Charging for Time in QuickBooks Online, Part 2

Last month, we talked about time-tracking setup, single-activity data entry, and user permissions. This month, we’re exploring additional time-and-billing steps.

By now, you’ve set up QuickBooks Online for time tracking and entered your first timed activity. If you have employees who only need to get on the site to complete their timesheets, we showed you how to give them restricted access.

Let’s start here by looking at what’s involved in completing timesheets. We’ll assume for this example that you are entering your own billable time. You can see how this screen looks by clicking the plus sign (+) at the top of the screen, then Employees | Weekly Timesheet. The screen looks very similar to a paper timecard.

If you had entered a single activity for a billable time block already, all of that information would appear in your timesheet for that week, once you selected your name from the drop-down list in the upper left and set the work week to the correct one in the field to the right. It would look something like this:

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Time entries recorded as single activities automatically transfer over to that week’s timesheet.

If you’re going to enter your complete work week directly on the timesheet, you’d open a blank form (using the instructions above) and select your name and the time range. Next, you’d go down to the first field under DETAILS and select the appropriate Customer Name by clicking on the arrows to the right of the field to open the list. Next to that, do the same thing to choose the Service.

The fields below those two are earmarked for Class (if you assign classes) and Territory (or whatever Location Label you’ve chosen). If you haven’t used these and want to explore them, let’s schedule a session to go over QuickBooks Online Classes and Custom Fields.

Type a Description in the box below and click in the box in front of Billable. The hourly rate and tax status should fill in automatically. In the boxes below the correct dates (in the grid to the right), you’d enter the billable hours worked for that customer that week. If you are reporting billable time for more than one customer, or time that is not billable, you’ll of course have to place those entries on new lines.

Employee Timesheets

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This is part of what employees see when they log into QuickBooks Online using their Time Tracking only status.

Your employees can, of course, enter hours directly on their own timesheet screens. As we discussed last month, you can choose whether to let employees see the customer’s billing rate. In this example, the employee can only enter hours worked and indicate that they were billable. When you go to approve the timesheet, you will see the rate.

Getting Paid

As you start to create an invoice for a customer who needs to pay for services that have been included in a timesheet, look at the vertical pane to the right of the main working screen titled Add to invoice. Any estimate that hasn’t yet been accepted and any time that hasn’t been paid for should appear in the small blocks in that pane.

You have two options here: Add or Open. Clicking on the first adds that time block to the invoice, and clicking on the second opens the original form. You can also click on the Add all button at the top of the pane to include the details of every entry in the invoice.

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When you create an invoice for a customer who has outstanding billable time, that information will appear in the right vertical pane. You can open the original transaction or click to add it to the invoice.

Time Reports

As you can see, time billing can get a little complicated when you have employees entering their own timesheets. And QuickBooks Online wants to make sure that you’ve billed customers for every minute that you’ve worked for them. So there are two reports that you should be consulting regularly. Click on Reports in the left vertical pane, then All Reports and Review Sales. In this list, you’ll see:

  • Time Activities by Customer Detail, and
  • Unbilled Time.

The titles of these reports should be fairly self-explanatory. Be sure to set the correct date range before running them, though, to avoid missing anything.

Completing timesheets isn’t rocket science. Nor is earmarking time blocks as billable. But due to the setup and the options involved, as well as the complications that can occur when you add employee self-service to the mix, we highly recommend that you meet with us to go over the whole process. We want to make sure that your company’s time entry and timesheet configuration are right from the start.

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Make QuickBooks Your Own: Specify Your Preferences

Your business is unique. Make sure that QuickBooks knows how you operate.

QuickBooks was designed to be used by millions of businesses. In fact, it’s possible to install it, answer a few questions about your company, and start working right away.

However, we strongly suggest you take the time to specify your Preferences. QuickBooks devotes a whole screen to this customization process. You can find it by opening the Edit menu and selecting Preferences.

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This is the screen you’ll see when you go to Edit | Preferences in QuickBooks. You can turn features off and on, and customize the software in numerous other ways.

Let’s look at some examples of what you can do on this page. In the image above, Accounting is highlighted. You can see that QuickBooks makes it easy for you to specify your preferences. You simply click in boxes to check or uncheck them. Sometimes, you’ll click on the desired button in front of a list item. Other times, you’ll be asked to enter numbers and text.

Tip: When you click on a tab in the left navigation pane of the Preferences window, you’ll notice that there are two tabs in the larger pane on the right. If My Preferences is highlighted and there are no options on that screen, click on Company Preferences.

Some of the screens here, like Accounting, contain complex concepts. Do you know, for example, why you would or wouldn’t want to Use account numbers? What Retained Earnings are?

Warning: While the mechanics of this process are simple, there may be times when you don’t understand what’s being asked because you’re either not familiar with the terms or you don’t know which option you should choose. Rather than guessing, please connect with us to set up a to go over all of the content in the Preferences window.

Some preferences are easier to define. Let’s look at one of these.

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The Time & Expenses window in QuickBooks’ Preferences

The image above is a partial snapshot of the screen that opens when you select Time & Expenses from the left vertical tab in the Preferences window.

Tip: If you start making changes and decide you’d like to return to the options selected before you started, click the Default tab in the upper right.

Your options here are very simple:

  • Do you want to use the time-tracking features in QuickBooks?
  • On what day does your work week start?
  • Does all of the employee time worked and recorded get billed back to the appropriate customer? (You can change this manually on each time entry by checking or unchecking the box in front of )
  • When you create an invoice for a customer who has outstanding time charges, do you want to be able to select those from a list?

If you check the box in front of Create invoices from a list of time and expenses, this box will appear when you open the Create Invoices window and select a customer who needs to be billed for time:

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If you are creating an invoice for a customer who has received services but who has not been billed for them yet, you can opt to have those charges added to the invoice.

You’ll notice that there’s a box in the lower left corner labeled Save this as a preference. While QuickBooks allows you to specify preferences in countless areas in the Preferences window, you will often have the opportunity to make an exception for a particular action as you’re working on transactions. Also, as shown here, you can sometimes turn on specific preferences once you’ve already started a task.

You’re not required to go through all of the entries in the Preferences window before you start working. You can always go there to see if there’s a setting you can change if an element of QuickBooks isn’t performing the way you expected.

But we think it’s a good idea to learn about all of your options in the software before you get started. If you let us go through this process with you, you’ll learn not only about the customization allowed, but you’ll also get a good introduction to all of the things that QuickBooks can do. You’ll also discover where your knowledge of accounting may be lacking. And we’ll learn more about your business and its needs. Contact us and we’ll help you get going.

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Form 5500 due date is approaching

August 1, 2016 is the deadline for filing Form 5500 for retirement or employee benefit plans on a calendar year. (The usual due date of July 31, 2016, is a Sunday.) There are two updates to be aware of. First, Form 5500 includes new compliance questions that plan sponsors can skip when completing the form. Second, if you’re required to file at least 250 returns of any type with the IRS, including information returns (for example, Form W-2 and Form 1099), you may need to electronically file Form 5500-EZ for calendar year 2015.

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Fighting Identity Theft with Credit Freezes

Identity theft is a crime involving the wrongful acquisition of someone else’s personal information such as name, Social Security number, or bank account information. A credit freeze can be an effective way to combat this fraud, and a financial advisor can assist with this process.

Individual State Laws

Each state enforces laws regarding credit freezes. Some states charge a fee for this service. Each state keeps the freeze in place for a specific period of time. Consumers should call their state Attorney General’s office to get this information.

Credit Freeze

To institute a credit freeze, a consumer must contact each of the three credit reporting agencies. These agencies are Experian, TransUnion, and Equifax. After reaching representatives with each company, one should request the freeze and pay any applicable fee to institute it.

Moving Forward

The credit freeze will remain in effect until it expires at a time determined by state law.

Sometimes existing bank accounts could continue to be misused, even with a freeze in place. Consumers should check with a financial advisor for answers to questions or for additional assistance if the credit freeze does not halt all fraudulent activity.

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Get automated help to understand Affordable Care Act penalties

The Taxpayer Advocate Service website has an automated tool to help you understand how the employer penalties put in place by the Affordable Care Act (ACA) apply to your business. The “estimator” will help you determine how many full-time employees you have, whether you’re an applicable large employer, and what responsibilities your business has under ACA rules. Contact us for answers specific to your business.

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Start preparing now for new overtime rules

In May, the U.S. Department of Labor updated the rules for paying overtime. Under the new rules, salaried employees who earn less than $913 per week ($47,476 per year) will be eligible for overtime pay. That’s double the annual exempt amount of $23,660 under current rules. The changes take effect December 1, 2016, which means you need to begin reviewing your payroll now, as penalties and fines can be assessed for noncompliance. One important step is to begin tracking hours for your salaried employees.

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Tax Planning, 12 Months a Year

We’re halfway through 2016. What do you know about this year’s income tax obligation?

Your 2016 income taxes are probably not at the top of your mind in the middle of summer. After all, it seems like you just filed your 2015 taxes (or you put in for an extension). Maybe you made your two estimated tax payments that have been due so far this year, but that’s as close as you’ve come to thinking about IRS forms and schedules.

The way we look at it, this is an ideal time to start your 2016 tax planning. In fact, we’d suggest you start even earlier in the year. You’ve already recorded a solid six months of income and expenses, which is more than enough information to start getting a picture of where you stand with your income taxes.

An aside here: If you’re still doing your accounting manually, it probably takes you a good deal of time and effort to pull together reports of your financial status. We strongly urge you to consider a cloud-based accounting application. There are many to choose from, and we can help you find one that’s a good fit for your company. You’ll quickly wonder why you didn’t make the move sooner.

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Just as they make your overall financial planning easier, faster, and more accurate, cloud-based accounting applications can help tremendously with tax planning. We can help you find the right match. 

TaxPlan 0716 image 2_zpsz7djn9pbBuilding a Schedule

Tax planning is another element of your overall financial planning. You can’t separate the two. Just as you work constantly toward keeping revenue ahead of expenses, you need to know how those sales and purchases will affect your income tax obligation.

There are times throughout the year when you’ll need to make a decision based in part on the outcome’s impact on your income taxes, such as major acquisitions of property, equipment, vehicles, technology, etc. Should you purchase outright or consider renting or leasing? You should know ahead of time how you’ll be reporting these on your taxes. We can help with these decisions.

We also suggest putting yourself on a tax planning schedule – a set of steps you take throughout the year that will put you ahead of the game when it comes time to file. That way, you avoid an unpleasant surprise. Instead, you’ll have a pretty good idea of where you stand before the IRS finalizes its forms and schedules in mid-January.

So here’s what we’d suggest for the formal part of your tax planning:

Every month. Create basic accounts payable and receivable reports. If you’re using an accounting website, you can do this in seconds. If you you’re doing manual bookkeeping, you really need to have a system in place so that end-of-month reports can be assembled without hours of combing through files. Compare revenue with expenses to see where you are, and compare the results to last month’s and last quarter’s. How are you doing with your budget?TaxPlan 0716 image 3_zpstra9z3of

Every quarter. There’s a handful of reports that you should be running and analyzing at least every three months, if not monthly, like Trial Balance, Profit and Loss, and Statement of Cash Flows. These are advanced reports whose results are difficult to interpret unless you’re an accountant. Let us help you with this.

You’ll also need to be prepared to pay your estimated taxes. Some businesses don’t do this because it’s too difficult to calculate. This means they end up having to pay penalties on top of a big tax bill at filing time. Don’t let this happen to you.

November and December. There are numerous tax-related issues that you’ll need to consider when the year’s end approaches. Are your accounts receivable terribly in arrears? Will all of your bills be paid? Do you need to make charitable donations, purchase items, etc., that will offset your revenue? Do you need to defer some income?

These are complex issues that we’d like to go over with you during the last couple months of the year.

Income tax preparation can be complicated, frustrating, and time-consuming. Planning for it throughout the year will definitely lighten your load when it’s time to file.

Stock images courtesy of

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