This video shows you:

• How to set up your PayPal account in QuickBooks.
• How to apply PayPal payments to customer invoices.
• How to record PayPal fees.
• How to record payments from your PayPal account to vendors.
• How to record deposits into your checking account from PayPal.

How to Set Up a PayPal Account in QuickBooks from Kelly Totten on Vimeo.

*Click this button on the video to expand to full screen: 

I have clients using QuickBooks for Mac.  I like to work from my office and they like to keep QuickBooks on their machine.  Of course, I can take control of their machine with any number of applications and do my work directly on their machine.

An easier, free method is to simply share the data file using a Dropbox.  With this method, each computer will have its own copy of QuickBooks for Mac and will simply open the data file stored in the Dropbox.

A caveat: The QuickBooks file can only be used by one person at a time.  If it’s open and in use by more than one person, you’ll end up with “conflicted file” copies.  I solve this by letting my clients know which days/hours I’ll be updating their books.

There are a couple of ways to handle customer deposits in QuickBooks.

Method 1: Receive Payment Without Applying to an Invoice

If the customer hands you a check you, can simply receive the payment without applying it to an invoice. This will create a credit on their account. While this method will allow you to apply the credit to the project invoice, it usually isn’t the best way to handle the situation.

Method 2: Utilize Customer Deposit Liability Account

I prefer the customer deposit liability account method. The correct accounting treatment of a deposit is to treat it as a liability (you haven’t earned the revenue yet, so you’re just holding their money for now).

To use this method you’ll need to:

• Setup a current liability called Customer Deposits
• Setup an “Other Charge” item called Deposits that points to the “Customer Deposits” account you just setup.

If the customer hasn’t paid you yet, you can issue an invoice using the Deposits item (Result: Debit Accounts Receivable, Credit Customer Deposits). If the customer already paid you, you can issue a sales receipt to skip the receive payment step (result: Debit Cash, Credit Customer Deposits)

When the revenue is earned, generate another invoice. On the first line(s), you’ll use your normal item for billing your customers. This line will be for the full amount of earned revenue. On the next line, use the Deposits item. Enter the amount of the deposit as a negative (only up to the amount of the revenue being invoiced). (The Result: Debit Customer Deposits, Credit Revenue, Debit Accounts Receivable for the difference between the deposit paid and revenue earned).

You can always run a transaction detail report for the Customer Deposits account and total by Customer/Job to see what the remaining balance on hand is for each customer. Reconciling this account should become a part of your monthly close process.

~Kelly

I’ve been supporting the accounting needs of mac users for quite some time. Until last week, I was using my mac mini to help those clients. I foolishly bought a mac mini because I already had a pc laptop and, like it or not, most accounting is done on the pc platform.  And I didn’t want to spend the money fully transition.

Last week, a windows update corrupted my computer. I don’t know what’s wrong with it. It has numerous issues and I’ll have to reinstall the operating system (man, I hate Vista). To get up and running quickly, I transitioned to the mac mini.

I LOVED it (except being chained to my desk and only having one monitor). I said “to heck with the budget, I NEED a MacBook”. Seriously. I know, I’m an accountant. I reason that I’m much more efficient on one machine rather than two. Plus cut and paste between the virtual machine and the mac is awesome!

I’m all set up on the new machine and loving it. I’m running 3 computers on one machine to solve all of my clients’ needs. Here’s the run down:

• MacBook: QuickBooks for Mac 2007, 2009, MYOB AccountEdge 2008, 2009
• Virtual Machine (Parellels/Windows XP): QuickBooks Premier Accountant 2009 (with numerous other years available, if the need arises)
• Real Time Data: Hosted Windows QuickBooks desktop, currently running QuickBooks 2008 & 2009  (this works better on my mac, than it did on my PC)
• Of course, QuickBooks online too.

Yes, I’m still working in Windoze a lot.  I can’t get around that, but at least I’m working on my Mac as much as possible.

~Kelly

Want to know my biggest beef with QuickBooks?  Well, really with the Intuit, “the makers of QuickBooks”.  It’s the marketing.  They constantly tell business owners that no accounting knowledge is necessary.

Don’t get me wrong, I think a lot of the data entry could and should be done by administrative clerks or do it yourself business owners.  I just think it’s a huge mistake to run a business based on incorrect financial information.  If you don’t know accounting, there’s a pretty good chance you’re not getting accurate, helpful information from your books (garbage in, garbage out).

In this economy, business owners need to stay on top of their financials.  That means actually using the data you entered into QuickBooks.  However, if the QuickBooks data is wrong, you’re using bad information to make decisions.

If you don’t know accounting, do yourself a favor and have someone knowledgeable in accounting review your books every month. You don’t *have to* know accounting to use QuickBooks, but you do need accurate books to manage your business.

~Kelly

Finally!  Mac users can use QuickBooks online.  Previously, QuickBooks Online only worked with internet explorer.  This week, Intuit finally released the online version that works on Firefox and soon will work with Safari.  Hip Hip Hooray!  There’s now a multi-user QuickBooks version for mac users.

FreshBooks® is an online invoicing system made for small businesses.  I’ve been using FreshBooks for 8 months and I LOVE it.  It really can make your business life easier.

I work with small business owners to help them get their accounts receivable under control.  Very often, there is a stack of past due accounts receivable.  I immediately question what’s happening.  Generally, the answer is “I haven’t had time to follow up with them.”  I immediately get to work on the follow up calls.

Most of the time (at least 80%), the customer responds “I never got that invoice”.  There are a couple of ways FreshBooks will stop that response or at least give you ammunition.  First, when you use FreshBooks to email your invoices, your customer has to click a link to view it.  On your admin panel, you can see who logged in and what invoices they viewed (this shows up on your dashboard, so you see it immediately upon logging in).  You will know if your customer is lying to you.

The second feature that will curb the “never got it excuse” is my absolute favorite FreshBooks feature.  It isn’t good business practice to collect on accounts that aren’t past due.  Generally you wait 30 days or so (if you’re monitoring your receivables closely, longer if you’re not) and then finally contact your customer only to find out they haven’t even started the processing.  So you send the invoice again and then wait even longer to get the invoice through their system.

I don’t have that problem anymore.  Now, I have clients calling me before 30 days to make payment arrangements or tell me when the payment will be made.  I’m often surprised to get those calls.  Why does that happen?  My invoice terms are due upon receipt, but I allow a 30 day grace period before finance charges begin.  I have FreshBooks set up to send automated reminders at 15, 25, and 45 days past due.  The first email is a simple reminder, the following emails get more formal.  It is rare for an invoice to get to 45 days without the client contacting me and I haven’t wasted one minute of my time harassing them.  I do state in those emails that its an “automated” notice, so they don’t think I’m personally nagging.

If anyone gets to 45 days, I get personally involved.  Since there are few that get to that point, I have seriously reduced the amount of time I have to spend on the collections side of cash management.  Before FreshBooks, I never had time and didn’t feel right asking about an invoice that was still in the grace period.  An automated notice to make sure it’s on their radar seems like a better way to go, at least to me.

On top of all that, my clients can login and view their account and history whenever they want without calling.  The invoices look great too.  My clients seem to like the system and no one is offended by the messages the system sends.

My one wish for FreshBooks that would make it the killer application?  Full QuickBooks integration.  FreshBooks is NOT a QuickBooks replacement.  It’s an invoicing system, not an accounting system.  Invoicing is only one piece of the process, and FreshBooks does it REALLY well.  It doesn’t, however, give you the rest of the accounting tools you need to manage your business for success.  I hope someone introduces a way to automatically sync with QuickBooks soon.  Until then, I’m stuck making monthly journal entries to update my QuickBooks file.

~Kelly

CrackerJack Accounting – Bookkeeping & Accounting for Creative Small Business Owners

CrackerJack Coaching – Coaching, Training, & Mentoring for Creative Small Business Owners

1. There are some great tools in there…if you can find them.
2. Having the tools in there doesn’t mean you know how to use them.
3. Every once in a while, you have to clean it up.
4. You don’t want to be embarrassed when someone looks inside.
5. Some people shouldn’t be allowed in there.