QuickBooks Tips

Two common pitfalls for new users.

They are: 1.) entering information twice, and 2.) using the wrong menu option (or icon or window).
Let's look at them one at a time!

1.) Entering information twice.

QuickBooks performs double-entry bookkeeping behind the scenes. You don't need to know too much about it, to use QuickBooks, but you do need to be absolutely clear that it does not mean that you enter information twice.

Once you get used to QuickBooks it should be relatively easy to verify if you already entered a check into QuickBooks. But before that, and especially if you are not yet sure exactly where and how to enter information, you need to be organized so you know if a particular check was already entered or not.

Otherwise things can get more than a little bit out of control. QuickBooks will be perfectly happy to let you enter a check twice, but your bank will not let you deposit it twice, so if you are wondering if a check got lost somehow, you may have entered it twice in QuickBooks. That would explain why it went missing after you deposited your checks.

You can use any system that you are comfortable using and that you trust.
Put it in a separate binder, or box, or put a paper clip with a post-it note on it.

You need to be sure - was this check entered into QuickBooks yet or not?
But don't archive it, that check still needs to be deposited!

You may find yourself asking "Should I have entered the check here instead?" Answer: Maybe, it depends on where you entered it before and where you are thinking of entering it now. More about that below.

Or you could be asking yourself  "Do I need to enter it here too?" Answer: No, never! While you need to perform an additional step after entering a check, which is to record that you have deposited it, you do NOT enter the check itself more than once.

You can think of any such additional step as moving information from one place within QuickBooks to another.
That is totally different from entering it a second time.

For example, when you deposit a check that you already entered into QuickBooks you need to tell QuickBooks about it.
You do that in the "Make Deposit" window. There, you do NOT enter the check a second time. Instead, you move it from Undeposited Funds to the bank account you actually deposited it to.

It got into the Undeposited Funds account when you entered the check into QuickBooks. It will stay there until you move it, which you need to do after you have deposited it at the bank. Then you move it into the check register, using the "Make Deposit" window.

As long as you do not enter information twice, mistakes you make with information that is already in QuickBooks (and not deleted) are more easily fixed.

2.) Entering information in the wrong window (i.e. using the wrong menu option or icon).

Most QuickBooks users have two types of checks going out and two types of checks coming in.

The two types of checks going out are: 1.) checks to pay bills previously entered into QuickBooks and 2.) checks to pay something that you will never see a bill for, like the check you write at the checkout counter in a store.

Similarly, the two types of checks coming in are: 1.) checks that you receive from customers paying invoices you previously sent out (and entered into QuickBooks), and 2.) checks you receive from customers ordering and paying at the same time.

Checks coming in are the easiest, so let's start with them.

Deposit checks - use the "Sales Receipt" or the "Receive payments" window?

The "Sales Receipt" window

If you have received a check you did not invoice for, you have what QuickBooks calls a "Sales Receipt", and you need to enter it as such. It represents income that has NOT been already recorded.



If the check is really payment for an invoice you mailed out and entered into QuickBooks, then it represents income that has actually already been recorded, and is now being recorded a second time. This means that any reports you run will be incorrect. Your income will be overstated and your current assets will be overstated.

The reason your current assets will be overstated is that entering the checks this way does not reduce Accounts Receivable, which it should - when your customers pay their invoices, which make up your Accounts Receivable, then their debt to you, a current asset to you, goes down.

The "Receive payments" window

If you did invoice for it, you need to enter it in the "Receive payments" window. It represents income that has already been recorded. It was recorded when you created the invoice. What remains is to locate the right open invoice, and mark it paid, so that your Accounts Receivable are properly reduced.



Continuing on now with the checks going out.

Direct Disbursement checks - checks that are NOT to pay a bill already entered in QuickBooks

Writing a check that is not related to any bill previously entered into QuickBooks is called a direct disbursement.
These checks can be entered either directly in the bank register, or in the "Write Checks" window.



For these checks, you must specify one or more expense accounts to debit for that check.

By the way, this is how QuickBooks handles double-entry bookkeeping - it decreases the balance in your checking account by the amount of the check and increases the balance(s) in the expense account(s) you specify, by an amount (or amounts with a total) that is equal to the amount of the check.

Entering checks directly into the bank register is virtually the same as entering them in the transaction register that came with your checks from the bank. The best time to do it is right after you wrote the check, since QuickBooks won't know whether or not the checks were actually written.

When you tell QuickBooks to print the checks you will be reminded of any unprinted checks anytime you open the "Print checks" window. Not necessarily a timely reminder, but a reminder nonetheless.

If you make a mistake, and enter a check here, that is really payment for a bill you previously received (AND entered into QuickBooks), the bill will still show up as unpaid and you run the risk of paying it a second time later on.
Additionally, any reports you run will overstate both expenses and liabilities by the amount of the check.

Bill payment checks

The right place to enter a check that you write to pay a bill that you have entered into QuickBooks is the "Pay Bills" menu option, under Vendors.



Here you need to specify the bill you are paying instead of the expense account(s) affected. You also need to specify which bank account you will pay from.

Finally, you need to decide if the check(s) are "To be printed" or if you intend to write the check(s) manually - if so, you need to "Assign check no" to the check(s).

Don't forget to actually write (or print) the checks!

After you close the Pay Bills window, your checks are already in the check register for the account you selected.
They just aren't actually printed or written yet.

To print them, you select the option to print checks, from the File menu. QuickBooks responds with a dialog box showing you all checks you have told QuickBooks are "To be printed" - you did so in the "Pay Bills" window.

Make sure the check numbers match up!

Whether you write the checks manually or print them, you must make sure the check numbers match.
If you write them manually, make sure the check register in QuickBooks has the same number as the check you write.
If you print them, the "First check number" field (in the "Select Checks to Print" window) must agree with the number on the first check in the printer.

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