Episode 12 – Polymath Video Tutorial Series: Changes to QuickBooks Online – Reports

For more information about the difference between cash and accrual, check out the Polymath blog on the topic.

Make sure to check out all the other great videos in the Polymath QuickBooks Tutorial Series:


Welcome, viewers, to the final video in the Polymath Bookkeeping QuickBooks Online tutorial series. I am Ingrid Edstrom of Polymath, LLC and Ashland Bookkeeping Services.

We will, of course, be adding more videos about QuickBooks Online in the future, especially as upgrades and new features are being created for this great program every month. In this video, we’re going to take a look at some of the reports that are available in QuickBooks Online, and how to customize those reports to meet your business needs. Make sure to watch this entire series to be sure that you’re comfortable using QuickBooks Online for your business.

[expand title=”Continue reading…”]To get to the Reports homepage, simply click on Reports on the left side of your QuickBooks Online screen. This is the Reports homepage. As you can see, there are a wide variety of reports that you can run to get information on how your business finances are doing. We will take a look at some of the numerous reporting capabilities in future videos as requests come in from our viewers. In this video, we will take a specific look at the Profit and Loss, and Balance Sheet reports in greater depth as these are the most commonly used and requested reports for any business.

Please find us on Facebook and post a request if you have more questions about other reports that are available. Keep in mind that the key point of reports is to make sure that you have the answers that you need to your questions about your business. How is your business doing? Are you meeting your goals? Who is your best customer or best-selling product or service? All of these tools are there so that you can make educated business decision. So it’s a great idea to review your reports on a very regular basis.

The first report that we’re going to take a look at is your Profit and Loss report. The Profit and Loss includes the income that you make from your customers, your cost of sales, and your overhead expenses. Cost of sales, or cost of goods sold, are your direct expenses. These are the products or services that have a direct relationship to what you are selling to your customers. That can include the products that you purchased for resale and the labor that you do for your customers. Your sales minus your cost of sales will give you your gross profit. It’s important for you to see the ratio, or margins, of your direct costs to your sales so that you know whether the work that you’re doing is profitable.

Your expense accounts in QuickBooks are for your company overhead, or indirect expenses. These are the costs of doing business that are not directly related to the products and services that you sell, for example, your rent, utilities, or office supplies. These are all things that you need to run your business, but you are not reselling them to your customers. When you subtract your expenses from your gross profit you get your net profit. This is also known as the bottom line of your business, simply because it’s the bottom line on your most important report. So this is what the Profit and Loss report will look like when you first open it in QuickBooks Online. If you want to see more details about the transactions that make up any number on this report, simply click on that number to view a detail report of all the transactions that create that value.

To change this report appearance or filter the data, you just have to click on Customize. In the dialog box that opens you can change many things. For example, this is where you can change between cash and accrual basis for your report. If you’re not sure what that is, please visit the Polymath blog for more information about cash and accrual basis reporting. We also suggest looking at the Profit and Loss with columns separated by a month. This is how the report will look when it’s broken out into columns by month. By viewing your profit and loss by month, it gives you the ability to notice trends in your business over the course of the year. You may also notice outliers in the data that can point to miscategorized transactions or other mistakes.

At the bottom of the report you can see the bottom line for each month, and at the far right it will show you the total for the year. You will notice in this sample company that they use an expense account that we strongly discourage. It’s best to avoid putting anything in Miscellaneous expense whenever possible, and I even remove this account from the Chart of Accounts entirely sometimes. Every expense in your business has a proper place and you will get the best information from your reports if you are consistent in how you categorize your transactions. If you see transactions in the Miscellaneous expense account, take a look at them and see where they might be able to go where they’ll give you better information to make sure that you can make educated business decisions moving forward.

As a comparison, if the Profit and Loss report is like the movie of your company over a set period of time, it shows you all of the ins and the outs and it tells the story of that time period, this report that we’re seeing now is the Balance Sheet. If the Profit and Loss is the film, the Balance Sheet is the photograph. It shows us a snapshot of your business at a single point in time, and it is always a cumulative of everything that happened up to that point in time. The Balance Sheet shows us your asset accounts, which is everything your company owns. Assets include the money in the bank, furniture and equipment, as well as your accounts receivable which is the money that is owed to you by your customers on open invoices.

Next on the Balance Sheet we have your liability accounts, which is everything that your company owes to others. This can include credit cards, business loans, and your accounts payable, which is money that you owe to your vendors on unpaid bills. Finally on the Balance Sheet we have your equity accounts. Equity is your company’s net worth. These accounts show the amount that you have invested into and drawn out of our business over time, as well as the retained earnings of the business. Retained earnings is the sum total of all of your net income over time. If we were to run your profit and loss for all dates, and your balance sheets for all dates, the retained earnings on the balance sheet would match the net income from your P&L.

The balance sheet will always balance, meaning that your total assets will equal your liabilities plus your equity. You can see at the top of the report all of your current assets, and at the bottom of the report is the liabilities and the equity. QuickBooks Online will not allow you to record an unbalanced transaction, so you don’t need to worry about getting your balance sheet off balance. These numbers will always equal each other. The important thing to keep in mind about the balance sheet is that it’s very important to run this report to help ensure that your business books are correct. For example, if you have a negative number in one of your bank account balances, there is either an error somewhere in your books or you might be bouncing checks. Either way, you want to review and understand this report on a regular basis for proper business health.

Now that we’ve taken a detailed look at the Profit and Loss and Balance Sheet reports, let’s look at just a couple of other great reporting tricks in QuickBooks Online. If you plan to be regularly running the same report, you can save all of your formatting by clicking on Save Customizations. This will bring up a dialog that allows you to name that report. If you would like all of the users in your QuickBooks Online company file to be able to see this same report, make sure to check the Share This Report With All Company Users and then click OK. To get to your customized report the next time you login, just click on My Custom Reports from the Reports homepage.

Finally, you can have custom reports automatically emailed to you on a set schedule. To set up an email schedule from the Custom Reports page, select the report and click Edit. In the Settings window, click on Edit Schedule. In the popup that opens, you can have any kind of set schedule that you would like based on your business needs. Then enter the email address or addresses that you would like to send the reports to, and include any custom message that you would like. You will now see on the Custom Reports page that this report is scheduled to email. In this case, we set the report to email monthly.

You are now ready to run all of your business finances using QuickBooks Online. You can create invoices and sales receipts, receive payments, deposit money into the bank, enter expenses, enter and pay bills, and review your company’s financial reports. Stay tuned to polymath.com for more educational videos coming soon, and find us on Facebook to let us know what videos you would like to see next. I’m Ingrid Edstrom of Polymath, LLC and Ashland Bookkeeping Services. Thank you for watching. [/expand]


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