How to use QuickBooks Online - Beginner Walkthrough & Tutorial

Summary

This video tutorial offers a comprehensive guide for small business owners to set up QuickBooks Online (QBO) effortlessly. It covers selecting the right plan, connecting financial accounts, categorizing transactions, creating and managing invoices, and paying bills. The script also discusses automating tasks with rules, organizing sales tax, and utilizing QBO's reporting features for better financial insights and decision-making, all without requiring prior accounting knowledge.

Takeaways

• 🛒 QuickBooks Online (QBO) is a tool designed to help small business owners manage their finances without accounting knowledge.
• 📋 Choosing the right QBO plan is essential; Simple Start is suitable for single managers, while Essentials and Plus are for teams and inventory management.
• 🔗 To get started with QBO, visit the official website and select a plan that fits the business size and needs.
• 🏢 QBO personalizes the user experience by asking various business-related questions upon first sign-in.
• 💳 Connecting credit cards and bank accounts to QBO is crucial for importing transaction history and managing finances effectively.
• 📊 Categorizing transactions is vital for budgeting, accurate financial reporting, and tax compliance in QBO.
• 🏷️ Using tags and memos in QBO can help in organizing and clarifying the purpose of transactions for better record-keeping.
• 🔄 Creating rules in QBO automates the categorization of recurring transactions, saving time and reducing errors.
• 📄 Invoicing customers in QBO is straightforward and can be customized with product details and pricing, including sales tax calculations.
• 💼 Managing vendor bills in QBO involves uploading invoices and ensuring payments are scheduled and made on time.
• 💹 QBO's reporting features allow business owners to track financial health through various reports like profit and loss, balance sheet, and sales summaries.
• 📈 QBO helps in tax management by automatically calculating sales tax and tracking obligations to different government agencies.

Q & A

What is the main purpose of using QuickBooks Online (QBO) for a small business?

The main purpose of using QBO is to track expenses and income, invoice customers, pay bills, manage taxes, and view financial reports for better financial planning, all without requiring accounting knowledge.

How does a small business owner choose the right plan for their needs on QuickBooks Online?

A small business owner can choose the right plan based on the number of people managing the company's finances and specific needs such as inventory management. Simple Start is for one person, Essentials or Plus for one or two employees, and Advanced for medium-sized businesses.

What is the first step to set up QuickBooks Online for a new user?

The first step is to connect the user's credit card and bank account to QBO to import transaction history, which helps in categorizing and understanding the transactions.

Why is it important to categorize transactions in QBO?

Categorizing transactions is important for budgeting, accurate financial reporting, and proper tax compliance.

How can a user add a new customer or vendor in QBO while categorizing a transaction?

A user can add a new customer or vendor directly from the transaction page by selecting 'add new customer' or 'add new vendor' and inputting their information.

What are tags in QBO and how can they be useful?

Tags are labels that can be applied to transactions to make it easier to search for specific types of transactions in the future and to customize reporting.

How can a user create a rule in QBO to automate the categorization of recurring expenses?

A user can create a rule by specifying criteria that match the transaction, such as the description containing 'paper cups', and then assigning the transaction type, category, and vendor.

What is the process of creating and sending an invoice in QBO?

To create and send an invoice, a user selects 'create invoice', chooses the customer, adds products or services with quantities and prices, and then sends the invoice to the customer.

How does QBO handle sales tax calculations and tracking?

QBO automatically calculates sales tax when an invoice is created and tracks the tax owed to different government agencies for easy tax compliance.

What are some of the financial reports available in QBO and what do they provide?

Some financial reports in QBO include the profit and loss report for tracking income and expenses, the balance sheet for overall business health, and sales by customer or product summaries to identify top performers.

How does a small business owner pay bills to vendors using QBO?

A business owner can pay bills by uploading invoices, extracting information, verifying details, and scheduling payments through an add-on service for direct transfers or checks.

Outlines

00:00

🚀 Starting a Business with QuickBooks Online

This paragraph introduces the challenges faced by new small business owners in managing finances and the solution offered by QuickBooks Online (QBO). It emphasizes the ease of use for non-accountants and outlines the core functionalities of QBO, such as tracking expenses and income, invoicing, bill payments, tax management, and financial reporting. The speaker guides viewers on selecting a QBO plan based on their business size and needs, and explains the initial setup process, including personalizing the experience and connecting credit cards and bank accounts.

05:06

📊 Categorizing Transactions and Automating with Rules

The speaker demonstrates how to categorize transactions in QBO to facilitate budgeting, accurate financial reporting, and tax compliance. They walk through the process of assigning transactions to customers and categorizing expenses, highlighting the importance of consulting with an accountant to ensure correct categorization. The paragraph also introduces the concept of tags for easier transaction searches and the use of memos for clarity. A key feature discussed is the creation of rules in QBO to automate the categorization of recurring transactions, using the example of paper cups purchases from Carla's Cups.

10:07

📝 Invoicing Customers and Managing Sales

This section focuses on invoicing customers within QBO, starting with creating an invoice for the Kevin Cookie Company. The speaker explains how to select products or services, adjust quantities, and set prices, including sales tax calculations. They introduce the process of adding new products to the inventory, using apple fritters as an example, and detail the steps for setting item types, SKUs, categories, and income accounts. The paragraph concludes with the speaker sending the invoice and discussing customer payment options, including setting up processes for accepting various forms of payment.

15:10

💼 Paying Vendors and Handling Sales Tax

The speaker moves on to managing vendor payments by adding and paying bills within QBO, using an invoice from Carla’s Cups as an example. They explain the process of uploading and extracting information from an invoice document, verifying details, and scheduling payments. The paragraph also touches on the need for an add-on service for bill payments and the availability of different plans. Additionally, the speaker discusses the QBO's sales tax features, explaining how it automatically calculates and tracks sales tax due for each invoice, helping businesses stay organized for tax obligations.

📊 Analyzing Business Performance with Reports

In the final paragraph, the focus shifts to utilizing QBO's reporting features to gain insights into business performance. The speaker highlights the profit and loss report, explaining its importance for tracking financial metrics over time and comparing year-over-year performance. They also mention other valuable reports such as the balance sheet for assessing business health, sales by customer and product summaries for identifying top performers, and expenses by vendor summary for monitoring vendor-related expenses. The paragraph concludes with an encouragement to use these tools for informed business decision-making.

Keywords

💡QuickBooks Online (QBO)

QuickBooks Online, often abbreviated as QBO, is an accounting software designed for small and medium-sized businesses. It enables users to manage their finances, including tracking expenses, income, invoicing customers, and paying bills. In the video's context, QBO is the primary tool being introduced and demonstrated to help small business owners manage their finances without accounting knowledge.

💡Accounting Knowledge

Accounting knowledge refers to the understanding of financial transactions, record-keeping, and reporting. In the video, the presenter emphasizes that no accounting knowledge is required to use QBO, making it accessible for small business owners who may not have a background in finance.

💡Financial Planning

Financial planning involves strategizing for the management of current and future financial resources. The video mentions that QBO can be used for better financial planning by allowing users to view reports that provide insights into the business's financial health.

💡Transactions

In the context of finance and accounting, transactions refer to the economic exchanges between parties. The script describes how QBO can track these transactions, which is essential for understanding the flow of money into and out of a business.

💡Categories

Categories in QBO are classifications used to organize different types of income and expenses. The video script explains the importance of assigning transactions to the correct categories to facilitate accurate financial reporting and budgeting.

💡Invoicing

Invoicing is the process of issuing a bill to a customer for goods or services provided. The script demonstrates how to create and send invoices using QBO, which is a key feature for businesses to manage receivables.

💡Vendors

Vendors are businesses or individuals that provide goods or services to a company. The video script discusses how QBO can be used to manage relationships with vendors, including paying bills and organizing expenses related to purchased supplies.

💡Rules

In QBO, rules are tools that automatically categorize transactions based on specific criteria. The script shows how to create a rule for recurring expenses, like paper cups, to streamline the categorization process.

💡Sales Tax

Sales tax is a tax paid by consumers on the purchase of goods or services. The video explains how QBO automatically calculates and tracks sales tax for invoices, which is crucial for compliance with tax regulations.

💡Reports

Reports in QBO are summaries of financial data that provide insights into the business's performance. The script highlights various types of reports, such as the profit and loss report, balance sheet, and sales by customer summary, which help business owners make informed decisions.

💡Profit and Loss Report

A profit and loss report, also known as an income statement, details a company's revenues, costs, and expenses during a specific period. The video script uses this report as an example to illustrate how QBO can help business owners track their financial performance over time.

Highlights

Introduction to setting up QuickBooks Online (QBO) for small business owners without accounting knowledge.

Explanation of QBO's capabilities: tracking expenses and income, invoicing customers, bill payment, tax management, and financial reporting.

Guidance on selecting the appropriate QBO plan based on business size and needs.

Personalization of the QBO experience through initial business-related questions.

Importance of connecting credit cards and bank accounts to QBO for transaction history.

Demonstration of categorizing transactions for better budgeting and financial reporting.

How to add new customers or select existing ones within QBO.

Customization of transaction categorization with the help of an accountant for business-specific needs.

Utilization of tags and memos to enhance transaction searchability and clarity.

Introduction to creating rules in QBO for automatic transaction categorization.

Creating and customizing invoices in QBO for customer billing.

Adding new products to QBO and setting item types for inventory management.

Explanation of sales tax handling within QBO and its automatic calculation on invoices.

Enabling customer payment options in QBO, including Apple Pay and credit cards.

Managing vendor payments through the bills section in QBO.

Uploading and processing vendor invoices in QBO for payment scheduling.

Overview of QBO's sales tax tracking features for tax compliance.

Accessing and customizing various financial reports in QBO for better decision-making.

Highlighting the profit and loss report for tracking business performance over time.

Use of balance sheet reports to assess the financial health of the business.

Sales and customer analysis through specific QBO reports for business focus.

Vendor expense analysis to identify potential cash flow issues.

Conclusion on the comprehensive financial management capabilities of QBO.

Transcripts

Imagine you've just started  your first small business,  

but you don't have a handle on your finances.

It's absolutely nerve-racking not knowing how  much money is coming in and how much is going  

out. In this video, we'll learn how to set  up QuickBooks Online so you don't have this  

problem. And we'll do it as a small business  owner with no accounting knowledge required.

With QuickBooks Online or what I like to call QBO,  

you can track your expenses and  your income, invoice your customers,  

pay your bills, manage your taxes, and  view reports for better financial planning.

Let's dive in. To get QBO, head to the  following website. You can click on the  

card in the top right, or I've included  a link in the description below. First,  

let's scroll down and select our plan.

Now, if you're the only person  managing your company's finances,  

you can get all the core functionality  in simple start. If you need one or two  

employees helping you out, then you  need to look at Essentials or Plus.

Plus is also useful if you have inventory  to manage and you don't have a solution  

yet. Advanced is definitely for  more medium-sized businesses.

Because you can get all the core functionality we  mentioned earlier in simple start, I'm going to  

choose that plan. When you sign into QBO for the  first time, it'll ask you a number of different  

questions about your business to personalize your  experience. Then you'll land here, your home base,  

from which you can do a number of different things  in the product, like manage your transactions,  

make sales, pay your vendors, and so on. We'll  get to all of those, but the number one thing  

you need to start with is to connect your credit  card and bank account. So, we'll start there in  

the transactions view. From here, let's click  connect account. Next, type in the name of your  

bank account or your credit card. Once you find  your financial institution, you can click on it  

and sign in to import your transaction history  into QBO. You should do this for every credit  

card and bank account that you use with your  business. After you connect your accounts, you'll  

land here on the transactions page. All of these  transactions are for my donut shop, David's Donut  

Den. Now I need to help QBO understand what these  transactions are by assigning them to categories.

This is important because it helps me with  budgeting, accurate financial reporting,  

as well as proper tax compliance.  Let's start with the first transaction.

Now, this was an event that we catered for the  Kevin Cookie Company. And there's a couple of  

things that we need to tell QBO about. The  first is the name of the customer. Well,  

it's the Kevin Cookie Company, and I already  have them in my list. But in case I didn't,  

I could select add new customer and input all  of their information right from this page.

Next, I need to categorize the  expense. When you start in QBO,  

you'll have a limited set of categories to  work from. I highly recommend that you talk  

with an accountant to make sure that you've got  the right set of categories for your business.  

Every business can be a little bit different in  how they classify different types of income and  

different types of expenses. For now, I'm  just going select sales of product income.

Next, there are two other things  you can customize. The first is  

tags. Tags are useful when you want  to have a way to search for specific  

types of transactions more easily in  the future. You can also use it to  

slice and dice your reporting in ways  that QBO wouldn't know about natively.

Next, you can also set the memo.

Sometimes when your bank or your credit card  brings transactions into QuickBooks, it's not  

exactly clear what that transaction is for. So you  can add some clarifying information, for example,  

that this is a catering event, so that anybody  who goes back to this transaction in the future  

will understand what it's for. When you're done,  you can click on confirm and the transaction is  

categorized. Next, let's tackle an expense  transaction. Here, I've got a line item for  

paper cups, which I purchased from Carla's Cups.  Just like before, I need to select the customer  

or the vendor. This time it's the vendor, so I'm  going to select Carla's Cups right from this list.

Next, I'll select the category. This one  falls under supplies and materials for me,  

so I'm going to select that category.

I can also type in tags or change the memo,  just like before. Now this time, before I select  

confirm, I know that paper cups is a recurring  expense, and I don't want to have to set this  

up every single time a new expense comes in for  paper cups. So, I'm going to click on create rule  

to handle this for me automatically. Rules are  a simple but powerful tool in QBO. They help you  

find transactions that match specific criteria  and then automatically categorize them for you.

Let's get started and do this for paper cups.  So first, I'll set a rule name and then look at  

the criteria that QBO has selected. You'll see  that it's already set that when the description  

contains paper cups, this rule fires. And then at  the bottom, it's assigning the transaction type,  

the category we just set, the vendor, and then all  the other fields that we just looked at as well.

Finally, there's one little setting here that's  important to pay attention to. When it's checked,  

every transaction that matches this rule  will be automatically categorized and  

confirmed for you. But if you want to still  review that the categorization is correct,  

you can uncheck this and then click save.

Now you see that Carla’s Cups is there, not  just for the transaction we just looked at,  

but also for the same paper cups  transaction that happened last week,  

and I can click confirm right here  for both of these transactions. Next,  

I'm going to handle the rest of my transactions.  Now that I've categorized all of my transactions,  

it's time to bring in some dough  by invoicing our customers. So,  

I'm going to click over in the sales, invoices,  and we'll get started. Click create invoice.

So, it turns out that Kevin Cookie  Company loved our donuts so much the  

last time that they've asked us to  cater their next event as well. So  

let's start by targeting the Kevin  Cookie Company for this invoice.

And next we'll scroll down to the list  of products that we're providing for  

them. They really liked our baker's assorted  dozen. And when we click on this dropdown,  

you'll see that QBO has saved this line item  from the last invoice that we've created.

They've also saved the unit price.  And when I change the quantity,  

the total amount updates as well.

Now the Kevin Cookie Company also wants an  order of apple fritters. We don't have those  

in our inventory yet, but we're about to start  offering them. Let's add them to our product list.

First, let's set the name, Apple fritters.

And next we'll set the item type. Now  on the QuickBooks simple start version,  

we've got two options here. First is service,  which is used for any non-physical good. The  

next is non-inventory item, which just means  we're not tracking the inventory of this item  

within QBO. If we wanted to track inventory,  we have to use the plus or the advanced  

subscription. Because this most applies to our  Apple fritters, we'll choose non-inventory item.

Next, you can select a SKU if you have one,  and then you can select a product category.

Product categories are useful when you have many  different products that you need to organize,  

not just for yourself, but for your customers  as well. Scrolling down, we're in the sales  

section. The description is a customer facing  description of the product and the price / rate,  

that's the unit price. Now we charge a lot for our  Apple fritters, but people sure seem to love them.

Next, the income account. Remember back to when  we were categorizing our transactions and we had  

a list of categories to look through? This is  the same list. So now I can say that anytime  

someone pays for a set of Apple fritters, it  goes into the sales of product income category.

Next, if you have special sales tax handling rules  for this type of item, you can click on edit sales  

tax to set that category directly. Because there's  no special needs for Apple fritters specifically,  

we'll leave this as the default and click create  new. We know that they want five dozen Apple  

fritters, so let's change the quantity from  one to five, and you'll see again the total  

amount updates. We're also going to make sure  that we're charging sales tax for the baker's  

assorted dozen, and you'll see instantly that  QBO handles the sales tax calculation below.

Finally, if we direct our attention to  the bottom left, you'll see the customer  

payment options where we can enable  or disable different payment options,  

including Apple Pay, most major credit  cards, as well as direct bank transfer.

To set this up, you'll need to go through  a special process to make sure that you  

can accept payments into your bank account.  I'll take care of this later. For now though,  

the total amount is good. Let's send the  invoice. Here QBO gives you a chance to  

review everything that gets sent to your  customer, including the invoice link,  

any special text that you want to send, as well  as the line items of the specific invoice. If  

you want to make any specific tweaks, you  can edit them here on the left-hand side.

This all looks good to me though, so I'm  going to click send invoice. All right,  

so down below, you can see that we have our open  and outstanding invoice, and up above, we now  

have two different visuals which indicate both  the status of our unpaid and our paid invoices.

We've taken care of billing our  customers. Now let's make sure  

that our vendors are getting paid. We'll  head over to the expenses bill section.

Bills is valuable when you have  vendors issuing you invoices,  

and you need to stay organized and  make sure that they get paid on time.

Carla’s Cups has just issued us an  invoice for an upcoming order. So,  

let's add that to QBO and  make sure that they get paid.

In the top right, you can select add  bill, and then upload from computer.

I'll take the PDF of the invoice that Carla’s  Cups has sent me and upload it directly to QBO.

Now, QBO right now is trying to extract as much  information about the invoice from that document.  

And you'll see here that it does a pretty good  job of identifying the vendor as well as the  

bill amount. My job is to make sure that QBO  got the right information from the invoice. So,  

let's hover over this icon where it says bill  and check that the total amount, $20,000,  

matches the amount in the bill amount column on  the right hand side. These match. So I'm going to  

click create bill, and this allows me to pay it.  Next, I can click on unpaid bills and see that the  

bill is ready to go. It's due today, so I better  schedule the payment quickly. In order to pay  

bills through QBO, I do have to select an add-on  service. Luckily, there's a basic version which  

allows me five free direct transfers per month.  And I can also choose to send checks if I need to.

If you need additional services, the  premium and elite plans are also available.

I'm going to click choose plan. I'll go through  the process of setting up my bank account so I  

can pay this vendor directly. You can see the  invoices now in our paid list and we're done.

Next, let's touch on sales tax and how QBO helps  you stay organized when it comes to tax time.

We'll head over to taxes, sales tax. When we  created an invoice earlier, QBO automatically  

calculated the sales tax that was due. For  every invoice we create from here on out,  

QBO will do the same thing and will track to  what government agency that I owe that sales  

tax in case I do business outside of Washington  state. That way, when it comes to tax time, I know  

exactly how much I owe to what government agency.  Finally, we put in all this work to track our  

money in and our money out. Let's get something  out of QBO by looking at their reports. You can  

find them by clicking on reports in the main menu.  Now, there are a ton of different reports in here,  

so I'm going to cover my favorites and let you  explore the rest. The first up is the profit  

and loss report. This is so important for me to  be able to see what's going in and what's going  

out over a certain timeframe and also track  important financial metrics like gross profit  

and net income. You can customize these reports  in a number of different ways. Scroll up to the  

top to see all of your options. Now, I'm going to  choose one which I think is pretty interesting,  

which is comparing this year's performance  with last year's performance at the same time  

of year. So, I'll select compare another period,  previous year to date, and then hit run report.

And what do you know? It's infinite improvement  since last year. Mama always said that there was  

money in the donut business. Let's  go check out some other reports.

Here are a few other of my favorite  reports. First up is the balance sheet.  

This is a well-known financial report  which tracks your total assets and your  

total liabilities. It's a good way to see  the health of your business at a glance.

Next, it's always important to pay  attention to your sales. And sometimes  

you're interested in who are your best  customers or who are your best products,  

so you can focus your attention on them.  The sales by customer summary and sales  

by product or service summary will  help you identify those areas of need.

Finally, also important to pay attention  to your vendors. If you have a feeling that  

you're bleeding cash to one or more vendors, the  expenses by vendor summary will help you identify  

that and nip it in the bud if it's really  happening. And there you have it. Now you  

have all your financial data in one place. You can  bill your customers, you can pay your suppliers,  

manage your taxes, and view financial  reports to make great decisions about  

your business. If you learned something  today, please give us a like and don't  

forget to hit that subscribe button. This is  David signing out. I'll see you next time.