Imagine you’ve just started your first small business, but you don’t have a handle on your finances. It’s absolutely nerve-racking not knowing how much money is coming in and how much is going out. In this video, we’ll learn how to set up QuickBooks Online so you don’t have this problem. And we’ll do it as a small business owner with no accounting knowledge required. With QuickBooks Online or what I like to call QBO, you can track your expenses and your income, invoice your customers, pay your bills, manage your taxes, and view reports for better financial planning. Let’s dive in. To get QBO, head to the following website. You can click on the card in the top right, or I’ve included a link in the description below. First, let’s scroll down and select our plan. Now, if you’re the only person managing your company’s finances, you can get all the core functionality in simple start. If you need one or two employees helping you out, then you need to look at Essentials or Plus. Plus is also useful if you have inventory to manage and you don’t have a solution yet. Advanced is definitely for more medium-sized businesses. Because you can get all the core functionality we mentioned earlier in simple start, I’m going to choose that plan. When you sign into QBO for the first time, it’ll ask you a number of different questions about your business to personalize your experience. Then you’ll land here, your home base, from which you can do a number of different things in the product, like manage your transactions, make sales, pay your vendors, and so on. We’ll get to all of those, but the number one thing you need to start with is to connect your credit card and bank account. So, we’ll start there in the transactions view. From here, let’s click connect account. Next, type in the name of your bank account or your credit card. Once you find your financial institution, you can click on it and sign in to import your transaction history into QBO. You should do this for every credit card and bank account that you use with your business. After you connect your accounts, you’ll land here on the transactions page. All of these transactions are for my donut shop, David’s Donut Den. Now I need to help QBO understand what these transactions are by assigning them to categories. This is important because it helps me with budgeting, accurate financial reporting, as well as proper tax compliance. Let’s start with the first transaction. Now, this was an event that we catered for the Kevin Cookie Company. And there’s a couple of things that we need to tell QBO about. The first is the name of the customer. Well, it’s the Kevin Cookie Company, and I already have them in my list. But in case I didn’t, I could select add new customer and input all of their information right from this page. Next, I need to categorize the expense. When you start in QBO, you’ll have a limited set of categories to work from. I highly recommend that you talk with an accountant to make sure that you’ve got the right set of categories for your business. Every business can be a little bit different in how they classify different types of income and different types of expenses. For now, I’m just going select sales of product income. Next, there are two other things you can customize. The first is tags. Tags are useful when you want to have a way to search for specific types of transactions more easily in the future. You can also use it to slice and dice your reporting in ways that QBO wouldn’t know about natively. Next, you can also set the memo. Sometimes when your bank or your credit card brings transactions into QuickBooks, it’s not exactly clear what that transaction is for. So you can add some clarifying information, for example, that this is a catering event, so that anybody who goes back to this transaction in the future will understand what it’s for. When you’re done, you can click on confirm and the transaction is categorized. Next, let’s tackle an expense transaction. Here, I’ve got a line item for paper cups, which I purchased from Carla’s Cups. Just like before, I need to select the customer or the vendor. This time it’s the vendor, so I’m going to select Carla’s Cups right from this list. Next, I’ll select the category. This one falls under supplies and materials for me, so I’m going to select that category. I can also type in tags or change the memo, just like before. Now this time, before I select confirm, I know that paper cups is a recurring expense, and I don’t want to have to set this up every single time a new expense comes in for paper cups. So, I’m going to click on create rule to handle this for me automatically. Rules are a simple but powerful tool in QBO. They help you find transactions that match specific criteria and then automatically categorize them for you. Let’s get started and do this for paper cups. So first, I’ll set a rule name and then look at the criteria that QBO has selected. You’ll see that it’s already set that when the description contains paper cups, this rule fires. And then at the bottom, it’s assigning the transaction type, the category we just set, the vendor, and then all the other fields that we just looked at as well. Finally, there’s one little setting here that’s important to pay attention to. When it’s checked, every transaction that matches this rule will be automatically categorized and confirmed for you. But if you want to still review that the categorization is correct, you can uncheck this and then click save. Now you see that Carla’s Cups is there, not just for the transaction we just looked at, but also for the same paper cups transaction that happened last week, and I can click confirm right here for both of these transactions. Next, I’m going to handle the rest of my transactions. Now that I’ve categorized all of my transactions, it’s time to bring in some dough by invoicing our customers. So, I’m going to click over in the sales, invoices, and we’ll get started. Click create invoice. So, it turns out that Kevin Cookie Company loved our donuts so much the last time that they’ve asked us to cater their next event as well. So let’s start by targeting the Kevin Cookie Company for this invoice. And next we’ll scroll down to the list of products that we’re providing for them. They really liked our baker’s assorted dozen. And when we click on this dropdown, you’ll see that QBO has saved this line item from the last invoice that we’ve created. They’ve also saved the unit price. And when I change the quantity, the total amount updates as well. Now the Kevin Cookie Company also wants an order of apple fritters. We don’t have those in our inventory yet, but we’re about to start offering them. Let’s add them to our product list. First, let’s set the name, Apple fritters. And next we’ll set the item type. Now on the QuickBooks simple start version, we’ve got two options here. First is service, which is used for any non-physical good. The next is non-inventory item, which just means we’re not tracking the inventory of this item within QBO. If we wanted to track inventory, we have to use the plus or the advanced subscription. Because this most applies to our Apple fritters, we’ll choose non-inventory item. Next, you can select a SKU if you have one, and then you can select a product category. Product categories are useful when you have many different products that you need to organize, not just for yourself, but for your customers as well. Scrolling down, we’re in the sales section. The description is a customer facing description of the product and the price / rate, that’s the unit price. Now we charge a lot for our Apple fritters, but people sure seem to love them. Next, the income account. Remember back to when we were categorizing our transactions and we had a list of categories to look through? This is the same list. So now I can say that anytime someone pays for a set of Apple fritters, it goes into the sales of product income category. Next, if you have special sales tax handling rules for this type of item, you can click on edit sales tax to set that category directly. Because there’s no special needs for Apple fritters specifically, we’ll leave this as the default and click create new. We know that they want five dozen Apple fritters, so let’s change the quantity from one to five, and you’ll see again the total amount updates. We’re also going to make sure that we’re charging sales tax for the baker’s assorted dozen, and you’ll see instantly that QBO handles the sales tax calculation below. Finally, if we direct our attention to the bottom left, you’ll see the customer payment options where we can enable or disable different payment options, including Apple Pay, most major credit cards, as well as direct bank transfer. To set this up, you’ll need to go through a special process to make sure that you can accept payments into your bank account. I’ll take care of this later. For now though, the total amount is good. Let’s send the invoice. Here QBO gives you a chance to review everything that gets sent to your customer, including the invoice link, any special text that you want to send, as well as the line items of the specific invoice. If you want to make any specific tweaks, you can edit them here on the left-hand side. This all looks good to me though, so I’m going to click send invoice. All right, so down below, you can see that we have our open and outstanding invoice, and up above, we now have two different visuals which indicate both the status of our unpaid and our paid invoices. We’ve taken care of billing our customers. Now let’s make sure that our vendors are getting paid. We’ll head over to the expenses bill section. Bills is valuable when you have vendors issuing you invoices, and you need to stay organized and make sure that they get paid on time. Carla’s Cups has just issued us an invoice for an upcoming order. So, let’s add that to QBO and make sure that they get paid. In the top right, you can select add bill, and then upload from computer. I’ll take the PDF of the invoice that Carla’s Cups has sent me and upload it directly to QBO. Now, QBO right now is trying to extract as much information about the invoice from that document. And you’ll see here that it does a pretty good job of identifying the vendor as well as the bill amount. My job is to make sure that QBO got the right information from the invoice. So, let’s hover over this icon where it says bill and check that the total amount, $20,000, matches the amount in the bill amount column on the right hand side. These match. So I’m going to click create bill, and this allows me to pay it. Next, I can click on unpaid bills and see that the bill is ready to go. It’s due today, so I better schedule the payment quickly. In order to pay bills through QBO, I do have to select an add-on service. Luckily, there’s a basic version which allows me five free direct transfers per month. And I can also choose to send checks if I need to. If you need additional services, the premium and elite plans are also available. I’m going to click choose plan. I’ll go through the process of setting up my bank account so I can pay this vendor directly. You can see the invoices now in our paid list and we’re done. Next, let’s touch on sales tax and how QBO helps you stay organized when it comes to tax time. We’ll head over to taxes, sales tax. When we created an invoice earlier, QBO automatically calculated the sales tax that was due. For every invoice we create from here on out, QBO will do the same thing and will track to what government agency that I owe that sales tax in case I do business outside of Washington state. That way, when it comes to tax time, I know exactly how much I owe to what government agency. Finally, we put in all this work to track our money in and our money out. Let’s get something out of QBO by looking at their reports. You can find them by clicking on reports in the main menu. Now, there are a ton of different reports in here, so I’m going to cover my favorites and let you explore the rest. The first up is the profit and loss report. This is so important for me to be able to see what’s going in and what’s going out over a certain timeframe and also track important financial metrics like gross profit and net income. You can customize these reports in a number of different ways. Scroll up to the top to see all of your options. Now, I’m going to choose one which I think is pretty interesting, which is comparing this year’s performance with last year’s performance at the same time of year. So, I’ll select compare another period, previous year to date, and then hit run report. And what do you know? It’s infinite improvement since last year. Mama always said that there was money in the donut business. Let’s go check out some other reports. Here are a few other of my favorite reports. First up is the balance sheet. This is a well-known financial report which tracks your total assets and your total liabilities. It’s a good way to see the health of your business at a glance. Next, it’s always important to pay attention to your sales. And sometimes you’re interested in who are your best customers or who are your best products, so you can focus your attention on them. The sales by customer summary and sales by product or service summary will help you identify those areas of need. Finally, also important to pay attention to your vendors. If you have a feeling that you’re bleeding cash to one or more vendors, the expenses by vendor summary will help you identify that and nip it in the bud if it’s really happening. And there you have it. Now you have all your financial data in one place. You can bill your customers, you can pay your suppliers, manage your taxes, and view financial reports to make great decisions about your business. If you learned something today, please give us a like and don’t forget to hit that subscribe button. This is David signing out. I’ll see you next time.