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January 25th, 2013, 11:13 PM | #1 |
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Anyone fluent with Quickbooks?
My accountant suggested Quickbooks and I am learning my way around. My big question is:
If I take a deposit in 2013 and wedding is in 2014, when I do end of the year reports how does it show the deposit as income in 2013 and balance in 2014? Thanks all. |
January 27th, 2013, 01:57 PM | #2 |
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Re: Anyone fluent with Quickbooks?
First, are you on a cash basis or accrual basis? That is something you need to determine first.
You should have started a new job and created either an invoice for the full amount or better a progress invoice. Then, when you received the deposit (which by the way you should change your standard payment procedure so that they are paying you a retainer, not a deposit), you will apply that against the invoice(s). Then have your reports set to "cash basis" and they will only show the receipts and payments you made to that date. |
January 28th, 2013, 05:38 AM | #3 |
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Re: Anyone fluent with Quickbooks?
According to my accountant, the income from work performed is taxed in the year the work is done, not the year in which payment is received. So a wedding shot and invoiced in 2012 with payment received in 2013 is taxed for 2012, not 2013. Your situation though is the opposite. In your case the deposit is not income but moneys held in escrow, in a manner of speaking, as prepayment against work to be done in the future. It doesn't become your money until you shoot the wedding and apply the deposit against the bill.
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January 28th, 2013, 07:15 AM | #4 |
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Re: Anyone fluent with Quickbooks?
Your accountant should set your QB system up for you and then show you how to enter everything, as well as explain the rules to you. If it's not set up correctly or the entries are screwed up then it ends up being a mess the accountant has to go clean up, costing you additional money. One useful thing my accountant did was add an account "Ask My Accountant" into which I enter transactions which I'm not sure how should be allocated. When I send the file for reconciliation he makes the appropriate allocation or sets up any new accounts needed.
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January 29th, 2013, 12:26 AM | #5 | |
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Re: Anyone fluent with Quickbooks?
Quote:
As Jim said, your accountant should set up your QB company so that is is very clear. No matter what basis you are on, if set up correctly, you should input invoices as you book the jobs including payment terms, and if coded correctly you will be able to toggle between cash basis and accrual basis. The same goes for bills you receive. Darryn, I believe you are getting a little mixed up. Are you interested the report for tax accounting purposes or for business planning and finance purposes? For tax purposes, if you are on a cash basis, whatever the balance is does not matter, Think of it as cash in hand. If you are on an accrual basis, the only thing that matters is the payment terms agreed to. Think of it as only what the agreement says. If you have money owed to you that was not paid or is delinquent, you can account for that as bad debt that will be retired as you receive payment. I believe there are some additional requirements for bad debt but I am on a cash basis so I am not as familiar with those. |
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