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Posted on November 1, 2012 byIt is the goal of this column to answer questions about QuickBooks and how it is used in the real estate investing arena. Know how to record transactions in the proper way and have your set of books in good shape when it comes time for taxes. It is our intention to do this by you the members submitting questions and getting answers here in this column.
But first, choosing the appropriate management software package is essential to the success of your business. You need a package that is appropriate for your business currently, but that can grow and evolve as well. QuickBooks software is the perfect solution for your account management. As your business grows you can upgrade to QuickBooks Enterprise if needed.
In using any accounting software, please understand that without a proper chart of accounts – that specifically fits your business – your information and reports won’t provide you with what you need or want to know. There are two reports that are most important to the business owner, the Income Statement and the Balance Sheet. Some refer to the Income Statement as the Profit and Loss Statement. The Chart of Accounts drives everything.
Your Balance Sheet accounts: Assets = Equity less Liabilities
- Balance Sheet Accounts
- Assets
- Liabilities
- Equity
Your Income Statement Accounts: Income less Cost of Sales less Expenses = Net Income
- Income Statement Accounts
- Income
- Cost of Sales
- Expenses
But knowing what account to put where is extremely important – if the account is assigned to the wrong “type” of account, it not only can be on the wrong report but can show up as a negative when it should be a positive figure.
Do you know how to set up your chart of accounts? Are you comfortable with QuickBooks? Every month we will answer questions from those who submit them to: Karen@smallbusinessadvisor.biz. Mark the subject line “QuickBooks Quickie” so we don’t overlook your e-mail. Questions will be treated with the utmost care to protect any private information. If you have a question on how to treat a particular entry please, submit it ASAP so we can be sure to include it in the next issue of “The Profit”.
Karen Bershad is The Small Business Advisor. Most small business owners have a challenge handling all the different areas of running a business. The accounting can be a challenge, particularly if the software seems overwhelming. The Small Business Advisor is what you may need to get you to the next level of your business. We work at your office or provide off site assistance in getting things under control by providing a wide variety of services that are specifically for the small business.
