But even if you don’t do payroll in-house, keeping your accounting software up to date with new releases as they become available is still important. When your accounting software comes out with new releases, it is generally for the purpose of either improving one or more of its functions or fixing a problem that users have reported. In other words, the updates will generally add to the efficiency or functionality of your current software. Anything that will save your staff time should be welcomed.

One of the mistakes that accounting software users make when installing updates is not taking the time to read the release notes that accompany the updates. This is an important step that should not be overlooked. If you do the install without reading the release notes, you may not be fully aware of the changes that have been made to your software. If you’re not aware of what changes have been made, it isn’t likely that you’ll take full advantage of them. If there are multiple users accessing the accounting software for data entry or reporting, you will want to make sure that everyone is aware of any changes that come through on a software update and how those changes might affect their interaction with the software.

Keeping your software updated will keep your accounting procedures running smoothly. The investment in annual license fees is generally well worth the efficiency that you gain as a result.

To verify that you have all your settings correcting, you will want to run a 1099 summary report, which can be found under your Vendor & Payables reports. Run one report with All Vendors and one report with Only 1099 vendors. Compare these reports for vendors whom you may not have marked as eligible for 1099′s, that should have been. After making any corrections, run two more reports:  one of Only 1099 vendors with ALL accounts and one with Only 1099 vendors and Only 1099 accounts. Comparing these two reports should help you to see if you missed any accounts in your 1099 preference setup. The total amounts for your 1099 vendors should be the same on both reports.

Making sure that information is setup and recorded correctly now, will save you precious time when it’s time for your year end processes to be done.

Select your Quickbooks report, your profit and loss by class would be a good choice. If you need to make any changes to the data, such as setting a filter or customizing the dates, do that first. Then, instead of printing or saving the report, select Export to Excel and send the report to a new Excel workbook.

Excel will open with the Quickbooks report laid out on the first worksheet. Now, all you have to do is use Excel’s formatting tools to add color and borders to your headings. Bolding your fonts will make your header titles stand out and easy to read. Change column widths or insert columns to provide more space between the columns of data.

Select preview, to see if you need to do any fine tuning to your sexy looking profit and loss report, before you print it out in full color. You’ll be amazed at how much more professional those reports can look and how much easier they are to read.

Color coded headings can be a great way to distinguish reports for different departments, different financial periods (months or quarters) or to distinguish the monthly P&L from the year to date P&L for the same period.

Color, bolding, increasing font size, all these formatting options can be used multiple ways to highlight totals or any other aspect of a report that you want to stand out.

Once you have your formatting scheme setup for each report, you can easily apply it the new report for the following month by using Excel’s format painter to copy last month’s formatting onto the new month’s exported report. It’s quick and easy.

In addition to the formatting, exporting a report to Excel will also allow you to add notes to a report. This can be especially useful on budget reports to note reasons for over budget items or highlight budgets that may need to be adjusted.

Why stick with boring black and white, when you could dress up your financial reports sexy reds, blues and greens?

Many merchant accounts (these are the people that permit you to accept credit cards) just take a monthly debit out of your bank account at the end of the month, these are easy to account for, you simply enter a withdrawal in your account register for the amount debited and categorize it as Merchant Processing Fees, which should be a COGS or an Expense (this varies by where you are located and your industry, check with your accountant if you are unsure).

However, what about those merchant accounts that take the percentage before you even get the money, similar to Paypal? This makes it more difficult to track, however, I do have an answer.

(I want to say that I recommend that the following is done even if your fees get debited as a whole so that you can process the flow of your income.)

1. Open up a new bank account inside of QuickBooks, call it Merchant Account, or PayPal, or Google Checkout (whoever your processor is). Don’t hesitate to set up multiple, as a matter of fact many of my clients have multiple, so I set up an account titled ‘Merchant Accounts’ and then I have sub accounts titled PayPal, Google Checkout, Chase Paymentech under the main ‘Merchant Accounts’ account.

2. When you receive your payment for services (via Invoices or Cash Receipts) don’t deposit directly into your checking account, deposit it into the merchant account it goes into, because let’s be honest, it is not in your checking account yet.

3. As the monies show up in your checking account, transfer the funds from your merchant account to your bank account. This also makes it easier for PayPal when you may accumulate funds in the account and only make random transfers from the PayPal account.

4. Accounting for your fees/costs – can be done in one of three ways:

• If you get lump sum fees at the end of the month debited from your checking account, don’t worry about doing anything differently, just record that transaction once it posts.
• If you are using a service like Google Checkout or PayPal you can ‘see’ how much they take out via their transaction reports, so at the same time you make that transfer from your ‘merchant’ bank account in QuickBooks to your ‘checking’ bank account in QuickBooks – you can make a withdrawal entry from your ‘merchant’ checking account for your merchant processing fees.
• If you are using a more standard merchant services provider, you rarely get daily reports, and rather get monthly reports, at the end of every month when you get your reports, take the cost of the fees they charged you off of the statement and make a lump sum withdrawal from your ‘merchant’ bank account for your merchant processing fees. This is a good way to reconcile too, making sure you received all your monies, because at the end of the month after you enter the fees, the only thing left in your account should be any undeposited recent payments.

For my FreshBooks followers:

I promised you a follow up to my recent ‘making FreshBooks and QuickBooks play nicely posts’ – if you have not read them yet, check them out:

Making FreshBooks work with QuickBooks and vice versa Part 1

Making FreshBooks work with QuickBooks and vice versa Part 2

My suggestion for you all in regards to credit card processing fees is to do the same thing that I suggest above – create additional accounts for your merchant processing accounts and rather than depositing the payments received directly to your bank account, place them in their appropriate merchant account as the ‘middle man’ before it hits your bank account, and follow one of the three options above for recording the appropriate fees.

Do you have any questions or specific circumstances that I did not help you with? Feel free to comment on the post with your question(s) and I will respond personally!

Stay tuned, in the upcoming week I am going to talk about allocating Sales Tax in QuickBooks for FreshBooks users, incorporating it into my previously suggested methods for recording receivables and revenue.