Lagerquist Accounting Blog

Read the latest blog articles from Lagerquist Accounting and Advisory.

Subscribe for Blog Updates

    Sign up to our newsletter for latest news and updates, as well as special announcements.

    Recent Blog Articles

    Key Steps to Set Up, Tune and Optimize QuickBooks for Your Small Business

    Posted by Lagerquist Accounting & Advisory

    Key Steps to Set Up, Tune and Optimize QuickBooks for Your Small Business

    Intuit QuickBooks is the overwhelming market leader in small business accounting software, representing nearly 80% of the entire market. There is an increasing movement to create alternatives, especially in the cloud marketplace, where products such as Xero, Zoho, Gusto, Wave and Freshbooks are competing to take a leading position against the dominant role of Intuit’s flagship product.

    However, small businesses often fail to take essential steps that can truly optimize their use of QuickBooks to achieve better results, stronger reporting capabilities and more accurate management of their finances. With that in mind, here are five key steps your small business can take to strengthen your configuration and optimization of QuickBooks for today and tomorrow.

    1. Make your chart of accounts work for you.

    Yes, it’s true that the IRS specifies a core set of standards by which all small businesses should effectively frame their chart of accounts, in order to make tax planning easy and transparent. But that’s the beginning, not the end. For example, a standard chart of accounts will set up accounts for advertising, postage and printing.

    But does that really reflect today’s reality when it comes to how you define and execute your marketing spend? Probably not. Consider re-labeling that advertising account as “marketing” and then under it, setting up a series of sub-accounts for the different marketing channels you might deploy — including digital, print, outdoor and more. By the same token, postage spending may be important to categorize for compliance purposes, but for management purposes the question is how much you spend on postage in different categories — such as marketing mailings, customer mailings, invoicing, etc.

    Again, the key is to make your chart of accounts work for you — and that means modeling it after the questions you need to answer as you make strategic investment and allocation decisions for your business.

    2. Connect your bank and card accounts to properly model your financial flow.

    There was a time when life was simple for a small business owner. You set up a bank account, received payments, paid bills and that was it. Life is not like that anymore. Now, you probably have one or more business credit or spending card accounts, many of your expenses are auto-billed on a recurring basis, a line of credit is floating out there as well, and different funds flow in different ways. This can become extraordinarily confusing very quickly, and you can’t afford to get disoriented when it comes to your cash flow every month.

    That’s why you need to work closely with your accountant to establish a financial flow that accurately reflects your business and banking configuration. Make sure that your credit card transactions align with the correct month, and that they are allocated individually to each appropriate expense category. There’s no point in collecting airlines miles at the expense of cash flow clarity, and no one needs their accounting system to tell them just how much they spent to pay their company credit cards each month. You need accurate details and allocations, regardless of how you paid the bill or when the funds were expended.

    3. Take the time to use QuickBooks the right way.

    Yes, it’s easy to use QuickBooks in part because the system will allow you to skip steps if you truly want to. Perhaps the biggest example is paying vendors without tying bill payments directly to vendor invoices. Yes, you can do it but, like anything, if you skip steps you might pay the price later on.

    In this case, it’s impossible to accurately track where your accounts payable stands if you don’t take the time to create bills first. In addition, you won’t be able to effectively time payments to maximize cash on-hand as you could if you were able to see what pending bills are due when over time going forward, and then time your payments accordingly. This is just one example of many — but the bottom line is, the better you use the system, the better it can serve you.

    4. Use QuickBooks to truly integrate, automate and communicate.

    For the last twenty years, small businesses used QuickBooks to manage and track their finances. But today’s QuickBooks can do so much more. It can allow you to email invoices to customers and have them pay automatically. It can support emailing of customer statements, sending reports, and with the right extensions or plug-ins, it can also support payroll automation, time tracking, expense management, data collection and more. To make this even more seamless for customers, Intuit has established the QuickBooks Apps marketplace, which includes hundreds of applications and solutions for seamless integration. To learn more, go to

    5. Commit to using effective reports on a monthly and quarterly basis.

    QuickBooks comes with a powerful set of standard reports that every small business owner should rely upon. It’s essential that you review your three basic financial statements each month: the income statement, balance sheet and cash flow statement. In addition, Intuit offers QuickBooks Advanced Reporting (QBAR) which offers more robust and customizable reporting for enterprise users. Beyond that, there are third party reporting solutions such as Fathom and Spotlight which allow you to create highly configurable and real-time reports to address performance metrics such as Key Performance Indicators (KPIs) while integrating directly with QuickBooks.

    These five steps all focus on three core QuickBooks optimization objectives: configuring the system effectively, using the system accurately and extending the system to meet your real-world business needs efficiently. By focusing on configuration, usage and extension you will find the best opportunities for enhanced business performance, with QuickBooks as a powerful cornerstone ready to support your growth.

    Photo by John Schnobrich on Unsplash

    Leave a Reply

    Your email address will not be published. Required fields are marked *

    Lagerquist Accounting Blog

    Welcome to the Lagerquist Accounting & Advisory Blog.

    Find out more