QuickBooks: Making it Work for Your Practice - Live … Making it Work for ... – Accounts...
Transcript of QuickBooks: Making it Work for Your Practice - Live … Making it Work for ... – Accounts...
QuickBooks: Making it Work for
Your Practice
Presented by: Karen Osborne, CPA, MBA
Lacher McDonald & Co., CPA’s
Courtesy of: Live Oak Bank
1.888.884.1506
Why Should a Practice use
QuickBooks?
• QuickBooks vs. Practice Management
Software
• Importance of up-to-date financial
information
How QuickBooks Should be Used
• Using the Accrual Basis of Accounting
Definition of Accrual Basis:
The accrual basis means recognizing revenue when it is earned (not only when the money is actually
received) and recognizing expenses when they are incurred (not only when they are paid).
Why use the Accrual Basis?
• Matches Revenue to Expenses
• Accurate financial picture
Example: Accrual Basis
Monthly Revenue:
• Practice Management
Report:
– Invoices = $100,000
– Clients paid = $95,000
– Accounts Receivable
increased by $5,000
How much should Revenue be
in QuickBooks under the
Accrual Basis?
Example: Accrual Basis
Reference Lab Expense:
• January Reference Lab Bill:
– Amount = $4,000
– Date of Invoice = 1/31/13
– Invoice Due = 2/20/13
How much should your
Reference Lab Expense be in
QuickBooks under the Accrual
Basis for the month of
January?
Set ALL Reports to Accrual Basis
Set ONE Report to Accrual Basis
How to Set up QuickBooks
• Goal: Meaningful Financial Statements
• Correctly use and set up your Chart of
Accounts
– AAHA Chart of Accounts recommended
To Access the Chart of Accounts
Home screen
Menu access
Chart of Accounts
• Balance Sheet Accounts:– Bank
– Accounts receivable (A/R)
– Other current asset
– Fixed asset
– Other asset
– Accounts payable (A/P)
– Credit card
– Current liability
– Long-term liability
– Equity
Chart of Accounts
• Income and Expense Accounts:
– Income
– Cost of Goods Sold
– Expense
– Other Income
– Other Expense
Revenue Accounts
• Classified by Sources of Revenue– Professional Fees
– Pharmacy Sales
– Laboratory Fees
– Vaccination Fees
– Boarding Fees
– Grooming Fees
– Diagnostic Imaging Fees
– Dental Fees
– Food Sales – Wellness & Rx
– Retail Sales
– Discounts
Revenue
• You will put your revenue into these
categories on a MONTHLY basis not daily
• These categories will summarize the revenue
categories in your Practice Management
Software
Revenue
Cost of Goods Sold
• Cost of Goods Sold Accounts
– Medical Supplies
– Prescriptions
– Lab Expense
– Food – Wellness & Rx
– Retail
– Other Cost of Goods Sold
Revenue & Cost of Goods Sold
Recording Payroll
• Recommended Payroll Accounts:
– Officer Salaries
– Salaries & Wages – Staff
– Salaries & Wages – Associate Veterinarians
• Payroll should be recorded at GROSS amounts
Example Payroll Accounts
Example: Payroll Journal Entry
Payroll Tax expense
(employer portion
of payroll taxes)
Gross pay for each
employee type
Matches amounts
deducted from bank
by payroll company
Expense Accounts
• Appropriate level of detail
• Broad expense categories
Liabilities
• Two parts of a loan payment
– Principal portion
• Balance Sheet item
– Interest portion
• Profit & Loss item
Principal and Interest
Example Loan Statement
Example Amortization Schedule
Example: Check for Loan Payment
Banking Menu
• Make Deposits
Entering Daily Deposit
Deposits
• Your deposits should be deposited in the bank
at the GROSS amount
• Almost all merchant service providers (with
the exception of Care Credit) will make your
deposits at gross and deduct the fee at the
end of each month
Enter Credit Card Charges
Practice Credit Card Charges
• Should be entering credit card charges
• Allows you to track your credit card balances
– Extremely important if you carry a balance each
month
Account Reconciliation
• Should be reconciling both bank and credit
card accounts each month
Account Reconciliation
Vendors Menu
Enter Bills Pay Bills
Enter Bills/Pay Bills
• Allows you to record the expense in the
correct period but pay in another period
• Helps you to match expenses to the
corresponding revenue
Reference Lab Example: Check
• January Reference Lab
Bill:
– Amount = $4,000
– Date of Invoice = 1/31/13
– Invoice Due = 2/20/13
Date the expense is recorded
in the ‘Lab Expense’ account
Reference Lab Example: Bill
Date the expense is recorded
in the ‘Lab Expense’ account
Cost of Goods Sold
• Entering invoices properly helps monitor this
expense
• Invoices vs. Statements
– You should be entering each individual invoice into
QuickBooks (Enter Bills function)
– Using your monthly statement to check off each
individual invoice (Pay Bills Function)
Enter Bills/Pay Bills
• What does entering the invoices accomplish:
– Allows you to check the statements you receive
– Makes sure the expenses are captured in the
correct period
• Statement may span more than one month
• Statement may contain delayed billing
Example Bill
• Invoice Total = $1,011.14
• 10 items received
– 70% Prescriptions
– 20% Medical Supplies
– 10% Lab related
Estimated amounts
from invoice
When Not to Use Enter/Pay Bills
• When you are sitting down to pay an
individual or company immediately
Pay Bills – Hint #1When the bill is selected the Amt. To Pay
field is auto-filled with the Amt. Due
Change Amt. To Pay field to whatever
amount you actually plan to pay
Highlight the Amt. To Pay to edit the field
Pay Bills – Hint #2
Choose corresponding Bank
or Credit Card account
Choose Method
of Payment
(Check or Credit
Card)
Practice Management Software
Reports for entry into QuickBooks
1. Accounts Receivable (AR) Report
A. Shows amount owed by clients
B. Want the report as of the last day of the month
2. Inventory Report
A. Shows total cost of all inventory items in Practice
B. Want the report as of the last day of the month
3. Sources of Revenue Report
A. List revenue generated by revenue category
B. Want the report for a one month period (i.e. 12/1/2012 to 12/31/2012)
Make General Journal Entries
Accounts Receivable
• Updating will help the income (revenue) in
QuickBooks be accurate
• Decrease in Accounts Receivable from
payments received on prior months services
• Increase in Accounts Receivable for clients not
paying for current services
Accounts Receivable Entry
Beginning
Accounts
Receivable
Total
New Accounts Receivable Total from
Practice Management Report
Step #3
Step #2Step #1
Enter Journal Entry to increase
Accounts Receivable Total
Verify new Accounts Receivable
total matches Practice
Management Report
Step #4
Inventory
• Adjusting your Inventory total in QuickBooks
each month helps your Cost of Goods Sold
total to be accurate
• Your Cost of Goods Sold is supposed to
represent the cost of materials used and
products sold during the period
Inventory Entry
• Very similar to Accounts Receivable journal
entry we went through
– Different accounts will be debited and credited in
the journal entry
• You will want help with these entries the first
time
Revenue
• Allows you to:
– See very easily where your revenue is coming
from
– Easily compare to industry benchmarks and your
Practice
– Compare it to your Cost of Goods Sold accounts
Revenue EntrySample Revenue Report
Journal Entry
Total Lab
Categories
(blue)
Caution ☺
If you have not been tracking Accounts
Receivable or Inventory in QuickBooks
previously you will want to get assistance from
your CPA!
Useful Reports: Profit & Loss Standard
• Also known as an
Income Statement
– Summarizes income and
expense accounts
– Tells you if you are
operating at a profit or a
loss
Useful Reports: Profit & Loss Prev Year
Comparison
• Summarizes income
and expense accounts
for the chosen period
and previous period
• Can compare
performance against
same period last year
Useful Reports: Balance Sheet
Standard
• Summarizes a Practices
financial position
• Shows the value of the
Practice’s assets (what
it owns) and liabilities
(what it owes)
Useful Reports: A/P Aging Summary
• Summarizes the status of
unpaid bills in Accounts
Payable
• Shows:
– What you owe
– Who you owe it to
– And how much is overdue
Other Useful Items: Find Feature
Advanced tabSimple tab
Other Useful Items: Set up Users
• Allows users access to
only certain areas of
QuickBooks
Other Useful Items: Additional Detail
Mouse pointer turns into
a magnifying glass
Drop-down Sorting
options on top of report
Other Useful Items: Additional Detail
(cont’d)Report Totaled by ‘Payee’
Payee
Total for specific Payee
QuickBooks: Making it Work for
Your Practice
Presented by: Karen Osborne, CPA, MBA
Lacher McDonald & Co., CPA’s
Courtesy of: Live Oak Bank
1.888.884.1506