Keeping on the Accounting Preferences section, under Company Preferences, we are going to look at a few options a CPA or bookkeeper would use. These are safeguards to try to keep mistakes from happening.
The first is one of the most important warnings QuickBooks can give you! Always make sure the ‘Warn when posting a transaction to Retained Earnings’ box is checked. Unless a CPA or bookkeeper gives you entries to make, you should never post anything to retained earnings. Doing so will cause you and your CPA time and money. The CPA will have to track down the transactions that were made, then reverse them out before they can prepare a tax return.
There are tons of preferences available in QuickBooks. Finding the perfect settings is key.
The second option that might be used after a tax return is completed by a CPA or bookkeeper is Closing Date. This feature can be set with a date and a password. A CPA might use this after the tax return is completed to make sure nobody goes back into that tax year and make changes that would disagree with the tax return. If you have multiple people in your QuickBooks file, this might be a good option when you close out a month. Only the Administrator can set a closing date.
Now we are ready to look at the Accounting Preferences. Under the Company Preference tab, you can turn on account numbers, use class tracking, automatically assign general journal numbers, set warnings, and closing date.
As accountants and bookkeepers, we like to use account numbers. When you turn on account numbers, QuickBooks will automatically assign account numbers to the accounts that QuickBooks automatically sets up. If you’ve added accounts to the Chart of Accounts, then you’ll need to also add those account numbers.
Class tracking is another handy tool. If you need to track income expenses by certain groups then class tracking is a great tool. Once you turn this on, you’ll need to enter classes on your transactions. Then you can run reports by class to show the classes by groups.
There are several warnings that you should make sure you have turned on. These are another internal control that can keep you from making too many mistakes!
Setting personal and company wide preferences allows you to customize your workflow to maximize efficiency.
The last of the General section we are going to discuss, is Date and Time. You’ll find the Date section at the bottom of the My Preferences Tab. The Time section is on the Company Preferences Tab.
There are two options regarding date. You can choose to have the current day automatically enter on a transaction, or to have the last entered date. QuickBooks requires one of these to be marked. If you are using your QuickBooks on a daily basis, and entering your items regularly, then you will want to choose Use today’s date as default. There aren’t too many reasons you would want to have Use the last entered date as your default.
If you track time, either in your Customer Module or the Payroll Module, then you’ll want to make sure you have the time set to your preference. QuickBooks lets you choose to use either decimals or minutes. I find decimals are the easiest to use, but you might have a time tracking system that goes by minutes. Either way, you have the option of choosing which works best!
That concludes the tips for the General section. Check back for our next section, Accounting!