Proper Invoice Structure on Quickbooks

I. Introduction

The importance of structuring an invoice correctly

If you have the type of business where you probably have fewer clients and you send them invoices and maybe give them like a week or two to pay then putting them in QuickBooks Online is a really great way to do it cuz it kind of keeps everything in place you’re able to track who has paid how much they have paid like what is the out standing amount like balance that they owe and then you can receive the payments right in there and it’ll match up in the bank feeds so for most of this video we will be inside QuickBooks online and I’ll be showing you exactly what I do in there with invoices here is the list of what we’re going to go over and I can give just kind of like a brief intro before each thing that I explain in there so the first thing I’m going to show you is just really simply where to go to create an invoice okay we’re going to start by opening a new invoice and filling it out so you can just go to sales and then invoices there’s usually in QuickBooks multiple ways to get places but that’s how we’re going to do

Distinctions between products and services

 

What to put in that customer field so in QuickBooks you have vendors which are people who you pay for your utilities and then you also have customers that pay you for whatever service or you know stuff that you are providing to your customers so it’s nice to have them all set up in QuickBooks, then you could pull reports per customer and that kind of thing and also you can store a bunch of info like their address and stuff which you’ll see in each customer so you don’t have to be entering it in all the time so this business already has a bunch of customers, but let’s create a new one just so we can see what it looks like so, you can put in a payment method also that can be helpful if they usually pay by check or cash or if they have a credit card in there and then if you have general terms that you always have for this customer you can set it to so this is how many days they have to pay their invoice so you can select any of that stuff you want fill in as you like and then save it, also put your customer or client email for each time you want to email them.

II. Product and Service Examples

right number in there if you’re charging per quantity for goods or if you’re charging per hour for Services there’s different ways to do that so let’s take a look at some of the product and services we already have in here just so you can get kind of an idea of what they are so for landscape they have some design stuff then they also have things like concrete and lighting and rocks so they have actual like you know items and then they also have services and gardening so these are like humans doing this and then rocks is obviously like just rocks so let’s make up a new one maybe we will call it like flower planting so let’s let’s add our flower planting and there’s different types of products that you can do like I said so inventory if you’re tracking inventory I have not done this with a client it’s a little more complicated so you kind of need to know what you’re doing if you’re tracking inventory and you might need a certain type of QuickBooks Online as the other thing too non-inventory is self-explanatory you’re not you know tracking the stuff that’s like in your shed or whatever and a service is like something that like here like landscaping or tax Preps so it’s not item that they’re buying but it is a service and then this is like a bundle so if you’re doing different things together that one I don’t use as much but let’s see what did I say flower planting so we are going to make that a service and then again there’s a lot of different things you can add in here you probably don’t need a lot of them category is just to kind of organize all of your products you know if you have different sub accounts and stuff or if you have different you know types of

Overview of landscape products and services
Introducing a new service: Flower Planting

III. Types of Products in QuickBooks Online

 

Types of Products in QuickBooks Online include advanced accounting, virtual bookkeeping, payroll, pay contractors, time tracking, payments and banking, enterprise features, invoice tracking, expense management, bill management, tax deductions, report generation, e-commerce management, and more[1]. QuickBooks Online offers various types of products designed to suit the needs of different business stages and sizes, allowing businesses to access their data from anywhere and collaborate in real-time[1].

When creating a new product or service item in QuickBooks Online, users can choose from four types: inventory, non-inventory, services, and bundles[2]. These item types help categorize products and services for better tracking. If a wrong type is selected, it can be changed later with a few considerations in mind[2].

In order to maximize the use of QuickBooks Online, businesses can add products and services, customers, and vendors to lists. When creating a new product or service item, users have the option to choose from four different types: inventory, non-inventory, service, and bundle[3]. Depending on the business’s needs, non-inventory or service items can be used when tracking inventory quantities is not required, while bundles allow packaging and selling multiple items as a single product or service[3].

To determine the most suitable QuickBooks product for a business, there are six versions to consider, each catering to different business needs and requirements[4]. These versions include QuickBooks Online, QuickBooks Desktop, QuickBooks Self-Employed, and more[4].

 

 

In QuickBooks Online, tracking inventory items is useful when a business needs to keep tabs on the quantity and value of physical goods it sells. When an inventory item is sold, the system automatically adjusts the quantity on hand, calculates the cost of goods sold, and updates the inventory value[1]. This is ideal for businesses that engage in buying and selling tangible products.

On the other hand, non-inventory items are used to track items that are not held as part of the business’s regular inventory. These can include fixed assets, such as equipment or vehicles, or products that are not meant for resale, like office supplies[1]. Non-inventory items are not tracked as part of the inventory system, so the quantity on hand does not change when these items are sold[1].

When it comes to services and bundles, QuickBooks Online offers specific item types for better categorization and tracking.

Services are used to track the services provided by a business. This can include anything from consulting and professional services to repair and maintenance[2]. Selling services in QuickBooks Online allows businesses to assign specific rates or charge customers based on time, enabling accurate billing and revenue tracking.

Bundles, on the other hand, are used to package multiple products or services together as a single item for sale. Bundles allow businesses to offer special promotions or discounts by combining different products or services into a single package[2]. By creating bundles in QuickBooks Online, businesses can simplify their invoicing process and offer more value to their customers.

To summarize, QuickBooks Online provides the flexibility to differentiate between inventory and non-inventory items, allowing businesses to accurately track tangible goods and other items separately. Additionally, the use of services and bundles helps categorize and package services and multiple products effectively.

IV. Organizing Products and Services

Categorizing products for better organization
Importance of income accounts for accurate invoicing

V. Differentiating Income Types

Differentiating income types in QuickBooks Online is important for proper categorization and tracking of revenue sources. By accurately categorizing income, businesses can gain valuable insights into their financial performance and make informed decisions.

In QuickBooks Online, there are several income types to consider:

Sales of products: This category includes income generated from the sale of goods or products. Businesses can create specific income accounts for different product lines, allowing them to track sales and analyze profitability of each product.

Services rendered: This income type pertains to revenue generated from providing services to clients or customers. It can include professional services, consulting fees, repair services, and more. Each service can be assigned to a separate income account for better tracking.

Sales of digital products: With the rise of digital products like e-books, software, and online courses, businesses may generate income from the sale of these items. QuickBooks allows for the creation of income accounts specifically for digital product sales.

Rental income: If a business earns income from renting out property or equipment, a separate income account can be set up to track the revenue associated with rentals.

Other income: This category can be used to capture income that doesn’t fit into the above categories. It could include interest income, dividends, grants, or any other miscellaneous income sources.

Properly categorizing income types in QuickBooks Online is essential for generating accurate financial reports. It ensures that businesses can track income sources separately, analyze profitability, and make informed financial decisions. QuickBooks Online allows for the creation of custom income accounts, enabling businesses to tailor their income tracking to their specific needs.

VI. How To Make Banking Reconciliation

 

To start, I’ll click on the gear menu located at the top right corner of the screen. Then, under “Tools,” I’ll select “Reconcile.” Next, from the drop-down menu, I’ll choose the specific bank account or credit card that I want to reconcile. Let’s say I want to reconcile my Chase bank account ending in 8145.
Now, I’ll bring a bank statement onto the screen. Keep in mind that every bank has a different layout, but for demonstration purposes, I’ve created a sample bank statement. Essentially, the reconciliation process involves comparing the bank statement with the transactions in the system.

 

I want to ensure that the beginning balance, which is already in QuickBooks, matches the bank statement. In this case, the beginning balance is $17,430.51. We need to make sure it matches the balance on the bank statement. Once we verify the beginning balance, we can move on to the next step.

Next, we need to enter the ending balance from the bank statement. Depending on your bank statement, the ending balance will be different. Enter the ending balance in the designated box labeled “Ending Balance.” The ending date should be the last date of the current bank statement you are reconciling. For example, if you are reconciling the January 2024 bank statement, the ending date would be 01/31/2024. QuickBooks will display the previous reconciled statement as December 2023.

Once you have the correct ending date, ending balance, and beginning balance, click on “Start Reconciling” to proceed to the reconciliation screen. However, it’s not as simple as selecting “Select All” and expecting it to work. If you only use bank-downloaded transactions in QuickBooks, they may auto-reconcile. But in this case, assume that all transactions were entered manually.

To ensure the accuracy and completeness of the information, check the box for each transaction that appears on the bank statement. You can have QuickBooks on the right side of your screen and the bank statement on the left. This will make it easier to follow along. Physically check off each transaction on the paper bank statement. You can also use a PDF software’s highlighter tool to mark the transactions on the digital statement.

Go through the process of checking off each deposit, expense, and check. Once you have marked everything off, double-check that all the transactions on the bank statement match those in QuickBooks. The difference should be zero if everything matches.

If there are missing transactions on the bank statement that don’t appear in QuickBooks, you will need to find those transactions in QuickBooks and determine if they were categorized incorrectly or not entered at all. This is your opportunity to enter them into QuickBooks.

If you come across duplicate transactions on the bank statement, delete the duplicates from QuickBooks. Ensure that you are only keeping one instance of each transaction.

Sometimes, you may notice transactions in QuickBooks that do not appear on the bank statement. These could be outstanding checks that haven’t cleared yet. You will need to wait until the next month’s bank statement to see if these outstanding checks are included. In the next reconciliation, you can then mark them as cleared.

Once you have gone through all the transactions and made any necessary adjustments, the goal is to bring the difference down to zero. Click on the “Finish” button to complete the reconciliation.

After finishing the reconciliation, you can view the Reconciliation Report. This report can be printed or saved as a PDF for your records.

Reconciling can become more complex in real-world scenarios. There may be more missing transactions, duplicate transactions, or transactions with dollar amounts that don’t match. You may also have to match deposits in QuickBooks with multiple invoices and payments. These situations require additional steps, which will be covered in separate videos.

In summary, reconciling involves matching your QuickBooks records with your bank statements or credit card statements to ensure all debits, credits, beginning balances, and ending balances align. This process will make your QuickBooks experience more enjoyable and help maintain accurate financial records.

 

If you need help with Quickbooks, contact us!

 



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