales Tax window. Go and look for it there. You will see it as a unique type: TAXPMT, rather than CHK or BILLPMT.

Final Thoughts
Here's why QuickBooks users should pay sales tax utilizing the correct method:

• QuickBooks generates Tax Payment checks (TAXPMT) rather than regular checks.
• QuickBooks users can perform specific searches for these types of checks.
• QuickBooks can compute the tax amount - this can then be used as a guide to make sure the sales tax return was prepared correctly.

What is Class Tracking?
Class Tracking in QuickBooks is a way to break down different segments of a single business. Let's say, for example, that you own a chain of restaurants. You have one in the north part of town, one on the south part of town, one in the east part of town, and one in the west part of town. You could establish classes with the following names: North, South, East, and West, and assign these to each transaction - writing checks, entering bills, generating invoices, etc.

If you want to see how of all the restaurants are doing as a group, you would run a regular Profit and Loss. But if you wanted to see how a particular restaurant was doing, you would still run a Profit and Loss, but you would filter it by Class. This report would give you the revenue and expenses for whichever class you chose, assuming all of the original entries were made correctly. Very nice!

What Types of Accounts Can Use Class Tracking?
Class Tracking is designed for Profit and Loss transactions, not for Balance Sheet transactions. On most screens it is very easy to tell if you are operating in a profit and loss transaction, or a balance sheet transaction with classes. Let's take the Write Checks screen. You are familiar with both halves of this screen, no doubt. There is the upper half with the green "check," and the lower half, with two tabs that say Expenses and Items in a white field.

If you have class tracking turned on in QuickBooks, open the Write Checks screen (from the banking menu, select Write Checks). Take a moment and look where the Class column is located. It's in the lower half of the screen. The upper half of this screen is definitely a balance sheet transaction - it takes money away from the bank account. The lower half of the screen is often a profit and loss transaction. And it is in this section where the class is assigned.

The same holds for the Enter Bills screen. Open it now and see (from the Vendors menu, select Enter Bills). In the Invoice screen, it is is a little more difficult to understand, but still, the class assigned here will affect a profit and loss account.

Can I Have Separate Companies in a Single QuickBooks File, and Assign Each Its Own Class?
No. Each unique entity, with a unique FEIN, must have it's own file.

I've often seen questions from people who have set up different companies in a single QuickBooks file, and assign a class name for to each company. At some point, the business owner inevitably wants a class report based on the balance sheet for each company - the bank accounts, accounts receivable, credit cards, accounts payable, etc., all broken down by class. QuickBooks Class Tracking cannot do this, and was not designed for this!

Another problem with establishing different companies within a single QuickBooks file is that ownership across the companies might not be the same. Retained Earnings for each company cannot be separated (at least, not automatically by QuickBooks). Maintaining separate Retained Earnings is crucial if the ownership across the entities varies AT ALL.

Also, if the entities are corporations, preparing the corporate tax returns becomes a real challenge if they've all been setup into a single QuickBooks file. There's just no way to have QuickBooks breakout the separate balance sheets that are required for the tax returns.

What Should I Do If I Have More Than One Company in a Single QuickBooks File?
You will need to separate them into separate QuickBooks files. I know, I know - you don't want separate QuickBooks files! I understand. But that is the way it needs to be - truly! If you need help doing it, go to the Intuit website and find a QuickBooks ProAdvisor to help. This is a sticky situation and should be handled by somebody who understands accounting principles.