QuickBooks 2005: The Missing Manual

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A company file is where you store your company's records in QuickBooks, and it's the first thing you need to start working on in the program. You can create a company file from scratch or convert records previously kept in Quicken, but the most agreeable approach is to use a file that someone else created. If you've worked with an accountant to set up your company, he might provide you with a company file configured precisely for your business so you can hit the ground running.

If you must create your own company file, this chapter tells you how to use the QuickBooks EasyStep Interview to get started and points you to the other chapters that tell you how to finish the job. If you already have a company file, you'll learn how to open it and modify basic company information.

Here're the easiest methods for opening QuickBooks:

Figure 1-1: The Quick Launch toolbar (no relation to QuickBooks) keeps your desktop tidy.

Quick Launch toolbar. This toolbar (Figure 1-1) is the fastest way to open QuickBooks, and although it requires setup, it's well worth those few seconds.

The Quick Launch toolbar starts a program when you click its icon on the toolbar.

If you have a QuickBooks desktop shortcut, right-drag (that's dragging while holding down the right mouse button) the desktop shortcut onto the Quick Launch toolbar and then choose Copy Here to create a second shortcut on the toolbar. (If you're trying to clean up your desktop, choose Move Here to move the desktop shortcut to the Quick Launch toolbar.) You can also use the right-drag technique to copy or move a shortcut from the Start menu or in Windows Explorer.

If you don't see the Quick Launch toolbar, in the Windows taskbar, right-click an empty area, and then choose Toolbars

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Here're the easiest methods for opening QuickBooks:

Figure 1-1: The Quick Launch toolbar (no relation to QuickBooks) keeps your desktop tidy.

Quick Launch toolbar. This toolbar (Figure 1-1) is the fastest way to open QuickBooks, and although it requires setup, it's well worth those few seconds.

The Quick Launch toolbar starts a program when you click its icon on the toolbar.

If you have a QuickBooks desktop shortcut, right-drag (that's dragging while holding down the right mouse button) the desktop shortcut onto the Quick Launch toolbar and then choose Copy Here to create a second shortcut on the toolbar. (If you're trying to clean up your desktop, choose Move Here to move the desktop shortcut to the Quick Launch toolbar.) You can also use the right-drag technique to copy or move a shortcut from the Start menu or in Windows Explorer.

If you don't see the Quick Launch toolbar, in the Windows taskbar, right-click an empty area, and then choose Toolbars→Quick Launch. When a checkmark appears to the left of the Quick Launch menu entry, the appearance of the toolbar in the Windows taskbar should follow.

Desktop icon. If you requested during installation that QuickBooks create a desktop shortcut, double-click that shortcut to launch QuickBooks.
Programs menu. Without a desktop icon, you can launch QuickBooks from the Windows Start menu. Click Start, and then choose Programs→QuickBooks→QuickBooks Pro 2005.

The first time you launch QuickBooks, you're greeted by the Welcome to QuickBooks window. Later, if you close a company file, the No Company Open window appears, as shown in Figure 1-2. These two windows are nearly—but not quite—the same. The rest of this chapter tells you when and how to use each one.

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Keeping books requires accuracy, attention to detail, and persistence, hence the customary image of spectacled accountants hunched over ledgers. QuickBooks can help you keep your books without ruining your vision or your posture—as long as you start your QuickBooks file with good information.

The EasyStep Interview tries to make creating a company file as painless as possible, but the process isn't pain free. Indeed, the EasyStep Interview is much like a family reunion, where you're asked a lot of questions you don't know that you want to answer. Unlike the reunion, however, you can skip most of the Interview or return to it when you're better prepared for the interrogation.

Some parts of the Interview aren't too helpful; you keep clicking Next but never actually accomplish anything. In many cases, adding information to your company file is more effective using the windows and commands in QuickBooks itself. This section tells you when and how to use the EasyStep Interview as well as when it's better to bail out to work directly in QuickBooks.

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If you've just started a business and want to inaugurate your books with QuickBooks, your prep work will be a snap. On the other hand, if you have existing books for your business, you have a few small tasks to complete before you jump into QuickBooks' setup. Whether your books are paper ledgers or electronic files in another program, gather your company information before you open QuickBooks. Then, you can hunker down in front of your computer and crank out a company file in no time. Here's a guide to what you need to create your company file in QuickBooks.

To keep your financial history at your fingertips, you need every transaction and speck of financial information in your QuickBooks company file. But you know that you have better things to do than enter years' worth of checks, invoices, and deposits, so the comprehensive approach is practical only if you started your company quite recently.

The more realistic approach is to enter account balances and transactions that are open (unpaid invoices or bills you haven't yet paid) as of a specific date and from then on, add all new transactions in QuickBooks. In QuickBooks, the date you choose is called the start date and you shouldn't choose it arbitrarily. Here are your start date options and the ramifications of each:

QuickBooks comes with two sample files: one for a product-based business and the other for a service-based business. To experiment with QuickBooks features before you put them in production, in either the Welcome to QuickBooks window or the No Company Open window, click "Open a sample file" and then choose either "Sample product-based business" or "Sample service-based business." If you botch your experiment, you can always reinstall the sample files from the QuickBooks CD.

These files aren't suitable as your company file because they come with accounts, customers, vendors, and transactions such as checks, invoices, and purchase orders. Besides, QuickBooks sets the date to 12/15/2007, which makes transactions later than you or your vendors would like.

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You can create a brand new company file from either the Welcome to QuickBooks windowor the No Company Open window by clicking "Create a new company." The EasyStep Interview window opens to the Welcome screen with a charming digital rendition of a spiral bound notebook to put you at ease. As the number of tabs you can see in Figure 1-3 suggests, each step in the EasyStep Interview might be easy, but navigating through them could be a challenge. This section explains how to survive.

Each main section contains several subsections and each subsection contains several screens. As you click Next, QuickBooks takes you to the next screen, the next subsection, and the next section without you having to worry about where you are. The EasyStep Interview is meant for beginners who need instructions and explanations, so many of the screens contain information rather than questions. If you don't need assistance, click Next until you reach the screen with an actual Interview question. The instructions on the following pages of this book focus on the screens that require action on your part, but you'll also learn the things that are significant on the intervening instructional screens.

When a company file is open, you can open the EasyStep Interview by choosing File→EasyStep Interview. When you do so, QuickBooks fills in the fields in the EasyStep Interview with the information for the current company, which is great if you want to review and edit your company file information.

Figure 1-3: The tabs that hang off the right edge of the digital notebook are the main sections of the EasyStep Interview. In each main section, the tabs along the top of the notebook are subsections. As you click Next to move from screen to screen, you'll navigate across the top tabs from left to right. For example, in the General section, you progress from Welcome, through Company Info, Preferences, finally to Start Date.

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Perhaps you remember that several dozens of screens ago, QuickBooks created a Chart of Accounts. That Chart of Accounts is a framework based on the type of industry you chose. In this section of the EasyStep Interview, you can review the accounts that QuickBooks created for you and add more accounts if you need them. However, if you want to add more accounts—and you probably will—it's much easier to create accounts in the Chart of Accounts window, as you'll learn in Chapter 2.

In the Income & Expenses section, shown in Figure 1-8, you can type a name and choose a tax line, but you can't enter an account number. Creating accounts is much faster and more thorough in the Chart of Accounts window, as explained on page 31.

If you do decide to create accounts during the Interview, when you get to expense accounts, consider bypassing the More Details options and choosing the No Thank You option. If you choose More Details, QuickBooks displays several screens of information about expense accounts. Unfortunately, these screens waste your time if you know what you're doing and don't tell you enough if you're lost.

Figure 1-8: The EasyStep Interview asks you for an account name and a tax line. If you create accounts in the New Account dialog box as described on page 37, you can also enter a description, a note, a QuickBooks account number, a bank account number, and more.

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The Income Details section asks you questions about how you receive payments and whether you issue statements, and then immerses you in creating items (the grist that feeds the contents of your invoices and other sales forms). Do yourself a favor and answer No each time QuickBooks asks if you want to set up some type of item.

The What's Next section starts with several suggestions for what you might do next (after a well-deserved break). For example, you might create a backup copy of the company file you just created, set up the other logins and passwords for your colleagues, or sign up for one of Intuit's payroll services. As you click Next, QuickBooks steps through one screen for each suggestion with further information about how to do those things. Here are the tasks that QuickBooks suggests and where to find more information about accomplishing them in this book:

Create a backup copy. See page 160.
Enter your historical transactions. For invoices, see page 184; for bills, see page 266, for payroll, see page 303.
Set up your users and passwords. See page 547.
Customize your forms. See page 534.
Set up your 1099 tracking. See page 393.
Sign up for Intuit Payroll Service. See page 304.
Visit our QuickBooks web site. See page 569.
Order QuickBooks checks and forms. See page 290.

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The Opening Balances section asks you about how much your customers owe you, how much you owe your vendors, and how much money you have in accounts that appear on your balance sheet (credit cards, loans, bank accounts, and so on). Unless you desperately need to pass the time, choose No when QuickBooks asks if any customer owed you money or you owed money to any vendors as of the start date. Like creating accounts, creating customers and vendors is much easier and more thorough outside the EasyStep Interview. To learn how to create customers, see page 47. For information on setting up vendors, see page 104.

If you enter a customer balance during the EasyStep Interview, QuickBooks creates one invoice for the entire customer balance. Then, when you receive a payment, QuickBooks deducts the payment from that one invoice. You can't tell if the customer missed a payment, paid an invoice late, or paid the wrong amount. Unless you've got stacks of invoices to enter, consider skipping this section of the EasyStep Interview and recreating each unpaid invoice, as described on page 221. By creating invoices with details such as dates and items sold, you can apply payments to the correct invoices and track what you've sold in the past.

QuickBooks also gives you an opportunity to set opening balances for asset accounts (things you own), liability accounts (money you owe), and equity accounts (the difference between how much you own and owe). If you collected all the paperwork for your company as described on page 14, you can create these accounts with their opening balances in the Chart of Accounts window, as described on page 37.

After the last What's Next screen, you'll see the Finishing Up screen. At long last—the final page of the EasyStep Interview. Before you click Leave to exit the EasyStep

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"Open an existing company" appears in both the Welcome to QuickBooks window and the No Company Open window. When you click this button, the Open a Company dialog box appears and you can double-click the name of the company file you want to open. However, the fastest route to opening your company file is (in the No Company Open window) double-clicking one of the file names in the list of recently opened files, as shown in Figure 1-9.

Figure 1-9: When you select a file name in this list, QuickBooks tries to display its folder path. But unless you store your company files in a top-level folder, you won't likely see the entire pathname. QuickBooks tries to store company files in the same folder as the software. But backups are much easier if you store your company files in dedicated folders.

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If you're like many small business owners, your accountant probably recommended that you make the leap from tracking your business in Quicken to using QuickBooks. Quicken doesn't report your business performance in the way that most accountants want to see, nor does it store your business transactions the way QuickBooks does. If you want the conversion to proceed as smoothly as possible, do some cleanup in your Quicken file first.

For example, you have to make sure that your accounts, memorized transactions, online banking accounts, and customer names are consistent and unique. In addition, you need complete reports of your past payroll because Quicken payroll transactions don't convert to QuickBooks. Intuit has published a detailed guide to preparing for a Quicken conversion, which is available at www.quickbooks.com/support/pdf_files/quickenconversion2004.pdf.

When your Quicken file is ready for QuickBooks prime time, in the Welcome to QuickBooks window, click Convert from Quicken. This option doesn't appear in the No Company Open window.

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In the No Company Open window, you'll see "Restore a backup file." Backup files are the answer to the adrenaline rush you get when you do something incredibly stupid with your company file or your hard drive crashes. To learn how to create backup files in the first place as well as how to restore them, see page 160.

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In the EasyStep Interview, QuickBooks extracts the basic information about your company in small chunks spread over several screens. After your company file exists, you can edit any of this information in one dialog box, as illustrated in Figure 1-10. Remember, the legal name and address are the ones you use on your federal and state tax forms. To open this dialog box, choose Company→Company Information.

Figure 1-10: Some company information changes more often than others. For instance, you might relocate your office or change your phone number, email, or Web site. However, information such as your legal name and address, the Federal Employer Identification Number, and your choice of business type (corporation, sole proprietor, and so on) usually remains the same.

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If you've just begun to run a business or keep books, all this talk of credits, debits, and accounts could have you flummoxed. Accounting is the cross between mathematics and black arts that records and reports the performance of an organization. The end result of bookkeeping and accounting is a set of financial statements (page 371), but the starting point is the Chart of Accounts.

In accounting, an account is like a bucket of money. When you earn money, you document those earnings in an income account. When you buy supplies for your business, that expense shows up in an expense account. If you buy a building, its value ends up in an asset account. Accounts come in a variety of types to reflect whether you've earned or spent money, whether you own something or owe money to someone else, plus a few other financial situations. The Chart of Accounts isn't actually a chart; it's a list of all the accounts you use to track money in your business.

Neophytes and experienced business folks alike should be relieved to know that no one has to build a Chart of Accounts from scratch in QuickBooks. This chapter explains how to acquire a ready-made Chart of Accounts for your business and what to do with it once you've got it. If you want to add or modify accounts in your Chart of Accounts, you'll learn about that, too.

The easiest—though probably not the cheapest—way to obtain a Chart of Accounts is to get one from your accountant. Accountants understand the accounting guidelines set by the Financial Accounting Standards Board (FASB, which is pronounced Fazbee, is a private-sector organization, but it sets standards with the SEC's blessing). When your accountant builds a QuickBooks Chart of Accounts for you, you can be reasonably sure that you have not only the accounts you need to track your business, but that those accounts conform to accounting standards.

Don't worry too much about the cost for your accountant to build a Chart of Accounts in QuickBooks. Your accountant won't startfrom scratch either. Many financial professionals maintain spreadsheets of accounts and build a Chart of Accounts by importing a customized list of accounts into QuickBooks.

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The easiest—though probably not the cheapest—way to obtain a Chart of Accounts is to get one from your accountant. Accountants understand the accounting guidelines set by the Financial Accounting Standards Board (FASB, which is pronounced Fazbee, is a private-sector organization, but it sets standards with the SEC's blessing). When your accountant builds a QuickBooks Chart of Accounts for you, you can be reasonably sure that you have not only the accounts you need to track your business, but that those accounts conform to accounting standards.

Don't worry too much about the cost for your accountant to build a Chart of Accounts in QuickBooks. Your accountant won't startfrom scratch either. Many financial professionals maintain spreadsheets of accounts and build a Chart of Accounts by importing a customized list of accounts into QuickBooks.

If the account types you see in QuickBooks are unfamiliar, rest assured that they are standard types used in finance. Here's a quick introduction to the account types and what they represent:

Bank. An account that you hold at a financial institution, such as a checking, savings, or money market account.
Accounts Receivable. The money that your cus-tomers owe you from sources such as outstanding invoices or goods purchased on credit.
Other Current Asset.Things you own that you'll use or convert to cash within 12 months, such as prepaid expenses or pelty cash.
Fixed Asset. Depreciable assets are things that your company owns, which decrease in value over time, such as equipment as it wears out or becomes obsolete.

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Accountants and bookkeepers tend to refer to accounts by both numbers andnames. This section explains why you should set up naming and numbering standards—and suggests some rules you can follow—but it won't explain the meaning of all the different names you'll find in your Chart of Accounts. If you accept the accounts that QuickBooks recommends in the EasyStep Interview, your accounts already have assigned account numbers, as shown in Figure 2-1. You might think that lets you off the hook. By taking the time to learn standard account numbers and names, you'll find working with accounts more logical and you'll understand more of what your accountant and bookkeeper say.

Figure 2-1: Accounts that QuickBooks adds to your Chart of Accounts during the Ea-syStep Interview come with account numbers assigned. Accounts that you add to the Chart of Accounts during the interview, such as the Fuel and Maintenance accounts under Automobile Expense, don't have account numbers assigned. For this reason, you're better off adding the accounts you want from the Chart of Accounts window, described on page 37.

Companies reserve ranges of numbers for different types of accounts, the benefit being that you can identify the type of account by its account number alone. Business models vary, so you'll find account numbers carved up in different ways depending on the business. If you think about your personal finances, you know that you spend money on lots of different things, but your income derives from a precious few sources. Businesses and nonprofits are no different. You might find expense accounts using numbers anywhere from 5000 through 9999, as shown in Table 2-1.

During the EasyStep Interview, any accounts you add to the QuickBooks account list won't have assigned account numbers. After you complete the interview and open your QuickBooks file, be sure to add any missing account numbers, as described on page 41.

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The different types of accounts represent dramatically different financial animals, as described in the "Making Sense of Account Types" box. The good news is that accounts of every type share most of the same fields, so you have to remember only one procedure for creating accounts.

If you look closely at the Chart of Accounts list in Figure 2-1, you'll notice that accounts fall into two main categories: those with balances and those without. If you're really on your toes, you might also notice that accounts with balances are the ones that appear on the Balance Sheet report. Accounts without balances appear on the Profit & Loss report. To learn more about financial statements and the accounts they reference, see page 371.

After you've had your business for a while, you won't add new accounts very often. But you might need a new account if you start up a new line of income and want a new income account, take on a mortgage for your new office building, or want a new expense account for the ostrich infertility insurance you took out for your ostrich farm. The procedure for creating accounts is simple, which is a refreshing change from many accounting tasks:

Your company's travel expenses are sky-high and you want to start tracking what you spend on different types of travel, such as airfare, lodging, and limousine services. You could try creating reports that categorize expenses by vendor, but subaccounts are easier to use, and they produce more dependable results. Subaccounts are nothing more than further partitions within a higher level account (a parent account).

When you post transactions to subaccounts only, not the parent account, your reports show the subtotals for the subaccounts and a grand total for the parent, with the Travel account (number 6336) and its subaccounts Airfare (6338), Lodging (6340), and Limo(6342).

Subaccounts help categorize transactions with more precision, but they're indispensable for assigning similar expenses to different lines on a tax form. For example, the IRS doesn't treat all travel expenses the same. You can deduct only half of your meal and entertainment expenses, while other travel expenses are fully deductible. In the figure, Meals and Entertainment are separate subaccounts from Travel for this very reason.

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If you stick to your account numbering and naming standards, you'll have few reasons to edit accounts. Should you want to tweak an account name or description, adjust an account number to make room for new accounts, or change an account's level in the Chart of Accounts hierarchy, you can do so in the Edit Account dialog box.

You're not likely to change the Type field, unless you chose the wrong type when you created the account. If you do want to change the account type, back up your QuickBooks file first (see page 160), in case the change has disastrous effects that you didn't anticipate. QuickBooks has several restrictions on changing account types. You can't change account types under the following conditions:

An account has subaccounts.
You try to change an Accounts Receivable or Accounts Payable account to another account type, and vice versa.
QuickBooks automatically created the account, such as Undeposited Funds.

To modify an account, in the Chart of Accounts window, select the account that you want to edit and press Ctrl+E. In the Edit Account dialog box, make the changes you want and click OK when you're done.

If your company owns multiple copies of QuickBooks Pro, Premier, or Enterprise, no one else can access the QuickBooks file while you're editing accounts. To switch QuickBooks to single-user mode, ask others to exit QuickBooks. When everyone has logged off, choose File→Switch to Single-user Mode. After you complete your account changes, choose File→Switch to Multi-user Mode. Don't forget to tell your coworkers that they can log into QuickBooks again.

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Suppose you find multiple accounts for the same purpose lurking in your Chart of Accounts—Postage and Mail Expense, for example. Rather than punishing your QuickBooks experts, it's more productive to merge the accounts into one and then reiterate the account naming rules to everyone who creates accounts in QuickBooks. If you haven't gotten around to setting up an account naming convention, see page 36 for some guidelines.

When you merge accounts, QuickBooks sweeps all the transactions from both accounts into the account that you keep. Each type of account has a distinct purpose, so you can merge accounts only if they are the same type. As an experienced manager, you can imagine the havoc that merging income and expense accounts would cause in your financial statements.

If you find two accounts with similar names but different types, those accounts might not represent the same thing. For instance, a Telephone Ex. expense account probably represents what you pay for your monthly telephone service; the Telephone Eq. asset account might represent the big telephone switch that your mega-corporation owns. In this situation, the accounts should be separate, although more meaningful names and descriptions would help differentiate them.

Here's how to eliminate an extraneous account:

To open the Chart of Accounts window, press Ctrl+A. Then, in the Chart of Accounts list, select the name of the account that you want to eliminate and press Ctrl+E.

The Edit Account dialog box opens.
In the Edit Account dialog box, change the account number and name to match the values for the account you want to keep.

If you don't remember the account number and name for the account you want to keep, drag the Chart of Accounts window and the Edit Account dialog box so you can see both at the same time. If QuickBooks won't let you do that, you might have the One Window preference set. To change your window display to show multiple windows, choose Edit

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If you create an account by mistake, you can delete it. However, because QuickBooks drops your financial transactions into account buckets and you don't want to throw away historical information, you'll usually want to hide accounts that you don't use anymore. You don't delete your Nutrition Service account just because you've discontinued your nutrition consulting service to focus on selling your new book, The See Food Diet. The income you earned from that service in the past must remain in your records.

The records of past transactions are important, whether you want to review the amount of business you've received from a customer or the IRS is asking unsettling questions. Hiding accounts doesn't mean you withhold key financial information from prying eyes. When you hide an account, the account continues to hold your historical transactions, but account lists in QuickBooks no longer display it, so you can't choose it by mistake with a misplaced mouse click.

Hiding and reactivating accounts, demonstrated in Figure 2-5, also comes in handy when you use QuickBooks' pre-defined Charts of Accounts, explained on page 31. If QuickBooks overwhelms you with accounts you don't think you need, hide the accounts for the time being. When you find yourself saying, "Gosh, I wish I had an account for the accumulated depreciation of vehicles,"the solution might be as simple as reactivating a hidden account.

You can delete an account only if nothing in QuickBooks references it in any way. An account with references within QuickBooks is a red flag that deleting it might not be the right choice. If that red flag isn't enough to deter you, the sheer tedium of removing references to an account should nudge you toward hiding the account instead. If you insist on deleting an account, here are the conditions that prevent you from doing so and what you must do to remove the constraints:

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You might be fond of strutting around your sales department proclaiming, "Nothing happens until somebody sells something!" As it turns out, you can increase your self-satisfaction by quoting that tired adage in your accounting department, too. Whether you sell products or services, the first sale to a new customer can initiate a flurry of activity, including creating a new customer in QuickBooks, assigning a job for the work, and the ultimate goal of all this effort—invoicing your customer (sending him or her an invoice, which shows the services and products that you sold and how much the customer owes) to collect some income.

The people who buy what you sell have plenty of nicknames: customer, client, consumer, patron, patient, purchaser, donor, member, shopper, and so on. QuickBooks throws out the thesaurus and applies one term, customer, to every person or organization that buys from you. To be precise, a customer in QuickBooks is a record of information about your real-life customer. QuickBooks takes the data you enter for customers and fills in invoices and other sales forms with your customers' names, addresses, payment terms, and other information. If you play it safe and define a credit limit, QuickBooks even reminds you when an order puts customers over their limits.

To QuickBooks, a job is simply a record of a real-life project that you agreed, perhaps begged, to perform for a customer—remodeling a kitchen, designing an advertising campaign, or tracking down the safety deposit box that matches your customer's key. Some organizations don't track jobs, and if your company is one of those, you don't have to create jobs in QuickBooks. For example, retail stores sell products, not projects. Even consultants who usually work on projects sometimes work on retainer, which provides a steady income that isn't related to one specific project. In these situations, you simply create your customers in QuickBooks and move on to invoicing them for their purchases without assigning the income to a job.

Regardless of how your organization works, customers and jobs are inseparable in QuickBooks. The New Customer dialog box and the Edit Customer dialog box, which you'll meet in this chapter, both include tabs for customer information

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QuickBooks doesn't care if you create customers and jobs without any forethought, but you should take the time to set them up properly. Your ability to report and analyze your financial performance the way you want rests in part on how you configure your QuickBooks customers and jobs. For example, customer and job types help you produce a report of kitchen remodel jobs that are in progress for residential customers. With that report, you can order catered dinners to treat those clients to customer service they will brag about to their friends. With the handy <Add New> menu command in every drop-down list of customer and job types, QuickBooks gives you just-in-time customer and job type creation. Spending a few minutes up front planning your customers and jobs in QuickBooks can save you hours of effort when you want to get information about your business.

Categorizing your customers and jobs is one way to slice and dice your business reports to show where your business is doing well and who needs closer attention. In a construction company, knowing that your commercial customers cause fewer headaches and that doing work for them is more profitable than working for residential customers is a strong motivator to focus your future marketing efforts on commercial work. Organize your customers and jobs by type, and you'll easily get some insightful analysis.

Section 3.1.1.1: Creating types of customers

Business owners often filter reports and add results by category. Over the years, Home Depot has expanded its business to include sales to professional contractors, so Home Depot probably wants to know how much it sells to homeowners versus construction contractors. Home Depot is too large a company to use QuickBooks, but a small building supply business could designate customers as Homeowner or Contractor to obtain this same comparison. Customer types appear as entries in the aptly named Customer Type List, shown in Figure 3-1.

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If bringing in business were as easy as creating customers in QuickBooks, sales of QuickBooks would propel Intuit past Microsoft as the software company with the largest market capitalization. Face facts—you still have to convince customers to work with your company. But once you've cleared that hurdle, you create customers in QuickBooks so you can charge for the products you sell and the services you deliver.

If you're a big fish in the small business pond, limitations on the number of names can cause problems. In QuickBooks Professional and Premier Editions, any single name list, such as the Customer:Job or Vendor lists, can contain only 10,000 names. However, the total number for all name lists combined (customers, vendors, and products) is 14,500. To make matters worse, once you reach the limit, not only can you not add more names, deleting existing names doesn't even free up slots in the names list.

Here are a few techniques you can use to avoid this maddening behavior:

Conserve customer names. You can prevent excessive consumption of these precious customer names by creating one customer to represent many individual sales. For example, you can aggregate all your cash sales under one customer, called Cash Sales. Mind you, by doing so, you can't produce sales reports by customer name, although you can add the buyer's name to Memo fields in sales forms to maintain some documentation of who purchased what.
Keep an eye on how many names you have. In QuickBooks, press F2 at any time to view the number of entries you have in each list.
Upgrade. If there's no getting around your company's gluttony for names, QuickBooks Enterprise Edition bumps the total name list limit to 29,000 names. Caveat emptor: if your company already has more than 29,000 customers, congratuations But honestly, you shouldn't be reading this book. You need an accounting program other than QuickBooks.

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Chances are you store customer information in other applications besides QuickBooks, such as a customer relationship management program to track customer interactions or a word processing application to produce mailing labels. Re-entering the same information more than once is not only mind-numbingly tedious—it wastes time you should spend on more important aspects of your business, such as selling, managing cash flow, or finding out who has the incriminating pictures from the Christmas party. If the other programs you use support delimited text files, you can avoid data entry grunt work by transferring data to or from QuickBooks. Delimited text files are nothing more than files that separate each piece of data with a comma, a space, a tab, or other character. The same kind of information appears in the same position in each line, so other programs can pull the information into the right places.

Data is easier to examine when you view an export or import file with a spreadsheet program, such as Excel, as described in Chapter 21. Most programs can open or import text delimited files, but Excel is a master at reading the records stored in these text files. When you export data to a text delimited file and then open it in Excel, the program pigeonholes the data into cells in a spreadsheet. Because records and fields appear in rows and columns respectively, you can quickly identify, select, and edit the data you want.

Furthermore, in spreadsheet programs, you can eliminate entire rows or columns with a few deft clicks or keystrokes. A detailed explanation of opening a delimited text file with Excel starts on page 518, but the following steps should be enough if you are at least familiar with Excel:

Choose File→Open as you would to open any worksheet.
The delimited text files won't appear in the Open dialog box at first, because they're not Excel worksheets. Delimited text files come with a range of file extensions (the three characters that follow the last period in the file name. Because of this, the only way to be sure to see your delimited file is—in the Files of type drop-down list—to choose All Files (*.*).

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Project-based work means that your current effort for a customer has a beginning and an end, although it sometimes seems like your project will last forever. Whether you build custom software programs or skyscrapers, you can use job tracking in QuickBooks to analyze financial performance by job. If you sell products to retailers and don't give a hoot about job tracking, you can simply invoice your customers for the products and services you sell without ever creating a job in QuickBooks. On the other hand, suppose you want to know whether you're making more money on the mansion you're building or the bungalow remodel. What's more, you want to know the percentage of profit you made on each project. These financial measures are the reason you create jobs for each project you want to track.

In QuickBooks, jobs connect to customers like baby possums clinging to their mothers. A QuickBooks job always belongs to a customer. In fact, the Add Job command is disabled on the QuickBooks menus if you haven't selected a customer.

Although job tracking is not available in QuickBooks Basic Edition, customers still appear on the Customer:Job List. The New Customer dialog box still includes the Job Info tab so you can add one set of job information for each customer. What you can't do is create jobs and produce reports that show performance for each job you do for a customer.

Because a job belongs to a customer, you must first create a customer before you can create any of that customer's jobs. Follow these steps to add a job to an existing customer:

To open the Customer:Job List, choose Customers→Customer:Job List.
Right-click the customer you want and choose Add Job from the shortcut menu.

The New Job dialog box appears.

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As long as you enter a customer name when you create a new customer, you can leave the remaining customer fields blank. You can change customer information at any time to add more data or to change what's already there. Similarly, you can create a job with only the job name and come back later to modify or add more. To modify a customer or job, open the Customer:Job List window and then double-click the customer or job that you want to edit.

If double-clicking isn't your favorite action, select the customer or job you want to edit and then press Ctrl+E.

In the Edit Customer dialog box, you can make changes to all customer fields—that is, all except for the customer balance. QuickBooks pulls the customer balance from the opening balance (if you provide one) and any unpaid invoices for that customer. Once a customer exists, creating invoices (see page 184) is your only option for reproducing the customer's current balance. Similarly, all the fields in the Edit Job dialog box are editable, except for the customer balance. Remember that the changes you make to fields on the Address Info, Additional Info, Payment Info, and Job Info tabs apply only to the job, not the customer.

Unless you have revamped your naming standard for customers, don't edit the value in a customer's Customer Name field. Because the Customer Name field uniquely identifies your customers, you might customize QuickBooks based on the Customer Name field. For example, if you created a customized report filtered by a specific customer name, the report isn't smart enough to take on the new customer name. If you do modify the Customer Name, make sure to modify any customization to use the new name.

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Table of Contents

Section 3.1.1.1: Creating types of customers