QuickBooks 2016 All-in-One For Dummies (2016)

Book II

Getting Ready to Use QuickBooks

Go to www.dummies.com/extras/quickbooks2016aio to find out how to calculate a business's break-even point.

Contents at a Glance

1. Chapter 1: Setting Up QuickBooks

1. Planning Your New QuickBooks System

2. Installing QuickBooks

3. Dealing with the Pre-Setup Jitters

4. Running the QuickBooks Setup Wizard

5. Identifying the Starting Trial Balance

2. Chapter 2: Loading the Master File Lists

1. Setting Up the Chart of Accounts List

2. Setting Up the Item List

3. Working with the Price Level List

4. Using Sales Tax Codes

5. Setting Up a Payroll Item List

6. Setting Up Classes

7. Setting Up a Customer List

8. Setting Up the Vendor List

9. Setting Up a Fixed Assets List

10. Setting Up a Price Level List

11. Setting Up a Billing Rate Level List

12. Setting Up Your Employees

13. Setting Up an Other Names List

14. Setting Up the Profile Lists

3. Chapter 3: Fine-Tuning QuickBooks

1. Accessing the Preferences Settings

2. Setting the Accounting Preferences

3. Setting the Bills Preferences

4. Setting the Calendar Preferences

5. Setting the Checking Preferences

6. Changing the Desktop View

7. Setting Finance Charge Calculation Rules

8. Setting General Preferences

9. Controlling Integrated Applications

10. Controlling Inventory

11. Controlling How Jobs and Estimates Work

12. Dealing with Multiple Currencies

13. Starting Integrated Payment Processing

14. Controlling How Payroll Works

15. Telling QuickBooks How Reminders Should Work

16. Specifying Reports & Graphs Preferences

17. Setting Sales & Customers Preferences

18. Specifying How Sales Are Taxed

19. Setting the Search Preferences

20. Setting the Send Forms Preferences

21. Fine-Tuning the Service Connection

22. Controlling Spell Checking

23. Controlling How 1099 Tax Reporting Works

24. Setting Time & Expenses Preferences

Chapter 2

Loading the Master File Lists

In This Chapter

· Setting up the Chart of Accounts list

· Setting up the Item list

· Setting up the Payroll Item list

· Setting up classes

· Setting up a Customer list

· Setting up the Vendor list

· Setting up your employees

· Setting up the Profile lists

When you set up QuickBooks 2016, as a practical matter, you not only create a company file you’ll use to store financial information about your business, but also set up master file lists. These master file lists store information that you can use and reuse. For example, one of the master file lists describes each of your customers; this master file of customer information includes the customer’s name and address, contact information, account numbers, and so on.

In this chapter, I walk you through the process of adding information to each of the master files — or lists, as QuickBooks calls them — that you need to fill (or mostly fill) before you begin using QuickBooks on a day-to-day basis.

One important note: You don’t need to completely fill your master files before you start doing anything. If you enter your active customers into the customer master file, your active vendors into the vendor master file, and so forth, that amount of information may be all you need to get started. With the information you entered through the QuickBooks Setup process (as described in Book II, Chapter 1) and the addition of a few more entries in key master files, you may be able to add everything else on the fly. QuickBooks enables you to add entries to the various master files as you work with windows and dialog boxes that reference master file information.

Setting Up the Chart of Accounts List

The Chart of Accounts list is a list of accounts that you use to categorize your income, expenses, assets, liabilities, and owner’s equity amounts. If you want to see a particular line item of financial data on a report, you need an account for that line item. If you want to budget by a particular line item, you need an account for that budget amount. If you want to report some bit of financial information on your tax returns, you need an account to collect that specific data.

Fortunately, the steps for creating new accounts are quite straightforward. To set up a new account within your Chart of Accounts list, follow these steps:

1. Choose the Lists ⇒ Chart of Accounts command.

QuickBooks displays the Chart of Accounts window, shown in Figure 2-1.

2. Click the Account button at the bottom of the window.

QuickBooks displays the Account menu. One of the Account menu options is New, which is the command that you use to add a new account.

3. Add a new account by choosing the New command from the Account menu.

QuickBooks displays the first Add New Account window, as shown in Figure 2-2.

4. Use the account-type buttons to identify the type of account that you’re adding.

QuickBooks supplies the following account types: Income, Expense, Fixed Asset, Bank, Loan, Credit Card, and Equity, as well as (if you select Other Account Types and open the Other Accounts Types drop-down list) Accounts Receivable, Other Current Asset, Other Asset, Accounts Payable, Other Current Liability, Long Term Liability, Cost of Goods Sold, Other Income, and Other Expense. If you have a question about which account type your new account fits into, you should review Book I, Chapter 1, which describes how financial statements work. These account groups essentially tell QuickBooks in which area of a financial statement account data gets reported. Note, too, that the first Add New Account window shows examples of the selected account type in the box above the Continue and Cancel command buttons.

5. Click Continue.

QuickBooks displays the second Add New Account window, as shown in Figure 2-3.

6. Use the Account Name box to give your new account a unique name.

The name that you give the account will appear on your financial statements.

7. If the account you’re adding is a subaccount of a parent account, identify the parent account by selecting the Subaccount Of check box.

After you select the Subaccount Of check box, name the parent account by using the Subaccount Of drop-down list.

8. (Optional) If you’re setting a bank account that uses a currency other than your home-country currency, select the bank account currency from the Currency drop-down list.

In Book II, Chapter 3, I talk a bit more about working with multiple currencies. But let me say this here: If you told QuickBooks that you work in multiple currencies (you would have done this during the QuickBooks Interview setup process, discussed in Book II, Chapter 1), QuickBooks wants you to identify those bank accounts, customers, and vendors that use a currency different from your home currency.

Note: The Currency drop-down list doesn’t appear in Figure 2-3 because within the example QuickBooks file I used for this book, the multiple currency tracking feature isn’t turned on. To turn on the multiple currency feature, choose the Edit ⇒ Preferences command, select the Multiple Currencies preferences settings, click the Company Preferences tab, and then select the Yes I Use More Than One Currency radio button.

9. (Optional) Provide a description for the new account.

You don’t need to provide a description. Without a description, QuickBooks can still use the account name on financial statements. If you want a more-descriptive label placed on accounting reports, however, use the Description box for this purpose.

10. Provide other account information.

The Add New Account window shown in Figure 2-3 includes a Bank Acct. No. box that lets you record the bank account number for a particular bank account. Other account types may have similar boxes for storing related account information. For example, the credit card account type version of the Add New Account window lets you store the card number. If you do have another box or two in which to store account information, go ahead and use that space, if necessary, to collect the bits and pieces of data that you want to save.

11. Identify the tax line on which the account information is to be reported by selecting a tax form and tax line from the Tax-Line Mapping drop-down list.

You may not need to assign a particular account to a tax line if that account data isn’t reported on the business’s tax return. For example, cash account balances aren’t reported on a sole proprietor’s tax return, so a bank account for a sole proprietor doesn’t have any required tax line data. Cash account balances are recorded on a corporation’s tax return, however. So if you’re adding a bank account for a corporation, you use the Tax-Line Mapping drop-down list to identify the tax line on which the bank account information gets reported.

12. (Optional but dangerous) Consider recording an opening balance for the account.

Typically, you shouldn’t supply an opening account balance for an account. But the second Add New Account window does let you do so. For example, in the window shown in Figure 2-3, you can click the Enter Opening Balance command button. When you click this button, QuickBooks displays a dialog box that you can use to set a starting account balance. All this sounds rather innocuous, but seriously, this is something you rarely do. (You should set starting balances for accounts by using a journal entry, as discussed at the end of Book II,Chapter 1.) However, if you know something I don’t, you can use this capability to set the starting balance for the account as of some date. One last caution, however. My accounting professors taught me two things that suggest that this approach to setting account balances is crazy:

· Debits are supposed to equal credits. (If you’re setting the opening balance for an account as part of setting up the new account, you’re recording only half of the accounting transaction.)

· Entering the opening balance as part of setting up a new account means that no audit trail exists for the transaction. (Rather than having an invoice associated with a transaction or a check, or even a general journal entry, you’re just setting balances on the fly. But hey, maybe you know something I don’t. . . .)

13. After you describe the new account that you want to set up, click either Save & Close or Save & New to save the new account to the Chart of Accounts list.

14. (Optional) Click the Next button to save the account information and then redisplay the Add New Account window so that you can add another account.

Figure 2-1: The Chart of Accounts window.

Figure 2-2: The first Add New Account window.

Figure 2-3: The second Add New Account window.

If you look closely at Figure 2-3, you’ll note some boxes, buttons, and even a hyperlink that I haven’t talked about. QuickBooks does supply other fields for collecting account information. And occasionally, QuickBooks also provides clickable hyperlinks and buttons that you can use to do special tasks associated with the particular type of account. For example, in the case of a bank account, QuickBooks supplies an Order Checks hyperlink that you can click to start the process of ordering check forms for the new account.

And that’s almost everything you need to know about adding accounts. The one other thing I should mention is that the Account menu — this is the menu of commands that QuickBooks displays when you click the Account button in the Chart of Accounts window (refer to Figure 2-1) — provides several other useful commands for working with accounts. The menu provides a Delete command that you use to delete the selected account (as long as you haven’t already used the account). The menu provides an Edit button that you can use to make any changes to the selected account information (by using a window that looks very much like the New Account window shown in Figure 2-3). The Account menu also provides other commands that you can use to work with the Chart of Accounts list. Fortunately, most commands have self-descriptive names: Print List, Make Inactive, and so on.

The Activities button, which appears at the bottom of the Chart of Accounts window (refer to Figure 2-1), displays a menu of commands that you can use to write checks, make deposits, enter credit card charges, transfer funds, make journal entries, reconcile a bank account, use a register, and produce a working trial balance report. The Reports button displays a menu of commands that you can use to print reports containing account information.

Setting Up the Item List

If you choose the Lists ⇒ Item List command, QuickBooks displays the Item List window, as shown in Figure 2-4. The Item List window lists all the items that you’ve set up as part of running QuickBooks Setup and items that you’ve added manually since running the setup wizard.

Figure 2-4: The Item List window.

I don’t talk about how you add items to the Item List window here, because Book III, Chapter 3 details that process. Note, however, that the Item list is very important! It lets you keep track of what you buy, hold, and sell to your customers.

Working with the Price Level List

The Price Level list lets you create price adjustments that you can use on the fly as you invoice customers, issue credit memos, and so forth. Because the Price Level list relates directly to how you work with and bill for inventory items, I describe how you work with the Price Level list in Book III, Chapter 3. Rather than repeat information that is of interest to only a few people and isn’t actually essential for getting started with QuickBooks, I refer you instead to Book III, Chapter 3.

Using Sales Tax Codes

The Sales Tax Code list keeps a list of codes, or abbreviations, that you can use to describe items as taxable or nontaxable. If you choose this command, QuickBooks displays a window listing the existing sales tax codes. (Usually, you see two existing codes: Tax and Non.)

The Sales Tax Code list doesn’t appear unless you tell QuickBooks to track sales tax during setup or afterward. To add sales tax codes, take the following steps:

1. Choose Edit ⇒ Preferences.

2. Click the Sales Tax item in the preferences list.

3. Click the Company Preferences tab.

4. Answer the Do You Charge Sales Tax question by clicking the Yes box.

To add a new sales tax code, click the Add Sales Tax Item, and describe the new sales tax when QuickBooks displays the New Item dialog box (not shown) by naming the sales tax item, describing it briefly, and then providing the sales tax rate and tax agency.

Setting Up a Payroll Item List

The Payroll Item list identifies items that appear on employee payroll check stubs. If you’re using an outside payroll service bureau to handle your payroll — and this isn’t a bad idea — you don’t even need to worry about the Payroll Item list. If you’re using the QuickBooks Enhanced Payroll Service, again, don’t worry about the Payroll Item list. (In either case, the QuickBooks folks set up the payroll items that you use for recording payroll.) And in the case of Intuit’s full-blown “we-do-everything” Payroll Service, you don’t even need to track payroll inside QuickBooks, because the QuickBooks people do it at their office location on their computers.

If you do need to add payroll items, follow these steps:

1. Choose the Lists ⇒ Payroll Item List command.

QuickBooks displays the Payroll Item list window.

2. To add a new Payroll Item, click the Payroll Item button and then choose New from the Payroll Item menu.

QuickBooks displays the Add New Payroll Item dialog box. You can choose to set up a new payroll item by using either the EZ Set Up method or the Custom Set Up method:

· EZ Set Up: If you want QuickBooks to help you, and you’re setting up a common payroll item, click the EZ Set Up button, click Next, and then simply follow the onscreen instructions.

· Custom Set Up: If you want to perform a custom setup of a payroll item, click the Custom Set Up button and then click Next. QuickBooks walks you through a multiple-screen interview — like the EasyStep Interview discussed in Book II, Chapter 1 — that asks you about the payroll item to set up. For example, the first dialog box that QuickBooks displays asks you to identify the type of payroll item that you want to create. You answer this question by selecting one of the radio buttons and then clicking Next.

3. Name the payroll item.

After you identify the type of payroll item, you name it. QuickBooks provides another version of the Add New Payroll Item dialog box that includes a field you fill in to give the new item a name.

4. To finish the payroll item setup, click the Next button to move through the remaining payroll item setup questions.

You identify the name of the government agency to which the liability is paid, the taxpayer identification number that uniquely identifies you to the taxing agency, the liability account that you use to track the items, the tax form line that you use to report the item, the rules that QuickBooks should use for calculating the item (such as whether the item is subject to taxes), and a couple of other miscellaneous pieces of data. After you supply all this information and click the Finish button (which appears on the last version of the Add New Payroll Item dialog box), QuickBooks adds the new payroll item to the Payroll Item list.

The Payroll Item menu supplies commands that are useful for working with the Payroll Item list. In addition to the commands that you use to add an item to the list, the menu supplies commands for deleting payroll items, renaming payroll items, making payroll items active, and printing the list of payroll items.

Setting Up Classes

QuickBooks lets you use classes to segregate or track financial data in ways that aren’t possible when you use other bits of accounting information, such as the account number, the customer, the sales rep, the item, and so forth. A firm can use classes, for example, to segregate financial information by stores, business units, or geographical territories.

To set up classes, follow these steps:

1. Choose the Lists ⇒ Class List command.

QuickBooks displays the Class List window, as shown in Figure 2-5.

If you don’t see the Class List command, choose Edit ⇒ Preferences, click the Accounting icon, click the Company Preferences tab, and select the Use Class Tracking check box.

2. To create a new class, click the Class button at the bottom of the window, and choose New from the Class menu.

QuickBooks displays the New Class window, as shown in Figure 2-6.

3. To name the new class, enter a name or abbreviation in the Class Name box.

Note that you enter the class name whenever you record a transaction that falls into the class. For this reason, you don’t want to create lengthy or easy-to-mistype class names. Keep things short, simple, and easy.

4. If the class that you’re setting up is actually a subclass of a parent class, select the Subclass Of check box and then choose the parent class from the Subclass Of drop-down list.

After you describe the new class, you can click OK to save the class. Alternatively, you can click Cancel to not save the class. Or you can click the Next button to save the class and redisplay the New Class window.

If you don’t want the class to be used anymore, you can select the Class Is Inactive check box.

The Class menu, which appears when you click the Class button, also supplies commands for editing the information of the selected class, for deleting the selected class, for making the selected class inactive, and for printing a list of classes, as well as several other useful commands. All these commands are pretty straightforward to use. Go ahead and experiment with them to find out how they work.

Figure 2-5: The Class List window.

Figure 2-6: The New Class window.

Setting Up a Customer List

A Customer list keeps track of all your customers and your customer information. For example, the Customer list keeps track of billing addresses and shipping addresses for customers.

Follow these steps to add a customer to the Customer list:

1. Choose the Customers ⇒ Customer Center command.

QuickBooks displays the Customer Information window, as shown in Figure 2-7.

2. To add a new customer, click the New Customer & Job button and then choose the New Customer command.

QuickBooks displays the New Customer window, as shown in Figure 2-8.

3. Use the Customer Name box to give the customer a short name.

You don’t need to enter the customer’s full name in the Customer Name box. That information can go in the Company Name box, shown on the Address Info tab. You just want some abbreviated version of the customer name that you can use to refer to the customer within the QuickBooks accounting system.

4. (Optional) If you bill your customer in a currency different from your usual home currency, select that currency from the Currency drop-down list.

If you told QuickBooks that you work in multiple currencies — you would have done this during the EasyStep Interview setup process — QuickBooks wants you to identify when you invoice a customer and collect payments from a customer in a currency different from your home currency. (Note: The Currency drop-down list box doesn’t appear in Figure 2-8 because the multiple currency tracking feature isn’t turned on. If you want more information, refer to Book II, Chapter 3’s discussion, “Dealing with Multiple Currencies.”)

5. (Usual rule) Ignore the Opening Balance and As Of boxes.

You typically don’t want to set the customer’s opening balance by using the Opening Balance and As Of boxes. That’s not the right way to set your new customer accounts receivable balance. If you do this, you’re essentially setting up the debit part of an entry without the corresponding credit part. Later, you’ll have to go in and enter crazy, wacky journal entries in order to fix your incomplete bookkeeping. But an exception to the usual rule exists, as discussed in the tip that follows.

Although the usual rule is that you don’t want to set an opening balance for a customer, this rule has an important exception. As discussed at the very end of Book II, Chapter 1, you record your accounts receivable balance on the conversion date by setting an opening balance for each customer as of the conversion date. The sum of these opening balances is what QuickBooks uses to determine your total accounts receivable on the conversion date.

6. Use the boxes of the Address Info tab to supply the company name and contact information, including contact name, phone numbers, fax numbers, e-mail addresses, billing and shipping addresses, and so on.

I’m not going to tell you that you should enter somebody’s first and last name in the Full Name boxes or that the phone numbers of your customer go in the boxes labeled Main Phone and Work Phone. I figure you don’t need that kind of help.

7. Click the Payment Settings tab to display the set of boxes shown in Figure 2-9.

You can record the customer’s account number, his or her credit limit, payment terms, preferred payment and delivery methods, and even credit card information. Note that the Online Payments check boxes let you indicate a customer can pay you using a credit card or bank transfer — but you need to have already set up these services. If you haven’t set up the services, QuickBooks prompts you to set them up when you check one of these boxes.

I discuss the Price Level list and how it works in Book III, Chapter 3.

8. (Optional) If you’re tracking sales taxes, click the Sales Tax Settings tab to display the boxes you’ll use to identify this customer’s sales tax rate.

The Sales Tax Settings tab, for example, includes a Tax Code drop-down list that you use to indicate which sales tax code applies to this particular customer. You can also identify the actual sales tax item and, if relevant, the resale number.

9. Supply a bit of additional information about the customer.

If you click the Additional Info tab, shown in Figure 2-10, QuickBooks displays several other boxes that you can use to collect and store customer information. For example, you can use the Customer Type drop-down list to categorize a customer as fitting into a particular customer type. (I talk about setting up a Customer Type list later in this chapter.) And you can use the Rep drop-down list to identify the customer’s default sales rep. You can also click the Define Fields button to specify additional fields that you want to collect and report for the customer.

10. (Optional) Click the Job Info tab to describe the customer job.

The Job Info tab lets you describe information associated with a particular job being performed for a customer. You use the Job Info tab if you not only set up a customer, but also set up a job for that customer. See Book IV, Chapter 5 for more information on how job costing works.

Figure 2-7: The Customer Information window.

Figure 2-8: The New Customer window.

Figure 2-9: The Payment Settings tab.

Figure 2-10: The Additional Info tab.

When you finish describing the Customer, click the Save & Close or Save & New button to save your description.

Setting Up the Vendor List

Just as you use a Customer list to keep records on all your customers, you use a Vendor list to keep records on your vendors. Like a Customer list, a Vendor list lets you collect and record information, such as the vendor’s address, the contact person, and so on.

To add a vendor to your Vendor list, follow these steps:

1. Choose the Vendors ⇒ Vendor Center command.

When you do, QuickBooks displays the Vendor Information window, as shown in Figure 2-11.

2. To add a new vendor, click the New Vendor button and then select New Vendor from the drop-down list.

QuickBooks displays the New Vendor window, as shown in Figure 2-12.

3. Give the vendor a name in the Vendor Name box.

As is the case with the Customer list, you use this name to refer to the vendor within QuickBooks. For this reason, an abbreviation is fine. You just want something easy to enter and easy to remember.

4. (Optional) If you pay your vendor in a currency different from your usual home currency, select that currency from the Currency drop-down list.

If you told QuickBooks that you work in multiple currencies — you would have done this during the EasyStep Interview setup process — QuickBooks wants you to identify when you receive bills from or pay a vendor in a currency different from your home currency. (Note: Figure 2-12 doesn’t show the Currency drop-down list box because the multiple currency tracking feature isn’t turned on.)

5. (Usual rule) Ignore the Opening Balance and As Of fields.

Don’t do anything with the Opening Balance and As Of boxes. People who don’t know better use those boxes to enter the opening balance owed a vendor and the date the amount is owed. But this only creates problems later. At some point in the future, this poor soul’s accountant will need to find and correct this error. As when you add new customers, however, an exception to the usual rule exists, as discussed in the tip that follows.

Although the usual rule is that you don’t want to set an opening balance for a vendor, this rule has an important exception. As discussed at the very end of Book II, Chapter 1, you record your accounts payable balance on the conversion date by setting an opening balance for each vendor as of the conversion date. The sum of these opening balances is what QuickBooks uses to determine your total accounts payable on the conversion date.

6. Supply the vendor address information.

The Address Info tab supplies a bunch of easy-to-understand boxes that you use to collect vendor name and address information. You enter, predictably, the vendor’s full name in the Company Name box.

You can click the Edit buttons on the Address Info tab to display another dialog box called the Edit Address Information dialog box, which lets you enter the address in typical street address, city, state, and zip-code format. The Edit buttons appear to the right of the Billed From and Shipped From address blocks.

7. Supply any additional information necessary.

The Payment Settings tab (see Figure 2-13) collects the most relevant vendor information, including account number, credit limit, and payment terms, but if you click the Tax Settings tab, the Account Settings tab, or the Additional Info tab, QuickBooks displays a handful of other boxes that you can use to collect and store information:

· The Tax Settings tab lets you collect the vendor’s tax identification number so you can (as sometimes required by federal tax laws) send the vendor a Form 1099 at the end of the year.

· The Account Settings tab lets you specify which accounts QuickBooks should use to prefill account fields when entering a transaction for the vendor.

· The Additional Info tab lets you categorize the vendor according to type and also lets you create other custom fields.

If you’re paying a vendor for the first time, a good guideline is to get his tax ID number. If somebody won’t give you his tax ID number — thereby making it impossible for you to report payments that you make to him — it’s probably a sign of something a bit amiss.

Figure 2-11: The Vendor Information window.

Figure 2-12: The New Vendor window.

Figure 2-13: The Payment Settings tab.

If you click the Account Settings tab (the fourth tab available on the New Vendor window), QuickBooks displays boxes you can use to list the accounts that you want QuickBooks to automatically fill in for you when you record a check to some vendor or when you record a bill from some vendor. For example, if the check to the landlord always pays rent expense and utilities expense, you could tell QuickBooks to prefill, using these two accounts every time you indicate that you’re writing a check to or recording a bill from the landlord.

Setting Up a Fixed Assets List

If you choose the Lists ⇒ Fixed Asset Item List command, QuickBooks displays the Fixed Asset Item list window. You can use this window to see a list of the fixed assets — furniture, equipment, machinery, vehicles, and so forth — that you’ve purchased. Or at least you can after you click the Item button, choose New from the Item menu, and fill in the New Item window for each fixed asset. Figure 2-14 shows the New Item window you use to describe each fixed asset.

Figure 2-14: You describe each fixed asset by using the New Item window.

Let me make a couple of comments about the QuickBooks Fixed Asset Item list. The Fixed Asset Item list doesn’t really integrate with the QuickBooks general ledger. You record the purchase or disposal of fixed assets by using regular old QuickBooks transactions. For example, you might record the purchase of a particular fixed asset simply by entering a check in the usual fashion. And you might record the disposal of a fixed asset by entering a general ledger journal entry.

The Fixed Assets Item list, then, just acts as a stand-alone list that lets you track the fixed assets you purchased. Because the list is so stand-alone-ish, I’m not going to spend much time talking about it in this book. Let me also say that your CPA probably — no, surely — maintains a list of your fixed assets because she needs that list in order to correctly include depreciation on your tax return and in your financial statements (if you get a CPA to help prepare those). For this reason, some people — including me — see the Fixed Asset Item list as being a little bit redundant.

Setting Up a Price Level List

A price level changes the sales price up or down when you do things like invoice. For example, you might create a price level that amounts to a preferred customer discount on specified items. When you create an invoice for those items, rather than use the standard price for the item(which appears in the Create Invoice window’s Price column), you could select the price level preferred customer discount (in the Price column) to use the discounted preferred customer.

To create a price level, choose the Lists ⇒ Price Level command. When QuickBooks displays the Price Level list window, click the Price Level button and then choose the New command. When QuickBooks displays the New Price Level dialog box, give the price level a name in the Price Level Name text box, use the Price Level Type box and list to specify to which items the price level applies, and then use the Adjust Price and Rounding boxes to set the new price level’s prices. When you click OK, QuickBooks redisplays the Price Level list window — this time with your new price level. You can edit and delete existing price levels by using other commands that become available when you click the Price Level button.

Setting Up a Billing Rate Level List

A billing rate sets the amount that you charge for service items. For example, whereas a law firm might sell only hours of legal advice, the item “legal advice” would be billed at different rates for different attorneys. A brand-new attorney just out of law school might have his or her time billed at one rate, while a senior partner in the firm might bill at another, probably much higher rate.

To set up a billing rate, you choose the Lists ⇒ Billing Rate Levels List command. When QuickBooks displays the Billing Rate Level window, click the Billing Rate Level button and then choose the New command to display the New Billing Rate Level dialog box. You use the New Billing Rate Level dialog box to define a billing rate, giving the billing rate level a name, and then set a fixed hourly rate for the bill rate level or different hourly rates for different service items.

After you create billing rate levels with the Billing Rate Levels List command, by the way, you need to connect the billing rate levels with specific employees so that the correct rate gets used when an employee’s time is billed. To do this, display the Employee Center window by choosing the Employees ⇒ Employee Center command. Then right-click the employee, choose Edit Employee from the shortcut menu, click the Additional Info tab when QuickBooks displays the Edit Employee dialog box, and select the appropriate billing rate in the Billing Rate Level list box.

Setting Up Your Employees

If you choose the Employees ⇒ Employee Center command, QuickBooks displays the Employee Center window. You can use this window to see a list of the employees — active or inactive — who you’ve identified to QuickBooks. You can also use this window’s New Employee button to add employees to the list.

Because I discuss how to add employees to the Employee list in Book III, Chapter 5, I won’t repeat that information here.

Setting Up an Other Names List

If you choose the Lists ⇒ Other Names List command, QuickBooks displays the Other Names list window. The Other Names list identifies those businesses or individuals that you pay but that don’t fall into one of these other standard categories: customers, vendors, and employees. For example, you may use the Other Names list to identify government agencies that you pay.

To add a name to the Other Names list, click the Other Names button, which appears at the bottom of the Other Names window. When QuickBooks displays the Other Names menu, click New. The New Name window that QuickBooks displays after you choose the New command provides boxes for entering a name, identifying the entity, recording an address, and so on. I don’t show this window here because it’s just a simplified version of the window that you use to identify and describe a customer, vendor, or employee.

Setting Up the Profile Lists

If you choose the Lists ⇒ Customer & Vendor Profile List command, QuickBooks displays a submenu of commands that you use to create some of the mini lists that QuickBooks uses to ease your bookkeeping and accounting. The Profile lists include lists of sales reps, customer types, vendor types, job types, payment terms, customer messages, payment methods, shipping methods, and vehicles. Most of the Profile lists are pretty darn simple to use. For example, if you choose the Sales Rep list command, QuickBooks displays the Sales Rep list window. Then you click the Sales Rep button and choose New. QuickBooks displays the New Sales Rep window, as shown in Figure 2-15. I bet you can figure out how to use this window.

Figure 2-15: The New Sales Rep window.

In case you’re still experiencing a certain amount of accounting anxiety, let me just point out that you enter the name of the sales representative in the Sales Rep Name box. Then, throwing caution to the wind, you enter the sales rep’s initials in the Sales Rep Initials box. When you click OK, QuickBooks adds the sales rep to your Sales Rep list.

The other Profile lists work in the same simple, scaled-down fashion. You select the Profile list in the submenu, click the Profile List button, and choose New. When QuickBooks displays a window, you use one or two boxes to describe the new Profile list.

Just to prove to you that this process really is as easy as I say, take a look at the New Customer Message window, shown in Figure 2-16 (accessible from the Customer Message list). This is the window that you use to create a new customer message. You can place customer messages at the bottom of customer invoices and credit memos.

Figure 2-16: The New Customer Message window.

If you want to track vehicle mileage within QuickBooks — and note that you usually must track business vehicle mileage in order to claim business vehicle expenses as a tax deduction — you can maintain a list of business vehicles by using the Vehicle list. Then this list lets you easily track your business vehicles — something you do by choosing the Company ⇒ Enter Vehicle Mileage command.

QuickBooks may provide access to other lists via the Lists menu. For example, you can access templates you create for invoicing and other forms by choosing the Lists ⇒ Templates command. (I discuss form templates in Book III, Chapter 1.) And QuickBooks may, depending on how you’ve installed the software, add lists I haven’t mentioned here. For example, depending on your installation and the state where you operate, QuickBooks may display a list of Workers Compensation items.