QuickBooks Setup: The Basics

I have been looking over articles on the most common mistakes in QuickBooks and I see a list of 10 to 20 common mistakes. I agree with all these as being mistakes made once you start using QuickBooks.

What I have found is most of the articles do not cover the source of the mistakes the Initial Setup of Your QuickBooks Data File.

While the setup of QuickBooks Online is somewhat different than QuickBooks Desktop Versions there are some basics we can address in the setup. I am not going to try to explain all the differences in QuickBooks Online setup and QuickBooks Desktop setup as most of the difference are in what in naming of the different areas and the user interface in setting up.

There are 4 areas I am going to address the Chart of Accounts, item list (desktop), Products and Services (online version), vendor list and customer lists.

Chart of Accounts is the basis for all your company’s financial reports and is a critical part of setting up QuickBooks both online and desktop versions.  If you do not properly classify and create your chart of accounts you will get errors in your management reports and inaccurate data. How can you make informed business decisions with bad data?  Remember the information contained in the chart of accounts is the information that flows through to your Balance Sheet, Profit and Loss Statement, and your Cash Flow Statement.  Balance sheet shows Assets, Liabilities, and Equity accounts. The Profit and Loss is your Income, Costs of Goods Sold (if you sell a product), and your business Expenses. The cash flow statement is distinct from the income statement and balance sheet because it does not include the amount of future incoming and outgoing cash that has been recorded on credit. Therefore, cash is not the same as net income, which on the income statement and balance sheet, includes cash sales and sales made on credit. Cash Flow Statement lets you know how much income is coming in vs. cash going out. We are not going to get into more advanced analysis of the different financial reports at this time. Just be aware that the Chart of Accounts is the building block for your entire accounting system.


Item Lists (desktop) and Products and Services (online: are necessary for the creation of Customer Invoices, Estimates, Sales Receipts, Vendor Purchases, and Inventory. There are several different types of items, products and services available in QuickBooks depending on your company’s needs. Item list, products, services and inventory are used for two reasons one they help illuminate double entry as they flow back to the chart of accounts and it helps make the chart of accounts condensed and easier to use.  Items link back to your cost of goods sold, expenses, and inventory and income accounts depending on the item.

Customer List: is just what is says it is a list of the people and business you sell your products or services to.  This is where you decide when payment is due such as upon receipt, or net 10, or net 30 etc.. You can also enter payment information if they pay your by credit card, however, you will need a merchant services account to accept credit card payments. Remember this is also where your item and product and services list come in when you create your customer invoices or sales receipts.

Intuit now offers Intuit Payments which allows you to take credit cards or to get payments directly from your customer’s bank account at the customer’s option or by previous agreement. I suggest you gather as much information as possible on each of your customers such as email address, birthdays always nice to send a customer a greeting on their birthday.
Vendor List: is exactly as it sounds the list of people you buy from. When creating vendor bills in QuickBooks you will use your item, products and services listings. This again flows back to you inventory, cost of goods, and expense accounts depending on the type of business you have. You can also setup the terms of payment you have with your different vendors. If you use subcontractors or individuals they will also be part of your vendor listings and you will need to get a Form W9 from them to report payments to them on Form 1099 at year end.

If you are a start up business and need assistance please give us a call and we can discuss what you need to do to properly setup your QuickBooks Online or QuickBooks Desktop accounting system.

Give us a call or go to our website:

www.bmeyerbookkeeping.com and fill out our contact us form or give us a call at


If you are an existing business and know you have problems with your setup and need assistance to fix these problems Give us a call or go to our website:

www.bmeyerbookkeeping.com and fill out our contact us form or give us a call at