Creating a Company File

Keeping books requires accuracy, attention to detail, and persistence—hence the customary image of spectacled accountants scanning row after row of numbers. QuickBooks can help you keep your books without ruining your eyesight—as long as you start your company file with good information. If you want to practice with QuickBooks, you can experiment with a sample file, as the box below explains.

Experimenting with a Sample File You don't have to use your real company file to test out QuickBooks features you've never used. The program comes with a couple of sample files: one for a basic product-based business, and one for a basic service-based business. And if you have QuickBooks Premier, you can experiment with several other sample files for more specialized pursuits like contracting, consulting, manufacturing, and so on. To experiment with QuickBooks features before you put them into production, in the No Company Open window, click “Open a
sample file,” and then choose the one you want. (To display the No Company Open window, you have to close any open company files by choosing File→Close Company [or File→Close Company/Logoff if there's more than one user set up for the file]. If the QuickBooks Setup dialog box is open, close it, too.) Don't try to use one of these sample files as your actual company file. They come with accounts, customers, vendors, and transactions (such as checks, invoices, and purchase orders). Besides, QuickBooks sets “today's” date in these files to 12/15/2020 which makes transactions later than you or your vendors would like (although you can edit the values in date boxes).

QuickBooks makes it easy to create a company file from scratch. (The box on page 7 tells you how to find someone who can help you create one.) You can opt for a short and sweet process, which asks you for the bare minimum of info before it creates your file. Or you can use a wizard that guides you through the process with a series of questions that takes about 15 minutes to answer. The questions cover the basics of creating and customizing a company file to fit your business. QuickBooks needs to know some company information, the industry you're in, and the features you want to use. The program then sets your preferences and creates a few accounts (like basic income and expense accounts and your checking account). The box on page 16 lists additional setup tasks you need to perform to flesh out your company file—and where in this book to learn more about those tasks.

Options for Creating a Company File

You can create a company file in several ways, and the QuickBooks Setup dialog box—which opens automatically the very first time you start QuickBooks—is your ticket to all of them. If you don't see this dialog box, choose File→New Company (or click “Create a new company” in the No Company Open window). The dialog box takes up most of the screen, so you can stay focused on creating your company file.

The three basic approaches to creating a company file are covered by the QuickBooks Setup dialog box's two buttons:

Start Setup. This button is in pole position because it's the best option if this is your first time creating a company file. If you go this route, QuickBooks launches QuickBooks Setup and asks for a few bits of info at a time before moving to each new screen. If you stop filling in information before QuickBooks creates your company file, the program won't save any of the values you entered. So make sure you have at least 15 minutes to complete the first set of steps. Instructions for the basic setup begin on next tutorial.

Advanced Setup. If you've been around the QuickBooks block before, click the Other Options button and then choose this entry to launch the EasyStep Interview window, which asks for more information on each screen than the Start Setup approach does. If you need help during the process, you can always click the “Get answers” link at the top right of the window. You can also use Advanced Setup to go back and modify info you entered previously, whether you entered it using QuickBooks Setup or the EasyStep Interview.

Other Options. The other entries on this button's drop-down menu cover the rest of the bases. You can use it to open an existing company file or convert existing records that are in Quicken or another accounting program (page 16) for use in QuickBooks.

Note: If you use QuickBooks Accountant edition, you can create a company file  from   an existing file by choosing File→“New Company from Existing Company File.”

Whether you use QuickBooks Setup or the Easy Step Interview, you tell QuickBooks the basic 411 about your company, such as its name and tax ID. (If any of the fields confuse you, try clicking the “Help me choose” links or help icons (a white question mark within a blue circle) to the right of the text boxes in the QuickBooks Setup dialog box, or the “Get answers” link in the upper-right corner of the Easy Step Interview window.) The next section has the full scoop on the information you need to provide.

Using QuickBooks Setup

When you click Start Setup in the QuickBooks Setup dialog box, the program gets you going as quickly as possible by asking for the minimum amount of info (you can fill in the details later). To use it, choose File→New Company and then, in the QuickBooks Setup dialog box, click Start Setup. The “Glad you're here!” screen appears, and you can begin entering info. This section explains what the program needs to know to create your company file.

On the “Glad you're here!” screen, shown in Figure 1-2, you need to cough up only a handful of answers, but these responses are the foundation of many of the preferences that QuickBooks sets:

Business Name. Type the name you want to appear on invoices, reports, and other forms. (QuickBooks also uses the name you type here to name your company file.) Later on, you can specify your company's legal name.

Industry. Start typing your industry in this box (as shown in Figure 1-2) and see if QuickBooks finds a match. If not, to the right of this field, click “Help me choose” to see all your options. If you don't see an obvious choice in the Industry list, scroll to the bottom and choose either General Product-based Business or General Service-based Business.

FiGURE 1-2 QuickBooks' list of industries is robust, so chances are good you'll find one that's close to what your company does. You can start typing an industry like cater , and the program displays options that match what you've typed so far, such as the industry “Restaurant, Caterer, or Bar” shown here. Or you can click the “Help me choose” link to see all the industries the program offers.

Choose your industry carefully. QuickBooks adjusts its preferences and chart of accounts based on your choice to match how your business operates. For example, the program creates income and expense accounts for your type of business and automatically turns on features like sales tax and inventory if your industry typically uses them.

Business Type. The tax form you use depends on the type of business entity you have. This drop-down list contains the most common types, from sole proprietorships and partnerships to corporations and nonprofits. When you select a type, QuickBooks assigns the corresponding tax form to your company file. After you finish creating your company file, you can see the tax form the program selected by choosing Company→My Company.

Employer Identification Number (EIN). This box is for the federal tax ID number you use when you file taxes. You don't have to enter it now, but you'll need it come tax time. You'll use a federal EIN if your company is a corporation or partnership, you have employees, or fit a few other criteria (go to www.irs. gov to see if you need an EIN). Otherwise, your tax ID is your Social Security number or Individual Tax Identification Number (ITIN).

The Business Name, Industry, and Business Type boxes are the only ones that QuickBooks requires. After you fill them in, the Create Company button becomes active. However, you might as well fill in the remaining boxes with your business address and telephone number.

Click Create Company to open the QuickSetup dialog box, and then navigate to the folder where you want to save your file. QuickBooks automatically fills in the “File name” box with the business name you typed and sets the “Save as type” box to QuickBooks Files (*.QBW, *.QBA). Click Save to create your company file. A Working message box appears to show QuickBooks' progress in creating your file; you'll know it's finished when the “You're all set!” screen appears. Click the Start Working button at the bottom right to open the file in QuickBooks.

Using the EasyStep Interview

The EasyStep Interview also guides you through the setup process, but it gives you more control over setting up your company file than QuickBooks Setup's basic approach does. For example, you can provide more info about your company up front and choose which features to turn on.

To access the EasyStep Interview, choose File→New Company and then, in the QuickBooks Setup dialog box, click the Other Options button, and then, from the drop-down menu,  choose Advanced Setup. The “Enter your company information” screen appears. As you enter the following info, click Next to proceed to each new screen:

Name and contact info. The first screen wants to know the name of your company, its legal name, its tax ID, and your contact info. The “Company name” field is the only one that's required.

Industry. On the “Select your industry” screen, choose the industry closest to yours. That way, most of the settings the program chooses will be what you want.

Type of company. On the “How is your company organized?” screen, select the option for your business type. This setting determines which tax form, accounts, and tax form lines you'll use to prepare your business tax return.

First month of fiscal year. When you start a company, you choose a fiscal year. On the “Select the first month of your fiscal year” screen, QuickBooks automatically sets the “My fiscal year starts in” box to January because so many businesses stick with the calendar year for simplicity. If you start your fiscal year in another month, choose it from the drop-down list.

Administrator password. The administrator can do absolutely anything in your company file: set up other users, log in as other users, and access any area of the company file. Although QuickBooks lets you click Next and skip right past the “Set up your administrator password” screen, this is no time for shortcuts, as the box below explains. Type the password you want to use in both the “Administrator password” and “Retype password” boxes, and then keep the password in a safe but memorable place.

CREATING YOUR COMPANY FILE

After you set the administrator password and click Next, the “Create your company file” screen appears. (If you're new to QuickBooks, click the “Where should I save my company file?” link, which opens a Help Article dialog box that explains the pros and cons of storing company files in different places.)

When you're ready to create the file, on the “Create your company file” screen, click Next to wrap up the creation process by specifying the filename and location. QuickBooks opens the “Filename for New Company” dialog box, which is really just a Save As dialog box. Navigate to the folder where you want to store your company file. QuickBooks automatically sets the “File name” box to the company name you entered, and the “Save as type” box to “QuickBooks Files (*.QBW, *.QBA).” Here are some guidelines for naming and saving your company file:

• If you want to call the file something other than the company name you entered earlier in the interview, simply type a new name in the “File name” box. For example, you may want one that's shorter or that better identifies the company's records within.

• Consider storing your company file in a folder with the rest of your company data so that it gets backed up along with everything else. For example, if you're the only person who uses QuickBooks, you could create a Company Files folder inside your Documents folder. See page 747 for more about choosing a location for company files.

When you click Save in the “Filename for New Company” dialog box, QuickBooks may take a minute or so to create the new file. In the meantime, a message box with a progress bar appears. When the company file is ready, the “Customizing QuickBooks for your business” screen appears. Click Next to dig in.

CUSTOMIZING YOUR COMPANY FILE

Click Next on the “Customizing QuickBooks for your business screen” to see a series of EasyStep Interview screens that ask questions about your business. Your answers to these questions help QuickBooks decide which features to turn on, what to include on your Home Page, and so on. The interview displays “(recommended for your business)” next to the options that are typical for a company in your industry, as shown in Figure 1-3.

FiGURE 1-3 The EasyStep Interview sticks to the basics, so you'll have more setup to do later. As you step through the screens in this section, make a list of the features you're turning on (and the corresponding page numbers in this book) for reference. If you decide to change any of these settings later, Chapter 25 tells you how.

Here are some guidelines for answering the questions on the various screens:

The What do you sell? screen is where you tell QuickBooks whether you offer services, products, or both. When you choose one of these options, the program figures out which types of income accounts you need. If you select “Products only” or “Both services and products,” another screen later in the interview asks whether you want to track inventory.

The Do you charge sales tax? screen has only two options: Yes and No. If you're one of the unfortunate souls who has to navigate the rocky shoals of sales tax, select Yes. If you don't charge sales tax, select No. For detailed instructions on dealing with sales tax in QuickBooks.

On the Do you want to create estimates in QuickBooks? screen, choose Yes or No to turn the estimate feature on or off. If you prepare quotes, bids, or estimates for your customers and want to do so in QuickBooks , select Yes.

The Using statements in QuickBooks screen is where you tell the program whether you generate statements to send to customers. For example, your wine-of-the-month club might send monthly statements to its members. Or if you're a consultant, you could send invoices for work performed and then send a statement that summarizes the fees, payments, and outstanding balance.

The Using invoices in QuickBooks screen appears only if you chose No on the “Do you want to create estimates in QuickBooks?” screen. (If you chose Yes on that screen, QuickBooks automatically turns on the invoicing feature.) Select Yes to tell the program that you want to use invoices, which you probably do because invoices are the most flexible sales forms. If you answer No (if, for example, you own a restaurant), QuickBooks jumps to the “Managing bills you owe” screen.

If you answer Yes on the “Using invoices in QuickBooks” screen, the Using progress invoicing screen asks whether you invoice customers based on the percentage you've completed on a job.

The Managing bills you owe screen asks whether you plan to write checks to pay bills immediately (select No) or enter bills in QuickBooks and then pay them later (select Yes).

The Tracking inventory in QuickBooks screen is where you tell the program whether you keep track of the products you have in stock. This screen provides a few examples of when to track or bypass inventory, and page 96 has info about how to decide whether tracking inventory makes sense for your business.

Tracking time in QuickBooks is ideal if you bill by the hour or pay people based on the number of hours they work. In that case, select Yes on this screen to track the hours people work and create invoices for their time. Chapter 8 explains how to set up time tracking.

The Do you have employees? screen is where you specify whether you want to use QuickBooks' payroll and 1099 features. If you do, select Yes and turn on the appropriate checkbox(es). If you use non-Intuit services to run payroll or to generate contractors' 1099s, select No.

When you click Next on the “Do you have employees?” screen, you see the “Using accounts in QuickBooks” screen, and the progress bar indicates that you're almost done with the interview. Click Next to set these final options:

The Select a date to start tracking your finances screen summarizes what you learned about start dates on page 5. To start at the beginning of this fiscal year (which QuickBooks can figure out using the current calendar year and the starting month you select), choose the “Beginning of this fiscal year: 01/01/15” option. (The year you see listed depends on the current calendar year.) If you've decided to start on a different date, select the “Use today's date or the first day of the quarter or month” option instead. You can then type or choose any date you want in the box, such as the last day of the previous fiscal period.

The Review income and expense accounts screen (Figure 1-4) lists the accounts typically used by companies in your industry.

FiGURE 1-4 QuickBooks places a checkmark in front of the accounts that are typical for your industry. Click an empty checkmark cell to add an account that the program didn't select, or click a cell with a checkmark to turn that account off. You can also drag your cursor over checkmark cells to turn several accounts on or off.

When you click Next, you see a bright orange—but premature—“Congratulations!” You still have a few more steps to complete before you can open your company file. Click “Go to Setup,” and then read the next section.

Adding Details to Your Company File

After you create your company file with the EasyStep Interview, you'll see the “Get all the details into QuickBooks” screen, which is where you can perform additional steps, such as adding people you do business with, items you sell, and bank accounts.

If you want to dive into your work without QuickBooks' help on these steps, at the bottom right of the window, click Start Working and jump to page 25. If you want step-by-step guidance through these processes, click the Add buttons in these sections (if your lists already contain people and items, you'll see Add More buttons instead):

Add the people you do business with. Adding these folks is a snap. Click the first Add button, and then you can import names from your email program (Outlook, Yahoo, or Gmail), paste data from an Excel workbook, or enter info manually. If you select one of the import options and then click Continue, you'll see a table with the names from your email program, as shown in Figure 1-5.

FiGURE 1-5 Initially, QuickBooks selects the Skip option (the far-left column) for all the names. That way, you can select the option in the Customer, Vendor, or Employee column for each name you want to import to designate whether it's a customer, vendor, or employee. You can also select a cell with info in it (like a name or an email address) to edit the info within it.

Add the products and services you sell. When you click the Add (or Add More) button in this section, you first choose either the Service or “Non-inventory part” option, because you fill in different fields for each type of item. Select the Service option to set up services you sell or the “Non-inventory part” option to create products you sell (see page 95 to learn about products you keep in inventory), and then click Continue. Fill in the names, description, and prices, and then click Continue again to save your items.

Add your bank accounts. For bank accounts, you fill in the account name, account number, opening balance, and opening balance date.

Whether you finish or skip these additional steps, click Start Working to jump to the Home Page, which includes icons for the features that QuickBooks turned on during setup.