QuickBooks Contractors Edition

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Workshop Objectives

•To set up a new company file•To understand your chart of accounts•To understand how to generate and

read financial statements (Balance Sheet and Profit & Loss)

•To practice creating estimates•To understand various methods for

invoicing customers•To understand your job cost reports

By the end of this training, you should be able:

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Home Screen

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Setting up a new company file

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Exercise 1-1 Entering your company information

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Exercise 1-1 Select your industry

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Exercise 1-1 Select your business structure

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Exercise 1-1 Select the first month of your fiscal year

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Exercise 1-1 Set up your administrator password

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Exercise 1-1 Name and save your company file

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Exercise 1-1 Customizing QuickBooks for your business

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Exercise 1-1 What do you sell?

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Exercise 1-1 Do you charge sales tax?

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Exercise 1-1 Do you want to create estimates in QuickBooks?

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Exercise 1-1 Using sales receipts in QuickBooks?

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Exercise 1-1 Using statements in QuickBooks?

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Exercise 1-1 Using progress invoicing

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Exercise 1-1 Managing bills you owe

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Exercise 1-1 Do you print checks?

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Exercise 1-1 Do you accept credit cards?

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Exercise 1-1 Tracking time in QuickBooks

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Exercise 1-1 Do you have employees?

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Exercise 1-1 Using accounts in QuickBooks?

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Exercise 1-1 Select a date to start tracking your finances

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Exercise 1-1 Add your bank account

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Exercise 1-1 Enter your bank account information

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Exercise 1-1 Enter your bank account information

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Exercise 1-1 Review bank accounts

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Exercise 1-1 Review income and expense accounts

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Understanding your chart of accounts

1000 - 1999 Assets2000 - 2999 Liabilities3000 - 3999 Equity 4000 - 4999 Income or Revenue5000 - 5999 Job Costs/Cost of Goods Sold6000 - 6999 Overhead Costs or Expenses7000 - 7999 Other Income8000 - 8999 Other Expense

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1000 - 1999 Assets2000 - 2999 Liabilities3000 - 3999 Equity 4000 - 4999 Income or Revenue5000 - 5999 Job Costs/Cost of Goods Sold6000 - 6999 Overhead Costs or Expenses7000 - 7999 Other Income8000 - 8999 Other Expense

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1000 - 1999 Assets

2000 - 2999 Liabilities3000 - 3999 Equity 4000 - 4999 Income or Revenue5000 - 5999 Job Costs/Cost of Goods Sold6000 - 6999 Overhead Costs or Expenses7000 - 7999 Other Income8000 - 8999 Other Expense

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1000 - 1999 Assets2000 - 2999 Liabilities

3000 - 3999 Equity

4000 - 4999 Income or Revenue5000 - 5999 Job Costs/Cost of Goods Sold6000 - 6999 Overhead Costs or Expenses7000 - 7999 Other Income8000 - 8999 Other Expense

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1000 - 1999 Assets2000 - 2999 Liabilities3000 - 3999 Equity

4000 - 4999 Income or Revenue5000 - 5999 Job Costs/Cost of Goods Sold6000 - 6999 Overhead Costs or Expenses7000 - 7999 Other Income8000 - 8999 Other Expense

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1000 - 1999 Assets2000 - 2999 Liabilities3000 - 3999 Equity 4000 - 4999 Income or Revenue

5000 - 5999 Job Costs/Cost of Goods Sold

6000 - 6999 Overhead Costs or Expenses7000 - 7999 Other Income8000 - 8999 Other Expense

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1000 - 1999 Assets2000 - 2999 Liabilities3000 - 3999 Equity 4000 - 4999 Income or Revenue5000 - 5999 Job Costs/Cost of Goods Sold

6000 - 6999 Overhead Costs or Expenses

7000 - 7999 Other Income8000 - 8999 Other Expense

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1000 - 1999 Assets2000 - 2999 Liabilities3000 - 3999 Equity 4000 - 4999 Income or Revenue5000 - 5999 Job Costs/Cost of Goods Sold6000 - 6999 Overhead Costs or Expenses

7000 - 7999 Other Income8000 - 8999 Other Expense

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1000 - 1999 Assets2000 - 2999 Liabilities3000 - 3999 Equity 4000 - 4999 Income or Revenue5000 - 5999 Job Costs/Cost of Goods Sold6000 - 6999 Overhead Costs or Expenses7000 - 7999 Other Income

8000 - 8999 Other Expense

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Understanding Financial Statements

•Two of the most important reports for measuring the profitability of your business are the balance sheet and the profit and loss statement (also called an income statement)

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A balance sheet is a financial snapshot of your company on one date. It shows:•What you have (assets)•What people owe you (accounts receivable)•What your business owes to other people (liabilities and accounts payable)•The net worth of your business (equity)

The Balance The Balance SheetSheet

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A profit and loss statement, also called an income statement, shows your income, expenses, and net profit or loss (equal to income minus expenses).

The Profit and The Profit and Loss StatementLoss Statement

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Setting up your items

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Setting up items if you generate estimates in QuickBooks

01 PLANS & PERMITS 01.1 Plans01.2 Building Permits01.3 City/County Licenses & Fees

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Exercise 1-2 Creating items for job phases

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Exercise 1-3 Grouping related items

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Setting up your customers and jobs

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Setting up your vendors and subcontractors

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Setting up and using class tracking

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Exercise 1-4 Setting up class tracking

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Estimates and Invoices

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Here is an outline of the estimating and invoicing process in

QuickBooks

1. Create the estimate. 2. If the customer needs

adjustments to the bid, edit the estimate and present a final estimate including the change order to your customer.

3. If you require an upfront job deposit, record the deposit.

4. Enter bills for job costs. 5. Create an invoice. 6. If you get a bank draw, instead

of receiving payment from the customer, create an invoice (even if you don't need to send one).

7. Receive payments and make deposits to your bank account.

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Creating estimatesCreating estimates

Follow these guidelines to plan and create estimates:

• Determine your estimating strategy • Turn on estimates and progress

invoicing • Customize the estimate form • Include boilerplate text on an estimate • Create items for you estimate • Create an estimate

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Estimating StrategyEstimating Strategy

There are two basic strategies for handling your estimates:

•Create all your estimates using QuickBooks.

•Create detail estimates using a spreadsheet or another estimating program, and then bring a summary estimate into QuickBooks.

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Exercise 2-1 Turn on estimates and progress Turn on estimates and progress

invoicinginvoicing

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Customizing the estimate Customizing the estimate formform

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Exercise 2-2 Customizing an estimate formCustomizing an estimate form

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Exercise 2-3 Create an estimateCreate an estimate

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Creating an Creating an invoiceinvoice

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Common types of invoice methods include:

• Set price (usually a small and simple verbal contract)

• Cost plus, or time and materials (to charge for time and reimbursable costs)

• Fixed price (usually a contract requiring a certain amount to be paid when a certain percentage of the work has been completed or when a milestone has been reached)

• Progress (invoicing in stages, based on estimate)

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Creating a set price invoice

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Exercise 2-4Creating a set price invoice

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Invoicing for cost plus or time and materials jobs

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Creating a fixed price invoice

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Exercise 2-5 Creating a new fixed fee billing item

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Creating a progress invoice

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Job Costing

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To use job costing to its full advantage

1. Set up a Customer:Job for each of your jobs

2. Set up your items to optimize for job costing

3. Assign all your expenses to jobs.

4. Enter your estimates in QuickBooks

5. Create invoices in QuickBooks, and select the right Customer:Job on the invoice form

6. Use the QuickBooks job cost reports to learn how your business is doing on a job-by-job basis.

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Setting up your

customers and jobs

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Entering bills for job-related or overhead expenses

•Enter vendor bills for job or project-related costs as items

•Enter bills for overhead expenses (for things such as telephone, electricity, office supplies, and so on) as expenses

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Exercise 3-1 Entering a bill for items

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Using purchase orders to track committed costs or subcontractor

bids

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Exercise 3-2 Enter a subcontractor’s bill checked against the original bid

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Entering credit card charges for project-related costs

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Exercise 3-3 Entering credit card charges for project-related costs

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Handling petty cash

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Exercise 3-4 Handling petty cash

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Understanding job cost reports

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Job Cost Reports

• Job Profitability Summary and Detail• Job Estimates vs. Actuals Summary and Detail• Job Costs by Vendor and Job• Cost to Complete by Job Summary and Detail• Job Costs Detail• Unpaid Bill by Job and Unpaid Job Bills by

Vendor• Expenses Not Assigned to Jobs• Job Progress Invoices vs. Estimates• Item Profitability• Item Estimates vs. Actuals• Profit and Loss by Job

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Job Cost Reports

• Job Profitability Summary and Detail

These reports give you a snapshot of your jobs so you can see which jobs are making money—and which are not.

•The Summary report shows revenue, cost, and profit for each of your jobs.

•The Detail report drills down into a job, and shows revenue, cost, and profit by item for that job.

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Job Cost Reports

• Job Estimates vs. Actuals Summary and Detail

Use these reports to see how accurate your estimates are and to improve your future estimates. This might be the most important use of job costing information.

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Job Cost Reports

• Job Costs by Vendor and JobUse these four reports to make sure you don't overpay vendors. These reports show you exactly how much you have spent with each supplier or subcontractor for each job..

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Job Cost Reports

• Cost to Complete by Job Summary and Detail

Use these reports to calculate the expected cost to complete your jobs. Consider reviewing this information on a regular basis to find out which jobs—or which phases of a specific job—are over or under estimate while there's still time to make adjustments. •The Cost to Complete by Job Summary report gives you a snapshot of the expected cost to complete all your jobs. •The Detail report shows you the expected cost to complete each item of a specific job.

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Job Cost Reports

• Job Costs DetailThis report lists each individual transaction for each job you have set up in QuickBooks. It will come in handy if you need a report that breaks out all material supplier purchases, all subcontractor bills, and all labor costs (including labor burden) for each job. .

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Job Cost Reports

• Unpaid Bill by Job and Unpaid Job Bills by Vendor

These reports show what you owe to vendors, grouped by vendor or job. Use these reports to manage your cash flow and make sure you pay your bills on time.

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Job Cost Reports

•Expenses Not Assigned to JobsUse this report to help identify costs that you may have forgotten to pass along to your customers. It is important that all job-related costs get assigned to a job. Otherwise, your job cost reports will not accurately reflect all costs, making your jobs look more profitable than they really are.

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Job Cost Reports

• Job Progress Invoices vs. EstimatesFor each customer or job, this report shows whether or not the estimate is active, the estimate total, the total invoiced from the estimate on progress invoices, and the percentage of the estimate already invoiced on progress invoices.

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Job Cost Reports

• Item ProfitabilityThis report summarizes how much money your company has made or lost on each item (service or inventory item) that your company sells. .

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Job Cost Reports

• Item Estimates vs. ActualsThis report summarizes how accurately your company estimated costs and revenues for the items you sell. The report compares estimated cost to actual cost and estimated revenue to actual revenue for all items.

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Job Cost Reports

•Profit and Loss by JobThis report shows how much you are making or losing on each job. The report includes subtotals for each type of income or expense so you can see where money is coming in and where you are spending it

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Specialty Contractors

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Handling reimbursable expenses

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Using service items and subitems to track service

rates

For example, if you are an electrician and you charge your customers $80 an hour for a journeyperson electrician and $45 an hour for an apprentice, you might want to set up items and subitems like these:

Electrician Labor (Item)•Journeyperson (Subitem of Electrician Labor)•Apprentice (Subitem of Electrician Labor)

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Handling product sales and inventory

If you sell products as well as services, you may want to use the inventory feature to track the products you buy and sell.

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Tracking noninventory materials used on a job

Generally this would apply to painters, electricians, or landscape contractors who purchase materials in bulk (like paint brushes, masking tape, electrical tape, switch plates, and so on) and who want to allocate portions of the materials (perhaps a paint brush or two) to a specific job.

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Exercise 4-1 Tracking noninventory materials used on a job

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Commercial Contractors

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Paying Union Benefits

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Exercise 4-2 To see hours worked for each employee on a union job

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Certified Payroll Reports

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Exercise 4-3 Creating a certified payroll report

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Tracking the costs of spec houses or

developments

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Tracking costs of construction

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Entering costs

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Recording the sale of a spec home

•The selling price of the home

•The pay-off of the construction loan or note

•Other closing costs for items such as real estate commissions, title fees, credits to the seller, credits to the buyer, and so on

•The transfer of the capitalized costs of the home out of an asset account (Development Costs) to a cost of goods sold account

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Overview of steps when you sell a spec home

This method uses four separate transactions and a "dummy" checking account named Closing Account.

The dummy account keeps dummy entries out of your real checking account and helps you avoid confusion when reconciling your real account.

The balance in the dummy account will be zero if you properly enter all transactions dealing with the sale of a home.

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Exercise 4-4 Recording the sale of a spec home

QuickBooks Contractors Edition

Business

Transcript of QuickBooks Contractors Edition