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Prior Issues

Shipping Delays In Receiving QuickBooks 2004 Product Orders
For the past six weeks, some QuickBooks customers have experienced shipping delays in receiving their products. Intuit, the maker of QuickBooks, has taken aggressive steps to resolve this situation and return to the level of excellent service expected from QuickBooks customers.

For those who have been effected by this inconvenience, Intuit is providing a complimentary copy of the software program “3001 Business and Sales Letters”, a $49.99 retail value. This program is a valuable resource for both business and personal letters.

Download your free gift at http://www.quickbooks.com/support/businessandsalesletters.html. This free download expires January 31, 2004.

Sunset of QuickBooks 2001 Reminder
Effective April 30, 2004, Intuit will discontinue live support for QuickBooks 2001 for Windows, subject to certain exceptions. That is, QuickBooks 2001 is being retired or "sunsetted." Sunsetting older products, a common practice in the software industry, allows Intuit to focus their resources on supporting their more current products, which are used by the vast majority of QuickBooks customers.

Also affected are QuickBooks Pro 4.0 for Mac and several services related to QuickBooks 2001 for Windows and QuickBooks Pro 4.0.

If you use QuickBooks 2001 and want to purchase or upgrade to QuickBooks 2004 at a 10% to 20% discount, click here. Please note that when you purchase or upgrade to QuickBooks 2004, QuickBooks will automatically convert your QuickBooks data to the new version.

Expert Analysis Tool
Note - This feature is available only in the QuickBooks Premier and Enterprise Solutions editions.

The Expert Analysis tool helps you better understand your financial data and improve the performance of your business. The Expert Analysis tool assesses performance trends for your business in important areas such as profits, sales, borrowing, liquidity, assets, and employees. It also shows how you are performing compared to others in your industry. Comparisons are available for more than 130 specific industries.

To open the Expert Analysis tool:
From the Company menu, choose Planning & Budgeting, then choose Use Expert Analysis Tool.

What Should I Do At Year-end To Prepare To File My Income Taxes?
What Should I Do At Year-end If I Use Subcontractors?
What Should I Do At Year-end If I Have Employees?

What Should I Do At Year-end To Prepare To File My IncomeTaxes?
Verify Petty Cash Entries For The Tax Year
Make sure all petty cash entries are up to date and balance your petty cash account. These steps can help you uncover some frequently missed expenses that can add up to a lot of money.

Make Year-End Accrual Adjustments And Corrections
If your business accrues payroll and liabilities, or prepays any expenses (such as insurance, subscriptions, etc.) and then carries the prepayment as an asset, you may need to make journal entries to ensure that these accruals and prepayments are handled at year-end. Please consult your accountant to determine whether these types of entries apply to your business and for assistance with clearing your prepaid and accrued expenses.

Review Details Of All New Equipment Purchased During The Year
New equipment details should include:

• date of purchase
• purchase price
• type of asset
• make
• model
• year
• new or used

Keeping track of these details will make the task of recording depreciation much easier.

Fixed assets such as furniture, computers, vehicles, and buildings contribute to the operating capacity of a business over many years. Because of their long-term value, fixed assets are treated differently than other business expenses. Typically, you expense the purchase price of a fixed asset over its useful life, not just the year in which you made the purchase. This business expense is known as depreciation.

Make All Asset Depreciation Entries And Adjustments
Each fixed asset should have its own "parent" asset account in the chart of accounts, and two subaccounts: one for the original purchase price of the item, and the other for its accumulated depreciation. For example, you could have a "Company Vehicle" parent account with two subaccounts, "Purchase" and "Depreciation." You will also need a separate expense account to track all depreciation expenses.

To learn more about depreciation accounts

• From the QuickBooks Company menu, choose Planning & Budgeting and then Decision Tools and then Depreciate Your Assets.
• From the QuickBooks Help menu, choose Help Index, and then search on
  assets and select "depreciation of" or “depreciation.”

Review Fringe Benefits That Need To Be Reported On Form W-2
Fringe benefits are compensation other than wages provided to an employee and can be either taxable or non-taxable. Examples of fringe benefits include:

• health and life insurance
• public transportation subsidies
• moving expense reimbursement
• employer-provided vehicles
• educational reimbursement plans
• group-term life insurance
• employee loans that are forgiven

If you're not sure whether you offer taxable fringe benefits to your employees, consult with your accountant, tax advisor, or payroll service.

Print Financial Reports

Trial Balance Report
Print the Trial Balance report for the day after the year that you just closed. This allows you to make sure that all income and expense accounts have a zero balance and are closed out to Retained Earnings. Check that the balance of your bank account in the Year to Date column agrees with your Trial Balance Report.

To create the Trial balance report
From the Reports menu, choose Accountant & Taxes and then Trial Balance.

Profit & Loss Standard Report
Verify that the Profit & Loss report includes the correct dates and is set to the appropriate accounting method (cash or accrual).

To create the Profit & Loss report
From the Reports menu, choose Company & Financial and then Profit & loss Standard

Balance Sheet Standard Report
Reconcile and verify all your Balance Sheet items. Be sure that this year’s beginning Retained Earnings matches last year’s ending Retained Earnings.

To create the Balance Sheet Standard report
From the Reports menu, choose Company & Financial and then Balance Sheet Standard

Print Income Tax Reports To Verify Tax Tracking
If you import your QuickBooks data into Intuit's TurboTax Business tax preparation product, or your accountant imports your data to Intuit's ProSeries tax preparation product, the Income Tax reports will help with the preliminary tasks of verifying your tax line assignments and the amounts QuickBooks tracked for each tax line.

Tax Line Assignments
To track income tax-related transactions in QuickBooks, each tax-related account must have a tax line assignment. The accuracy of the tax reports depends on whether each tax-related account has the right tax line assignment. If you went through the EasyStep Interview to set up your company file, most of your accounts will automatically have tax line assignments. The default tax line assignments have been expanded to include Balance Sheet accounts for business tax products. When you create a new Balance Sheet account, the tax line assignment will be prefilled for you based on the type of Balance Sheet account you're creating. The Income Tax Preparation Report shows the tax line associated with each account in your chart of accounts. Be sure to review these tax line assignments, and edit if necessary, before generating the income tax summary or income tax detail report.

Income Tax Preparation Report
This report shows the tax line assigned to each account in your chart of accounts. Be sure to review these tax line assignments, and edit if necessary, before generating the income tax summary or income tax detail report.

To associate any tax-related accounts with a tax line

1. From the Company menu, select Chart of Accounts.
2. Right-click the account and choose Edit.
3. Select the appropriate Tax Line from the drop-down list and then click OK.

To create the Income Tax Preparation report
From the Reports menu, choose Accountant & Taxes and then Income Tax Preparation.

Income Tax Summary Report
This report helps you gather data for your federal income tax forms. The report shows the amount QuickBooks tracked for each tax line on the tax forms that your company files with the federal government. The tax lines are assigned to individual accounts in your chart of accounts. Initially, the report covers the current tax year. You can change the period covered by choosing a different date range from the Dates list. To see how QuickBooks calculated an amount, double-click the amount.

To change the associated tax line for a tax-related accounts

1. From the Company menu, select Chart of Accounts.
2. Right-click the account and choose Edit.
3. Select the new Tax Line from the drop-down list and then click OK.

To create the Income Tax Summary report
From the Reports menu, choose Accountant & Taxes and then Income Tax Summary.

Print And Mail Forms W-2, W-3, 1099, 940, 941 And 1096
Notify employees to review their address and Social Security number on their paychecks and to verify that their check name appears exactly as it appears on their Social Security card. Check all federal and state employer identification numbers to be sure the W-2s and tax reports are being reported under the correct employer number. The FEIN is used each quarter for reporting purposes when filing a company's 941 form, as is the state employer identification number (SEIN) for any state quarterly reporting forms. Be sure that when you are verifying that the FEIN and SEIN are correct, you also verify that the company's address is correct. Many companies have more than one location; therefore, this verification of FEIN's and business address is extremely important.

What Should I Do At Year-end If I Use Subcontractors?
Ensure That 1099 Information Is Correct

Set Up A 1099 Vendor
To set up a vendor as a 1099 vendor:

1. From the Lists menu, choose Vendor List.
2. Select the vendor for whom you want to file 1099-MISC forms.
3. Click the Vendors menu button, and choose Edit.
4. At the Address Info tab, make sure the vendor's address contains the two-letter state abbreviation and the zip code.
5. If the vendor is a person, the vendor's legal name should appear in the First Name, M.I., and Last Name fields
6. If you know the company name but not the person's name, leave the Company Name field blank to avoid double names on the 1099-MISC form.
7. Click the Additional Info tab.
8. Select the "Vendor eligible for 1099" check box, enter the vendor's tax identification number.
9. Click OK.

Set Up A 1099 Account
To set up an account as a 1099 account:

1. From the Edit menu, choose Preferences, and then select Tax:1099.
2. Select the Company Preferences tab.
3. Click Yes, for "Do you file1099-MISC forms?".
4. Choose an account or accounts to associate with the 1099 categories for which you report amounts to the IRS.
   1. Click the Account column and choose an account from the drop-down list.
      Or
   2. For more than one account, choose Selected Accounts from the list and place a checkmark next to each of the accounts you want to use.
5. Click OK.

The accounts you select should be the same accounts you use to track payments related to your 1099 vendors. An account can belong to only one 1099 category. For example, if you set up an expense account named "Payments to subcontractors" and you have selected it to track the 1099 category "Nonemployee compensation", you can not use "Payments to Subcontractors" for any other 1099 category.

Typically, the accounts will be expense accounts but you can also associate an other expense account, a long term liability account, an other current asset account, etc. with a 1099 category.

Note: Your business may not need to report on all 1099 categories, many businesses report amounts only for Box 7: Nonemployee compensation.

Verify 1099 Data

1099 Detail Report
This report helps you verify the information that QuickBooks prints on the 1099-MISC tax form. It provides more detail than the 1099 report.
For each vendor, the report lists the individual transactions that contribute to the vendor's 1099 total. The totals themselves appear in the Balance column.

The report initially shows only the vendors specified as 1099 vendors. To list all vendors in the report, regardless of their 1099 status, choose All Vendors from the 1099 Options drop-down list in the report buttonbar.

Likewise, the report initially shows only transactions assigned to 1099 accounts. To list transactions that may have been assigned erroneously to non-1099 accounts, choose All Allowed Accounts from the 1099 Options drop-down list in the report buttonbar.

To go directly to one of the transactions listed, double-click the transaction.

To create this report
From the Reports menu, choose Vendors & Payables and then 1099 Detail.

Verify 1099 Vendor Information

Create A 1099 Report
To create a 1099 report that will verify your 1099 vendor information:

1. From the Reports menu, choose Vendors & Payables, and then choose 1099 Summary Report.
2. Note: Be sure the date range for the report is the same as the one for your 1099-MISC forms. Change it if necessary.
3. Examine the report for missing 1099 vendors.
4. In the 1099 report buttonbar, choose "All vendors" from the list. If a missing 1099 vendor appears, you need to set up the vendor as a 1099 vendor.
5. After all 1099 vendors are set up correctly, if some are still missing, choose "All allowed accounts" from the list for accounts.
6. Choose "Only 1099 vendors" from the list for vendors.
7. Double-click any amounts in the Uncategorized column.
8. In the Account column of the 1099 Detail report, if you see any accounts that you need to set up as 1099 accounts.
9. Repeat Steps 7 and 8 for each amount in the Uncategorized column. Choose "Only 1099 accounts" from the list for accounts.
10. Choose "Only 1099 accounts" from the list for accounts. Note: You should now see all expected 1099 vendors to whom you have paid amounts that total or exceed the threshold for the 1099 category.
11. If a vendor is still missing, choose "Ignore thresholds" from the list for thresholds. The vendor may not have met the threshold for the year.

Note: The report covers actual payments made during the year, regardless of the original date of the vendor's bill.

Print And Mail 1099s

Printing Form 1099-MISC Or 1096
Create 1099 reports to verify all 1099 information (vendors, accounts, and amounts) before printing the forms.

Note: You must be in single-user mode to do this.

Print 1099s
To print 1099s:

1. Make sure your printer is turned on and is online.
2. Make sure you have pre-printed 1099-MISC or 1096 forms in your printer.
   • If you have a continuous printer, you may need to adjust for additional thickness due to the copies
   • If you have a page-oriented printer, it's simpler to print copies separately than all at once. Do not collate your pre-printed forms before putting them into the printer. Instead, start by loading all the Copy 1 forms. After you have printed all the Copy 1 forms for each vendor, load and print the Copy 2 forms.
3. From the Vendors menu, choose Print 1099s/1096.
4. Select the time period covering the 1099-related payments you want in the forms, then click OK. You can print up to 249 forms. What to do if you have 250 or more 1099 vendors
5. Click Preview, and verify that each vendor's address will print correctly.
6. To see details of each address, click Zoom In. When you're satisfied with the accuracy and appearance of the addresses, click Print 1099.

Print 1096
To print 1096

1. Follow Steps 1 through 4 above.
2. Click Print 1096.
3. Enter Contact Name (name of person to contact at your company) on 1096 Information window. If you will not be required to file Form 1099 in the future, check "This is my Final Return".
4. Click OK.
5. On the Print 1096 dialog, click Preview to review the document then click Print.

Correct Invalid Addresses For 1099 Vendors

Resolve 1099 Errors
The message "You have selected to Print 1099s for one or more vendors who do not have a valid address on file. Are you sure you want to continue?" occurs when a vendor's address begins on the first line of the address box instead of the vendor's name. To resolve the problem, edit the vendor's record in the Vendor list and begin the vendor's address on the second line of the address box.

What Should I Do At Year-end If I Have Employees?
Please note: This addresses QuickBooks users who use QuickBooks Do-It-Yourself Payroll only.

Update Your Payroll Tax Table

Getting A Payroll Update (Online Option)
For QuickBooks to calculate your payroll taxes and provide payroll tax forms, you must sign up for one of the integrated Intuit Payroll Services and connect to the payroll service to get payroll updates. Internet access is required. We recommend that you connect to the payroll service each time you pay your employees (or at least every 45 days) to help ensure that you have the most current tax table available.

Note: QuickBooks will automatically clear your YTD payroll amounts.

Pay Payroll Liabilities
QuickBooks lets you create payments for all your payroll liabilities. You can also add penalties, expenses, and discounts to the checks. There are three ways to create and pay payroll liabilities in QuickBooks:

• Paying payroll taxes and liabilities by check
• Paying federal payroll taxes online (using E-File & Pay)

Important: QuickBooks cannot compute payroll taxes accurately unless it has a current tax table. To receive tax tables and keep them current, you should subscribe to QuickBooks Do-It-Yourself Payroll. This service regularly sends you payroll updates, which include the most up-to-date tax tables available.

Note: Before you can create payments, you must have a payee name associated with each liability.

Fix Incorrect Payroll Totals
Help from a technical support representative will probably be required since specific circumstances would cause YTD totals to be incorrect.

Review W-2 Forms
Before you can print W-2 forms, you must review the form for each employee who worked for you at any time during the year. If you notice anything missing, or if you want to adjust for something you don't track on paychecks, you can edit the fields on the form.

Important: If you are uncertain about how to report a specific benefit or amount on the W-2 form, consult your accountant or federal tax guidelines.

1. Display the Process W-2s window.
2. If the year shown in the Year field is not the tax year for which you want to process W-2 forms, choose the correct tax year from the drop-down list.
   From January 1 to the last day of February (28 or 29), QuickBooks assumes you want to review W-2 forms for the previous year, and displays the previous year. From March 1 on, QuickBooks displays the current year.
   If you have E-File & Pay and you selected "E-file" on the W-2/W-3 Filing window, QuickBooks automatically sets the year to the previous year. E-File & Pay only allows you to e-file W-2 forms for the previous year.
3. Select the employees whose W-2 forms you plan to review now.
4. Click Review W-2.
5. Examine the information displayed on the first employee's form.
6. If necessary, enter corrections for Boxes 1 through 20.
   If employee or employer information is incorrect in Boxes b through f, click Cancel, then make the change in the appropriate window.
7. Click Next to record your approval of the employee's W-2 form (with any changes).
8. Repeat Steps 5 through 7 to review the W-2 forms for other employees you marked. At the last W-2 form, click OK.

Verify Numbers On W-2 Forms
Click on a box to get more information about that section. If you are uncertain about how to report an amount on the form, consult your accountant, professional tax advisor, or federal tax guidelines.

Print And Distribute W-2s
QuickBooks prints W-2 information for each employee in either of the following ways:

• Print W-2 information and forms on blank paper (available to subscribers of the Do-It-Yourself Payroll service)
• Print W-2 information on standard (preprinted) W-2 forms

For both options, first review your W-2 forms online. If you're printing on preprinted forms, you should also test how your printer prints on W-2 forms.

Note: To ensure your Forms W-2 are accepted by the U.S. government, make sure the following are both true:

• Your printer is loaded with 8.5" x 11", or 8" x 11", white- or cream-colored paper, of at least 18-lb. weight.
• The printer ink is black.

To print W-2 forms on blank paper:

1. Display the Process W-2s window.
2. Click Mark All, or select the employees whose W-2 forms you want to print.
3. Click Review W-2, review each W-2 form, then click OK.
4. Click Print W-2s.
5. Select Blank paper, and click OK.

Remember: Print a W-3 form to summarize the W-2 forms.

Important: If you are filing Forms W-2 and W-3 electronically with the Social Security Administration, do not mail Copy A.

Note: If Box 14 contains more than 3 lines, a second form prints the overflow information. (The additional form displays only the name, address, and overflow information.)

Printing Form W-3
After you print your W-2 forms, you must print a single W-3 form to summarize the individual W-2 forms. QuickBooks calculates the amounts for the W-3 form by adding the W-2 amounts. Unlike the W-2 forms, you cannot edit the W-3 form.

QuickBooks prints W-3 information in either of the following ways:

• Print W-3 information and form on blank paper (available to subscribers of the Do-It-Yourself Payroll service)
• Print W-3 information on a standard (preprinted) W-3 form

To obtain an accurate W-3 form, first review your W-2 forms online. If you're printing on preprinted forms, you should also test how your printer prints on a W-3 form.

If you use E-File & Pay to file your Form W-2s, you do not need to print and file a Form W-3.

Process Form 940

Part I Computation Of Taxable Wages
Line 1: Total payments = sum of payroll items with Tax Tracking (in versions prior to 6.0, it is called W-2 tracking) set to Compensation, Tips, Dependent care, Fringe benefits, and Other Moving Expenses.
Line 2: Exempt payments = user's entry (exempt payments as defined in the 940 instructions).
Line 3: Payments of more than $7000 = Line 1 minus total FUTA wage base.
Line 4: Total exempt payments = Line 2 plus Line 3.
Line 5: Total taxable wages = Line 1 minus Line 4.

Part II Tax Due Or Refund
Line 1: Gross FUTA tax = 0.062 x Line 5 from Part I.
Line 2: Maximum credit = 0.054 x Line 5 from Part I.
Line 3: Computation of tentative credit. Form 940 supports a maximum of 5 states.

• Column (a) Name of State = Two-letter state abbreviation from the Company Info screen.
• Column (b) State ID = State Employer ID from the Company Info screen.
• Column (c) Taxable payroll = sum of SUI wage base.
• Column (e) State Experience rate = Rate as defined on the state unemployment payroll item.
• Column (f) Column c multiplied by .054.
• Column (g) Column c multiplied by column e.
• Column (h) Column g minus column f or zero if less than zero.
• Column (i) Contributions actually paid to state = sum of SUI taxes paid.

Line 3b: Total tentative credit = sum of columns (h) and (i).
Line 6: Credit = whichever is the smaller of Line 2 and Line 3b.
Line 7: Total FUTA tax = Part II Line 1 minus Line 6.
Line 8: Total Federal Unemployment tax deposited = Sum of Federal Unemployment tax from the liability checks and prior payments for the year.
Line 9: Balance due = Line 7 minus Line 8 if Line 8 is smaller than Line 7.
Line 10: Overpayment = Line 8 minus Line 7, if Line 8 is greater than Line 7.

Part III Record Of Quarterly FUTA Liability
Quarterly FUTA liabilities = sum of FUTA taxes for each quarter (from paychecks, liability adjustments, and YTD information).

Note: Running a QuickReport on the Payroll Item may help you verify the accuracy of the amounts, or customize to show the wage base per item.

To run a QuickReport

1. From the Lists menu, select Payroll Item List.
2. Select the payroll item in question.
3. Click the QuickReport button at the bottom of the Payroll item list.
4. You may need to change the date range at the top of the report to reflect the quarter for which you are processing the 940.

Process Form 941
The following chart shows you how QuickBooks calculates the numbers for each line on Form 941.

Note: Running a QuickReport on a payroll item may help you verify the accuracy of the summary amounts for the item.

To run a QuickReport on a payroll item:
1. From the Lists menu, choose Payroll Item List.
2. Select the payroll item in question, click the Report button, and then choose QuickReport.
3. Change the date range at the top of the report to reflect the quarter for which you are processing the 941.

Verify W-4 Information
Be sure to have each employee review the personal information on their W4 forms at the end of each year.

Year-end Tasks Every QuickBooks User Should Do

Year-end Tasks Every QuickBooks User Should Do
Close Your Books
QuickBooks makes some automatic adjustments to your books at year-end, and even though you don't have to close your books you can still protect that data. In QuickBooks version 5.0, you can protect last year's transactions from accidental change by using a transaction password. In QuickBooks version 6.0 and later, there is a new password/permissions system that is also used to protect last year's transactions. Advantages to not closing your books:

• Detail: You always have easy access to last year's data, including the details of every transaction.
• Reporting: You can create comparative reports between this year and last year. Additional Notes
• For additional information on year-end tasks, check the index of the onscreen Help and the User's Guide for periodic tasks.
• For depreciation of fixed asset instructions, check the index of the on-screen Help and the User's Guide for depreciation.
• For adjustments that transfer money from one income or expense account to another, check the index of the on-screen Help and the User's Guide for general journal, entries.
• For transaction passwords, check the index of the on-screen Help and the User's Guide for passwords, closing books or period, or passwords, transactions.
• For yearly tax forms, check the index of your on-screen Help and the Users Guide for tax forms

Automatic Year-End Adjustments QuickBooks Makes
QuickBooks performs certain year-end adjustments, based on the fiscal year start month you entered in the Company Info window under the File menu.

• QuickBooks for Windows automatically adjusts your income and expense accounts at Year-End to zero them out. Therefore, you start your new fiscal year with a zero net income.
• QuickBooks for Windows makes an adjusting entry with your net income. It posts it to the Retained Earnings account, which QuickBooks creates automatically. For example, if your profit for the year was $12,000, on the last day of your fiscal year the equity section of your Balance Sheet would show a line for net income of $12,000.
• On the first day of the new fiscal year, QuickBooks increases your Retained Earnings equity account by the previous year's net income ($12,000 in this example) and decreases your net income by the same amount. This way, you start each new fiscal year with a net income of zero.

Condense And Back Up Your Data
The Archive & Condense Wizard provides you with several options for condensing your company data file, which can help reduce its size and improve performance. You make step-by-step selections as you progress through the wizard. From the File menu, choose Archive and Condense Data.

Option 1: Condense transactions as of a specific date
This option removes closed transactions dated on or before the specified date and enters monthly summary journal entries for them. Transactions dated after the specified date are retained as are open transactions dated on or before the specified date.

You can improve the effectiveness of condensing by selecting additional transactions to be removed, such as unreconciled bank transactions or invoices that have been marked "To be sent."

After Condense removes transactions, you may be left with list items that are no longer used, such as unused accounts, unused vendors, or To Do Notes that have been marked "Done." You can instruct QuickBooks to remove these items as well.

Option 2: Remove all transactions

This option removes all transactions from your company file. Your lists, preferences, and service subscriptions will be retained. Use this option if you wish to start a new company file without re-entering names and items. (Not available if using payroll or online banking features.)

Backing up: Regardless of which option you choose, the Archive & Condense Wizard will prompt you to make a backup of your company data file before condensing.

Start A New Data File (Optional)
From the Company menu, choose Archive and Condense Data. When the Archive and Condense wizard appears, select Remove ALL Transactions if you wish to start a new company file without re-entering names and items. (Not available if using payroll or online banking features - see below.)

I. QuickBooks enables you to start a new company file each year, eliminating the data entry required the first time you set up a file. Please be aware of the following limitations:

• Due to critical payroll information contained within payroll files, this feature is not available to payroll users.
• Due to security-related and time-related data from financial institutions, this feature is not available to QuickBooks online banking users.
  You will not be able to run comparative annual reports if you choose to create a new company file.

While closing a company file at year-end is not required, many users find that the volume of transactions over the course of a year results in large data files and reduced computer performance. Starting a new company file helps to prevent these problems while providing an extra measure of security against accidental changes to data for a previous tax-reporting period. (It is also possible to make previous years' data secure by assigning a closing date in QuickBooks. A password is required to make changes to the data.)

II. Prior to starting a new company file, create and print the following reports dated December 31st of last year:

1. Customer Balance Detail Report
2. Vendor Balance Report
3. Balance Sheet (standard)

You will need these reports to recreate the Accounts Receivable and Accounts Payable year-end balances in the new company file, as well as the opening balances for all Balance Sheet accounts. You will also need to manually enter inventory value, stock status, and any outstanding banking transactions.

III. To start a new company file:

1. Make sure you have printed copies of the three reports in Step II above.
2. From the File menu, choose Archive & Condense Data.
3. Select Remove ALL Transactions option, then click Next.
4. When the warning message appears, click Yes.
5. Click Begin Condense to proceed.
6. QuickBooks will prompt you to make a backup of your company file, either to 3.5-inch disks or to your hard drive. Also, an archived copy of your original company is created in your QuickBooks directory with the name "Archive Copy MM/DD/YY Company Name." If needed, you can easily restore your original company file from either the backup or archive copy.
7. Follow the steps to completion.

Your new company file retains your lists, preferences, and service subscriptions, but no transactions. You may begin entering opening balances for Balance Sheet accounts by choosing Make Journal Entry from the Company menu.

To rebuild the outstanding balances in Accounts Receivable, you can either create "balance forward" invoices for a lump sum customer balance, or you can recreate individual invoices. The Enter Bills option in the Vendors menu enables you to recreate vendor balances, charging these bills directly to the Opening Balance Equity account, as opposed to individual expense accounts.

Clear Pre-Paid Expenses And Accrued Liabilities
Confer with your accountant for assistance with clearing your pre-paid and accrued expenses.

Reconcile All Bank Or Credit Card Accounts
Make sure your QuickBooks records agree with the checking, savings, money market, and credit card financial statements you regularly receive.

Note: If you clear a transaction directly in the account register, you will exclude the transaction from the beginning balance shown in the Begin Reconciliation window. To make sure such transactions are included in the beginning balance, you must clear them from the Reconcile window.

1. From the Banking menu, choose Reconcile to display the Begin Reconciliation window.
2. In the Account field, enter or select the account you want to reconcile.
3. In the Statement Date field, enter the date of the bank statement you are trying to reconcile.
4. Compare the opening balance amount shown on your statement with the amount shown in the Beginning Balance field in the Begin Reconciliation window.
   If the opening balances are different
5. Find the ending balance on your statement and enter it in the Ending Balance field.
6. Enter any service charges or interest earned in the fields provided.
   • If the financial statement shows a service charge or interest that you have not yet entered into your QuickBooks records, enter those amounts into the Service Charge and Interest Earned fields.
   • In the Account field for service charges, enter the expense account you use to track service charges. In the Account field for interest, enter the income account you use to track interest income.
7. Click Continue to open the Reconcile window for the account you've chosen.
   The reconcile window displays a list of checks and payments, plus a list of deposits and other credits. Using your latest bank statement, check each of the entries to make sure they match.
8. When you find a transaction in the Reconcile window that matches a transaction on the statement, click the transaction to mark it as cleared.
   • For each transaction you select, verify that its amount matches the amount listed on the statement.
   • If some amounts don't match, or if you find transactions that contain other errors, correct the transactions.
   • If you find a transaction on your statement that is not shown in the QuickBooks list of uncleared transactions, enter the transaction now.
9. When you've finished selecting the transactions, look at the difference amount in the bottom right corner of the Reconcile window:
   • If the amount is 0.00. Click Reconcile Now. You've reconciled the account with the statement. At this point, you can have QuickBooks print a reconciliation report.
   • If the amount is not zero. Your account does not balance for the period of time covered by the statement, and you need to correct the difference.

Create And Print Reports
These reports show how well your business is doing.

Profit & Loss Standard Report
This report summarizes your income and expenses for the month, so you can tell whether you're operating at a profit or a loss. The report shows subtotals for each income or expense account in your chart of accounts. The last line shows your net income (or loss) for the month.

This type of report is also known as an income statement.

To see a list of the transactions that make up an amount, double-click the amount.

To create this report
From the Reports menu, choose Company & Financial and then Profit & loss Standard.

Profit & Loss Detail Report
This report shows year to date transactions (instead of totals only) for each income and expense account.

By default this report displays the adjustments column, which indicates if an account has had any manual adjustments made to it. If you prefer, you can hide the adjustments column.

By default this report does not display the adjustments column. The adjustments column indicates if an account has had any manual adjustments made to it. If you prefer, you can show the adjustments column.

By default this report is collapsed; in other words, for each item containing multiple amounts, QuickBooks combines the amounts into a single amount.

This helps shorten the report and makes it easier to print.

To create this report
From the Reports menu, choose Company & Financial and then Profit & loss Detail.

Profit & Loss YTD Comparison Report
This report summarizes your income and expenses for this month and compares them to your income and expenses for the current fiscal year. You can tell whether you're operating at a profit or loss this month, and you can compare this month's performance against your profit or loss for the fiscal year.

The intermediate lines in the report show subtotals for each income or expense account in your chart of accounts. The last line shows your net income (or loss) for the month and the fiscal year to date.

To see a list of the transactions that make up an amount, double-click the amount.

To create this report
From the Reports menu, choose Company & Financial and then Profit & loss YTD Comparison.

Profit & Loss Prev Year Comparison Report
This report summarizes your income and expenses for both this month and this month last year. You can tell whether you're operating at a profit or loss, and you can compare this month's performance against your profit or loss for the same month one year ago.

The intermediate lines in the report show subtotals for each income or expense account in your chart of accounts. The last line shows your net income (or loss) for this month and the same month last year.

To see a list of the transactions that make up an amount, double-click the amount.

To create this report
From the Reports menu, choose Company & Financial and then Profit & loss Prev Year Comparison.

Profit & Loss By Job Report
This report shows how much you are making or losing on each job. The report includes subtotals for each type of income or expense so you can see where money is coming in and where you are spending it.
To create this report

• From the Reports menu, choose Company & Financial and then Profit & loss by Job.
• You can also create this report by choosing Jobs & Time from the Reports menu, then Profit & loss by Job.

Profit & Loss By Class Report
This report shows how much you are making or losing within each segment of your business, as defined by the QuickBooks classes you have set up. The report includes subtotals for each type of income or expense so you can see where money is coming in and where you are spending it.

If you assigned classes to items and transactions in QuickBooks, you can use this report to review profitability by class. The information in this report will be based on how you use classes in your company file.

Some examples of using classes for a manufacturing/wholesale company include:

• Using classes to track profitability by product line
• Using classes to track departmental spending
• Using classes to track division-level profitability.

If you use classes to track profitability by product line, the columns labeled Income/Revenue and Cost of Goods Sold are broken down by class (since there is a class assigned to those values), but the Expenses columns are not (since there is no class assigned to expenses).

If your report lists amounts in the Unclassified column in the Expense section of the report, don't worry, that is to be expected. However, if you are using classes to track departments or divisions, the expenses should be broken down into the correct column. You can click to QuickZoom to unclassified expenses and assign a class to them.

You can see sample Profit and Loss by Class reports by opening either the Manufacturing Sample Company file or the Wholesale-Distributor Sample Company file included with QuickBooks. From the Reports menu, select Memorized Reports, then Memorized Reports list, and in the Item/Product Reports group select Profitability by Product Line. The customized report includes income and cost of goods sold accounts.

To create this report
From the Reports menu, choose Company & Financial and then Profit & loss by Class.

Income By Customer Summary Report
This report shows your company's net sales income from each customer and job. Initially, the report covers this fiscal year to date, but you can change the period covered by choosing a different date range from the Dates list.

To see a list of the transactions that make up an amount, double-click the amount.

To create this report
From the Reports menu, choose Company & Financial and then Income by Customer Summary.

Income By Customer Detail Report
This report is a more detailed version of the income by customer summary report. For each customer or job, the report lists the sales, returns, and reimbursed expenses related to the customer or job. Initially, the report covers this fiscal year to date, but you can change the period covered by choosing a different date range from the Dates list.

The totals shown in the Balance column are the net sales income from each customer or job during the time covered by the report. The totals reflect customer returns and credits given. The grand total in bold at the bottom of the report is your company's net sales income from all customers and jobs.

To display any of the transactions listed, double-click the transaction's entry in the report.

To create this report
From the Reports menu, choose Company & Financial and then Income by Customer Detail.

Expenses By Vendor Summary Report
This report shows your company's net expenses with each vendor. Initially, the report covers this fiscal year to date, but you can change the period covered by choosing a different date range from the Dates list.

To see a list of the transactions that make up an amount, double-click the amount.

To create this report
From the Reports menu, choose Company & Financial and then Expenses by Vendor Summary.

Expenses By Vendor Detail Report
This report is a more detailed version of the expenses by vendor summary report. For each vendor, the report lists the expense and credit transactions that your company had with the vendor. Initially, the report covers this fiscal year to date, but you can change the period covered by choosing a different date range from the Dates list.

The totals shown in the Balance column are the net expenses for each vendor during the time covered by the report. The totals reflect credits received. The grand total in bold at the bottom of the report is your company's net expenses for all vendors.

To display any of the transactions listed, double-click the transaction's entry in the report.

To create this report
From the Reports menu, choose Company & Financial and then Expenses by Vendor Detail.

Balance Sheet Standard Report
This report provides a financial snapshot of your company as of a specific date. Initially, the date is today's date, but you can change the date by entering a different date in the As Of field.
The report calculates how much your business is worth by subtracting all the money your company owes (liabilities) from everything it owns (assets). The result is what your company is worth: your business's equity. The total for equity includes your company's net income for the fiscal year to date.

To create this report
From the Reports menu, choose Company & Financial and then Balance Sheet Standard.

Balance Sheet Detail Report
This report is a more detailed version of the standard balance sheet report. For each account, the report shows the starting balance at the beginning of last month, transactions entered in the account for this month to date, and the ending balance as of today.

Like the other balance sheet reports, this report calculates how much your business is worth by subtracting all the money your company owes (liabilities) from everything it owns (assets). The result is what your company is worth: your business's equity.

By default this report displays the adjustments column, which indicates if an account has had any manual adjustments made to it. If you prefer, you can hide the adjustments column.

By default this report does not display the adjustments column. The adjustments column indicates if an account has had any manual adjustments made to it. If you prefer, you can show the adjustments column.

By default this report is collapsed; in other words, for each item containing multiple amounts, QuickBooks combines the amounts into a single amount.

This helps shorten the report and make it easier to print.

To create this report
From the Reports menu, choose Company & Financial and then Balance Sheet Detail.

Balance Sheet Summary Report
This report provides a financial snapshot of your company as of a specific date. Initially, the snapshot date is today's date, but you can change the date by entering a different date in the As Of field.

The report calculates how much your business is worth by subtracting all the money your company owes (liabilities) from everything it owns (assets). The result is what your company is worth: your business's equity. The total for equity includes your company's net income for the fiscal year to date.

This report is a briefer version of the standard balance sheet report. It shows totals for each type of account, but does not list balances of individual accounts (for example, the report would show the total balance of all credit card accounts, but would not list individual credit card balances). If you need to see individual account balances, create a standard balance sheet report instead.

To create this report
From the Reports menu, choose Company & Financial and then Balance Sheet Summary.

Balance Sheet Prev Year Comparison Report
This report compares the worth of your business as of a specific date to the same date last year. Initially, the date for comparison is today's date, but you can change the date by entering a different date in the As Of field.

The report calculates how much your business is worth by subtracting all the money your company owes (liabilities) from everything it owns (assets). The result is what your company is worth: your business's equity. The total for equity includes your company's net income for the fiscal year to date.

The "$ change" and "% change" columns provide the comparison to one year ago. They show how much the balance of each balance sheet account has changed since a year ago.

To create this report
From the Reports menu, choose Company & Financial and then Balance Sheet Prev Year Comparison.

Statement Of Cash Flows Report
This report shows how your cash position changed over a period of time. It shows the amount of cash earned from profit, where you received additional cash, and where your cash was spent.

The report shows how much cash was provided or used by:

• Operating Activities
• Investing Activities
• Financing Activities

Initially, the report shows your cash flow for the fiscal year to date, but you can change the reporting period by choosing a different date range from the Dates list.

To see a list of the transactions that make up an amount, double-click the amount.

To create this report
From the Reports menu, choose Company & Financial and then Statement of Cash Flows.

Cash Flow Forecast Report
This report helps you forecast how much cash you'll have by projecting your cash inflows, cash disbursements, and bank account balances on a week by week basis.

To see a list of the transactions that make up an amount, double-click the amount.

To create this report
From the Reports menu, choose Company & Financial and then Cash Flow Forecast.

Creating A Customized Year-End Income Statement Report
For year-end preparation of tax returns or financial statements, you can customize the standard profit and loss report to create a year-end income statement.

To create this report:

1. From the Reports menu, choose Company & Financial and then Profit & loss Standard.
2. On the report buttonbar, click Modify Report.
3. On the Display tab, select "This Fiscal Year-to-Date" from the Dates drop-down list.
4. In the Columns section, select Previous Period, % Change, and % of Income.
5. Click OK to return to the Report window.
6. If this report will be useful to you in the future, click Memorize.

Record Depreciation, If Necessary
If you or your accountant uses QuickBooks Fixed Asset Manager, you or your accountant can determine the depreciation of your assets and update your company file with that information. For more information, see Fixed Asset Tracking and the Fixed Asset Manager.

There are several ways to figure depreciation. Choosing the right method is often a complex decision, one that depends on several factors. Here's how you can make an informed decision.

1. From the Company menu, choose Decision Tools, and then choose Depreciate Your Assets.
2. Read the background information and compare different methods of depreciation.
3. Talk to your accountant and decide how you want to track depreciation in your business.
4. Based on the information provided, enter depreciation expenses on a monthly, quarterly, or annual basis.

Record Disbursements
You can make transfers to the Retained Earnings account from the registers of other balance sheet accounts; or you can use Retained Earnings in a general journal entry. Your accountant can advise you if adjustments to this account are appropriate.

While you might adjust the Retained Earnings account to track funds withdrawn by, or distributed to, company owners, Intuit recommends that you create a separate equity account for these transactions. Such accounts are commonly called Owner's Draw. With this method, you know at a glance the total funds withdrawn by the owner as well as the individual transactions that make up the total amount.

To adjust Retained Earnings from the register of another balance sheet account:

1. Open the register of the balance sheet account.
2. Enter an increase or decrease amount with appropriate notes.
3. Type Retained Earnings in the Account field, and save the transaction.

To adjust Retained Earnings using a General Journal entry:

1. From the Company menu, select Make Journal Entry.
2. Debit or credit Retained Earnings and other appropriate accounts.
3. Save the transaction.

To withdraw funds from the company using an Owner's Draw account:

1. Choose an existing equity account or set up a new equity account, e.g. Owner's Draw, to track owner's draw transactions.
2. Write out a check to the owner and use the above account in the Account field.
3. To view entered transactions, open the register of the account chosen in step 1 from the Chart of Accounts.

Take A Physical Inventory And Reconcile With Book Inventory
If your business maintains inventory, reconcile your actual inventory against the inventory recorded in QuickBooks. For additional information about reconciling physical inventory with QuickBooks inventory, go to the QuickBooks Help menu, choose Help Index, and then search on inventory.

You can use QuickBooks to create a worksheet for taking a physical count of your inventory.

1. From the Reports menu, choose Inventory, and then choose Physical Inventory Worksheet.
2. (Optional) Use the report buttonbar to adjust the content and appearance of the worksheet.
3. (Optional) Change, as needed, the width of the columns.
4. Click Print.
5. As you check your stock, enter the quantities for each item in the Physical Count column of the worksheet.

Password-Protect Your Data
Decide who the administrator will be. Choose someone who is usually available in your office.

To designate an administrator:

1. From the Company menu, choose Set Up Users.
2. In the user list, select Admin and then click Edit User.
3. Enter the name of the person who will be the Admin.
4. (Optional) Enter a password in the Administrator's Password field. Enter the password again in the Confirm Password field.
5. Click Next and then click Finish.

To set the Owner's password:

1. To assign a password to a new user
   From the Company menu, choose Set Up Users.
2. Click Add User.
3. In the User Name field, enter the person who is to receive the password.
4. Enter the password: first in the Password field and then in the Confirm Password field.
5. Click Next.
6. To set up access permissions for this person, follow the instructions that appear.

Note: It is an expensive and time-consuming process to remove a password from a file, so it is important that you write down the new passwords and save them in a secure place. If you do not remember the owner password, you will not be able to view or print reports, graphs, or registers for your company file. Making frequent backups is a way of protecting yourself, should you forget your new password. You can then restore an old backup that does not have the new password protecting it.

Problem with QuickBooks Customer Manager Version 1.0
Intuit recently discovered a problem in the QuickBooks Customer Manager software and trial version that caused this software to stop working on December 31, 2003. This problem will not put any of your data at risk, and Intuit has released a free, fast fix at http://www.quickbooks.com/support/index/ndxw_qb_customer_mgr_updates.html.

QuickBooks Enterprise Solutions 4.0 Problem Affects Remote Access Sign Up
Intuit recently identified a problem with QuickBooks Enterprise Solutions 4.0 that affects all Enterprise Solutions products. The problem prevents you from receiving one subscription for 12 prepaid months for the WebEx Remote Access service at no additional cost.

Customers new to the WebEx Remote Access service in Enterprise Solutions will be prevented from taking advantage of the free WebEx Remote Access offer upon sign up and registration. If they try to sign up for Remote Access, they will instead be asked to pay. Existing users of the service will also be prevented from taking advantage of this offer, as they must re-register with each new version of the software. This issue affects all versions of Enterprise Solutions 4.0.

Intuit is actively working on a software fix and in the meanwhile identifies procedures to allow all QuickBooks Enterprise Solutions 4.0 customers to take advantage of the offer.

For those QuickBooks customers who want to sign up now and take advantage of the offer, here are notes for manual registration through the vendor WebEx.

Manual Registration for Remote Access in QuickBooks Enterprise Solutions 4.0

1. Send an email to Webex support at intuitsupport@webex.com.
2. Title the subject line "Register for Enterprise Free Service.
3. In the body of the e-mail identify your following information:
   • Name
   • E-mail address
   • Registration number

Note: You can locate the Registration Number as follows:

1. While running QuickBooks Enterprise Solutions 4.0, go to the Help menu.
2. From the pulldown menu, select About QuickBooks Enterprise Solutions 4.0.
3. QuickBooks will display a splash screen that lists the Registration Number among other items like the Install Key Code and the Serial Number.

Independent Contractor or Employee?
The tax law covering independent contractors is very complicated. Before you can determine how to treat payments you make for services, you must first know the business relationship that exists between you and the person performing the services. In determining whether the person providing service is an employee or an independent contractor, all information that provides evidence of the degree of control and independence must be considered.

It is critical that you, the employer, correctly determine whether the individuals providing services are employees or independent contractors. Generally, you must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an independent contractor, you can be held liable for employment taxes for that worker plus a penalty.

Who is An Independent Contractor?
A general rule is that you, the payer, have the right to control or direct only the result of the work done by an independent contractor and not the means and methods of accomplishing the result.

Example:
Steve Smith, a computer programmer, is laid off when Megabyte Inc. downsizes. Megabyte agrees to pay Steve a flat amount to complete a one-time project to create a certain product. It is not clear how long it will take to complete the project, and Steve is not guaranteed any minimum payment for the hours spent on the program. Megabyte provides Steve with no instructions beyond the specification for the product itself. Steve and Megabyte have a written contract, which provides that Steve is considered to be an independent contractor, is required to pay Federal and state taxes, and receives no benefits from Megabyte. Megabyte will file a Form 1099-MISC. Steve does the work on a new high-end computer which cost him $7000. Steve works at home and is not expected or allowed to attend meetings of the software development group. Steve is an independent contractor.

Example:
Steve Smith, a computer programmer, is laid off when Megabyte Inc. downsizes. Megabyte agrees to pay Steve a flat amount to complete a one-time project to create a certain product. It is not clear how long it will take to complete the project, and Steve is not guaranteed any minimum payment for the hours spent on the program. Megabyte provides Steve with no instructions beyond the specification for the product itself. Steve and Megabyte have a written contract, which provides that Steve is considered to be an independent contractor, is required to pay Federal and state taxes, and receives no benefits from Megabyte. Megabyte will file a Form 1099-MISC. Steve does the work on a new high-end computer which cost him $7000. Steve works at home and is not expected or allowed to attend meetings of the software development group. Steve is an independent contractor.

Who is An Employee?
A general rule is that anyone who performs services for you is your employee if you can control what will be done and how it will be done.

Example:
Donna Lee is a salesperson employed on a full-time basis by Bob Blue, an auto dealer. She works 6 days a week and is on duty in Bob's showroom on certain assigned days and times. She appraises trade-ins, but her appraisals are subject to the sales manager's approval. Lists of prospective customers belong to the dealer. She has to develop leads and report results to the sales manager. Because of her experience, she requires only minimal assistance in closing and financing sales and in other phases of her work. She is paid a commission and is eligible for prizes and bonuses offered by Bob. Bob also pays the cost of health insurance and group-term life insurance for Donna. Donna is an employee of Bob Blue.

For additional information on how to determine whether an individual providing services is an independent contractor or an employee, see Publication 15-A, Employer's Supplemental Tax Guide.

Still Not Sure?
Firms and workers may file Form SS-8 to request a determination of the status of a worker for purposes of Federal employment taxes and income tax withholding.