The Evolved QBO Chart of Accounts

A chart of accounts (COA) is a financial organizational tool that provides a complete listing of every account within an accounting system. If you are currently using QuickBooks Online (QBO), you will recall that it establishes a chart of accounts as you add new accounts. However, this default COA is simply an alphabetical chart of accounts lacking any meaningful detail that could be used for job costing/cost accounting. While QBO can easily establish categories within the COA, there is no correlation with the alphabetical list to how you operate and run your business.

In our previous post, we discussed the importance of having a 5-digit numbering system for your COA. Having this numbered system is critical because it gives you grouping information that you’ll use for your business intelligence. For example, if you’ve grouped all your current assets and liabilities with a numbering system, you can instantly produce your net liabilities.  It also allows you to maintain an appropriate profit margin whereby you can easily calculate your job costing, even if you sell more in one month than another. Say you recorded a sale in your accounts receivable in June, you would want the cost associated with that sale to also be within June. Without an evolved COA, you won’t have the tools to connect the costs to the sale.

Another benefit of the 5-digit numerical COA is that adding new accounts is simplified, and easy to manage from a reporting perspective. Without the numbered accounts, you may not be able to truly tell what’s happening within a category of accounts. We also recommend that if you have a miscellaneous category within your groupings, and it becomes more than 10% of the group, then it needs to be brought out to create a new account.

Your COA doesn’t have to be perfect, and the beauty of it is, you can make modifications as your company grows or your business intelligence needs change. Don’t let recoding your COA be overwhelming. vbo Solutions has a proprietary template we provide for our clients, making it easy for our clients of all industries to adopt. We also provide tools to allow you to reclassify accounts. While that process seems daunting, it really can be worthwhile it to recode transactions to produce better information.

Having a well-designed COA is best practice for every company: Fortune 500 companies, as well as solo to medium sized businesses. It provides meaningful information to make timely management decisions, essential for growing companies.

Why Cost Accounting Could be the Secret to Your Success

Imagine knowing at any time, exactly how much profit you’ve earned from a job or project. Would that make a difference in how you created your proposals? If you had insight into your profitability for each job, could you be more competitive with your estimates?

Job costing, also called cost accounting, is the practice of tracking business profit within your accounting system. The more insight you have into where you make (or lose) money, the better you are able to make smarter decisions, and the stronger your business will be.

Cost accounting is a practice most construction and manufacturing companies utilize in order to manage their overhead — but don’t think it’s only for those industries. Every company that has customers requiring work and/or projects should have their accounting system primed to facilitate profits on those jobs.

When using QuickBooks Online (QBO), the first and most essential step in cost accounting is to create a chart of accounts. Having your accounts set up appropriately anticipates a lot of the ‘what if” scenarios, and the ability to capture the info available to you is extremely important. Establishing your chart of accounts upfront and correctly, saves a lot of time and resources as opposed to recoding a mature system. But don’t worry if that horse has already left the barn, we can help with that!

QBO has “rules” that you can follow to create your coding information for your chart of accounts. Once you have established your chart of accounts using our guidelines, you’ll have the perspective to view income, net revenue, gross profit by client or customer or project summary at any time.

Establishing and maintaining that chart of accounts however, can be daunting especially with growing companies. vbo Solutions assists our clients with setting up, recoding or even cleaning up their chart of accounts so they too can have better business intelligence. We also assist with running reports and maintaining the system, ensuring everyone is utilizing it correctly and consistently, and training all those who will be using it. Employees are human though: if someone begins coding in error, it will create misinformation and that can lead to problems so vbo routinely checks to make sure the information input into the system is correct and you can be sure you made money on that job.

The four QuickBooks apps you should be using right now

Image Credit: Intuit

QuickBooks Online (QBO) is the workhorse for many business’s accounting activities, with many capabilities – far too many for every company to have deep understanding of which features to leverage for their unique business intelligence needs. Thankfully, vbo Solutions is expert in making QBO simple, so we’re breaking down our four most favorite QBO Apps that we think can take the power of almost any QuickBooks subscription to a whole new level. Check these out:

Bill.com

Businesses can streamline their bill approval and payment processes, and get paid faster with Bill.com, a business payments system that digitizes the accounts payable and receivable process. The app can be used to get paid via ACH, credit card, or PayPal. Additionally, Bill.com automatically sends payment reminders and overdue notices to your customers. Payments automatically sync with QuickBooks and allow vendors to send their invoices to a company-specific email address. This app helps reduce the time-consuming steps of searching and processing invoices in QBO. When transactions are reconciled in QuickBooks Online, bills can be matched to an attachment for future reference. Your financial data and documents are secure, encrypted, and reside on password-protected servers – way safer than they are in filing cabinets and on people’s desks throughout your offices.  

Expensify

Companies love Expensify because it provides an easy avenue for employees and independent contractors to track expenses on the spot. Simply take a photo of the purchase and it will go directly into the expense report. The app is compatible with Bill.com making it easy for clients to pay vendors – and if you establish regular parameters, it can even make payments automatically. Additionally, the mobile app can reimburse employees out of Expensify, QuickBooks Online, or Bill.com, providing seamless integration with all three.

Recommended by the American Institute of Certified Public Accountants (AICPA) as the solution for simplified expense management, Expensify was also awarded “Best Partner Program 2016” by Accountex. Expensify is loved by small businesses, accountants, and employees alike!

TSheets Time Tracking

Get rid of the punch time clock and simplify payroll, invoicing, and job costing with automated time tracking right inside QuickBooks! The TSheets Time Tracking app can be used internally to track projects, time spent with clients, employee tasking, payroll and billing. When working offsite, staff can clock in on their phones, track their time, budget expenses, and projects they are working on. The app also provides access to mobile time tracking apps, scheduling, GPS, alerts and more. Additionally, it syncs to QuickBooks Online making invoicing easier and accurate, as well as providing a backup for accountability. We can also customize this app to fit your unique needs.

Hubdoc

Hubdoc is a fantastic app for keeping key financial documents (and associated data) in one place, seamlessly synced with your accounting program and the professionals who mange it for you. Hubdoc eliminates all the hassle of sharing staggering amounts of bank and credit card statements and other various invoices. It also keeps them from cluttering up your email or mailbox. Hubdoc can also automatically convert receipts, bills and statements into data you can actually use.

Hubdoc partners with a huge variety of vendors — simply enter your credentials and it will sync with each vendor and keep the details in one centralized location. No more data entry or filing!

This time-saving app also makes on-boarding information much easier for accountants, allowing them to import and quickly code their clients’ invoices, and then upload them to Quickbooks Online. Additionally, subsequent recurring transactions are auto-coded and uploaded. Instead of chasing clients’ account details, accountants can set up a user name for each client and allow access. Accountants can then very easily reconcile the details.

These are all convenient but…

While these apps interact and sync with QuickBooks providing great flexibility to manage and report financial activity, setting them up is not for the faint of heart – and that’s where vbo Accounting Solutions really shines. We are experts in each of the abovementioned apps, we streamline the set-up process, and are ready to troubleshoot and solve any issues with the apps. We are available to maintain them as well. And because we are super users, we also get favorable pricing which we pass on to our clients.

Which app would solve your biggest QuickBooks challenge?