Contractor's Guide to QuickBooks Pro 2007 Book+CD, PDF & Software Download

Contents

Introduction, 5
What You Can Expect from This Book, 6
QuickBooks, QuickBooks Pro, or Premier: Contractor Edition?, 7
Why Should You Believe Us?, 8
The CD and How to Use It, 11
Removing the Installed Files, 14

1 Setting Up Your QuickBooks Pro Company, 15
Getting Started, 15
QuickBooks Pro Company Files, 16
Begin with Our Sample and Company Data Files, 17
Upgrading to QuickBooks Pro Version 2007, 21
Convert from Quicken to QuickBooks Pro, 23
Convert an Existing Data File to Our Setup, 29

2 How to Set QuickBooks Pro Preferences, 31
General Preferences, 31
Accounting Preferences, 32
Bill Preferences, 34
Checking Preferences, 34
Finance Charge Preferences, 37
Items & Inventory Preferences, 38
Jobs and Estimates Preferences, 39
Payroll and Employees Preferences, 40
Reminders Preferences, 42
Reports and Graphs Preferences, 43
Sales and Customers Preferences, 43
Sales Tax Preferences, 44
Send Forms Preferences, 46
Service Connection Preferences, 46
Spelling Preferences, 47
Tax: 1099 Preferences, 48
Time Tracking Preferences, 50

3 Chart of Accounts, 51
The Chart of Accounts, 51
How to Use the Sample Chart of Accounts, 53
Change, Add to, and Print Your Chart of Accounts, 59
QuickBooks Premier:
Contractor Edition Features, 61

4 Items, 71
Entering Items for a Non-Inventory Based Business, 72
Entering Items for an Inventory Based Business, 74
Creating a Group of Items, 76
Entering Non-Job Related Items, 77

5 Payroll Items, 81
Using Payroll Items to Track Workers' Comp Costs, 81
Using Payroll Items if You Don't Track Workers' Comp, 88
Including Sole Proprietor and Partners' Time Costs in Job Costs, 90

6 Classes, 99
Using Classes to Track Cost Categories, 99
How to Create a Class, 100

7 Customers and Jobs, 103
How to Set Up a Customer, 103
Adding a Job for a Customer, 107
Exporting or Printing Your Customer List, 110

8 Vendors and Subcontractors, 111
Setting Up 1099 Vendors, 111
Setting Up a Non-1 099 Vendor, 115

9 Employees, 117
Setting Up Your Employee List, 117

10 Opening Balances, 125
Entering Opening Balances in QuickBooks Pro, 125
Entering Invoices for Accounts Receivable, 126
Entering Bills for Accounts Payable, 128

11 Organizing Work Flow, 131
Setting Up Your Office Files, 132
Organizing Your Payroll, 135
Keeping Office Paperwork Current, 135

12 Estimating, 139
Using a Summary Estimate You Make Outside of QuickBooks Pro, 140
Customizing an Estimate Form, 142
Memorizing an Estimate, 143
Estimates and Progress Billing, 145
Getting Detailed Estimates, 145

13 Receivables, 147
Four Ways to Invoice a Customer, 148
Tracking Change Orders on Estimates, 158
How to Handle Retainage, 160
Recording a Payment You Receive, 165
Recording a Deposit, 166
Recording a Job Deposit, 167

14 Payable, 171
Creating and Using Purchase Orders, 172
Using Purchase Orders to Track Multiple Draws and Committed Costs, 173
Entering Bills Without Purchase Orders, 177
Selecting Bills for Payment, 179
Printing Checks, 180
Vendor Workers' Comp Reports, 181

15 Payroll, 187
Entering a Timesheet, 187
Processing Employee Payroll, 190
Allocating Sole Proprietor or Partner's Time to a Job, 197

16 Using QuickBooks Pro on a Cash Basis, 201
How to Record a Check, 202
How to Record a Deposit, 205
Checking Your Transactions with the QuickBooks Pro Register, 207

17 Reports, 209
How to Modify Reports, 209
Using Our Memorized Reports, 213
Using Jobs, Time & Mileage Reports, 230
Using Reports in QuickBooks Premier: Contractor Edition, 239

18 End of Month and End of Year Procedures, 243
End of Month Procedures, 243
Reading and Understanding Your Financial Reports, 251
End of Year Procedures, 254

19 Real Estate Development, 261
New Accounts, 261
Setting Up a Development Job, 262
Using Items to Track Construction Costs as WIP, 263
Land Purchase Transactions, 265
Personal Loans, 269
Development Loans, 275
Construction Loans, 279
Recording the Sale of a Property, 282

Appendix A Estimating with QuickBooks Pro, 287
Three Good Reasons to Try QuickBooks Pro Estimating, 287
A Road Map to Your Destination, 288
Setting Preferences for Estimating, 289
Building Your Item List, 291
Creating an Estimate in QuickBooks Pro, 293
Turning an Estimate into an Invoice, 296
Tidying Up Your Company File, 299

Appendix B Job Cost Tracking and Importing Estimates, 301
Estimates into Invoices, 304
Handling Tax, 304
Using Items for Job Cost Tracking, 306
Help Learning National Estimator, 308
Estimating with National Estimator, 309
Converting Estimates with Job Cost Wizard, 323
Job Cost Wizard Prints Invoices Your Way, 325

Index, 335

Introduction

Why You Need This Book

Contractor's Guide to QuickBooks Pro is a simple, hands-on guide for contractors, remodelers, subcontractors, and real estate developers who plan to use, or are now using, QuickBooks Pro accounting software. Think of this manual, like QuickBooks Pro, as a powerful new tool. Used correctly, it will get results you never thought possible - in ways you never imagined.

This book was written for contractors by contractors. That's why it's low on "accounting speak" and high on practical examples. We're not going to talk about debits and credits. QuickBooks Pro doesn't use those terms, so we won't either. Instead, we'll use words we all understand, like checks, estimates, bills, timecards, purchase orders, and deposit slips.

We'll help you set up a good, effective, highly-professional bookkeeping system as quickly and painlessly as possible. You'll know, at the click of a mouse button, who owes you money and who you owe. You'll know if there's enough cash on hand to pay bills. When you need a current profit and loss statement, you'll have one in a minute or two - either for the month, the year, or for just one job. When a lender or a bonding company needs a balance sheet, you'll get one in minutes.

Contractors have special payroll requirements. This book will show you how to get the most out of QuickBooks Pro's payroll system. No matter where you do business in the 50 states, QuickBooks Pro has a current tax table exactly right for your company. If QuickBooks Pro isn't doing your payroll now, we predict it will be before too long.

Since estimating is important to most construction contractors, we're going to cover estimating from three perspectives. In Chapter 12, you'll see how to enter the summary data from estimates you've already written into QuickBooks Pro. From here, you can do progress billing and job cost tracking. In Appendix A you'll learn how to use the estimating system built into QuickBooks Pro to create estimates. And for those who want still more estimating power, Appendix B has complete instructions for using Craftsman's estimating software, National Estimator, and Job Cost Wizard, a program that lets you turn estimates into invoices that will export to QuickBooks Pro. Both are included on the CD in the back of this book.

What You Can Expect from This Book

According to a recent national survey, more construction contractors use QuickBooks Pro and QuickBooks than all other accounting programs combined. When set up properly, QuickBooks Pro can handle the accounting for most small- to medium-sized (to $10 million a year) construction companies. But despite the sales hype, QuickBooks Pro isn't easy to set up and learn. Dozens of options and preference settings may lead you down the wrong road, resulting in hours of frustration. We've spent hundreds of hours testing the options and preferences in QuickBooks Pro to help you get it right the first time. Follow our examples and you'll have an effective accounting system that provides all the information any successful business needs - and in the shortest time possible.

QuickBooks Pro doesn't replace accountants. But it does help organize and standardize your bookkeeping system. Every report your accountant needs is readily available. This makes it easier for your accountant to prepare tax returns and annual reports. The time saved should translate into lower costs for your company.

In this book, we'll explain how to:

set preference options correctly for your company
set up a Chart of Accounts that matches the work you do
set up, edit, and use classes
set up customers and jobs
set up vendors and subcontractors
set up employee payroll
get your current account balances into QuickBooks Pro
track transactions through QuickBooks Pro
create and use estimates
set up a simple and effective job cost system
create and send invoices
enter vendor bills
write checks
process payroll
get payroll tax and workers' comp expenses into job cost reports
get an owner's time into job cost reports (for a sole proprietorship)
run workers' comp reports
create and interpret job cost reports to keep track of your business
prepare financial statements
set up end-of-the-month and end-of-the-year procedures

In short, we'll show you how to get everything a construction company needs out of QuickBooks Pro. If you understand and apply the methods in this book, you should see real improvement in the effectiveness of your accounting system. And, you'll gain the personal and financial rewards that come from working not just harder, but smarter.

QuickBooks: Simple Start, QuickBooks Pro or QuickBooks Premier: Contractor Edition?

You'll notice that the title of this manual refers to the "Pro" version of QuickBooks. We recommend that you use at least QuickBooks Pro because QuickBooks: Simple Start can't create estimates and can't track time spent on specific jobs. If time tracking and estimating are important to your construction company, invest the extra money to get QuickBooks Pro. If you have QuickBooks Premier or QuickBooks Premier: Contractor Edition, this book will work for you as well. All the features in this book are based on QuickBooks Pro, which is included in the Premier and Contractor editions. When we refer to QuickBooks Pro, we are also referring to QuickBooks Premier and QuickBooks Premier: Contractor Edition.

You'll find another major advantage to QuickBooks Pro once we get into estimating. QuickBooks Pro can do progress billing - creating an invoice for each part of a job as you complete that part. That's important if you handle larger jobs that take weeks or even months. For example, you can send out a bill that covers 100 percent of the foundation work, 40 percent of the framing, and 20 percent of the plumbing on a job. That's an important advantage. No calculation is required. QuickBooks Pro does the math and keeps all the records: what you told the customer it would cost, what you've billed so far, and what is left to be billed. These progress billing statements may also become important business records to reduce arguments over what's still owed.

We believe QuickBooks Pro has the best combination of power and simplicity for small-volume builders and general contractors. It makes accounting simple for non-accountants because it works the way you do. You've been writing checks for years. With QuickBooks Pro, you fill in blanks on a check the same as always. But you do it on a computer screen. And you add notes to check stubs about accounts and jobs to be charged just the way you've always added notes to the stubs of paper checks.
Timecards, purchase orders, and invoices work the same way.

Can QuickBooks Pro do the job for you? The thousands of construction companies now using QuickBooks Pro are good evidence that it can. If you're serious about making your construction business grow and prosper, you'll want the accounting and reporting power built into QuickBooks Pro.

There's an old saying among builders about construction accounting: "A builder who knows where he stands won't stand there very long." You need to know where you stand so you can make informed decisions quickly. If you agree, QuickBooks Pro may be perfect for your company.

For more than ten years, the three authors of this book have used construction accounting packages, some costing thousands of dollars. None are as slick, professional, and as easy to use as QuickBooks Pro. In our opinion, QuickBooks Pro offers the builder, remodeler, general contractor, and specialty subcontractor the best off-the-shelf accounting program on the market. It's affordable, reliable, and probably has all the features you'll need.

Even though QuickBooks Pro never mentions debits and credits, it handles accounting and reporting functions the same way an accountant would. It follows what professional bookkeepers and accountants refer to as Generally Accepted Accounting Principles (GAAP). You may never notice, but QuickBooks Pro uses conventional double-entry accounting. That means each time you enter a transaction, the numbers go two directions - one way as a debit and another way as a credit. Suppose you enter a bill from a supplier. Behind the scenes, QuickBooks Pro records the transaction two ways, first as an account payable and then as a charge to an expense category.

Strictly speaking, the way it comes out of the box, QuickBooks Pro isn't a true construction accounting program. But it's adaptable enough to fit the needs of most construction companies like a glove. For example, you can customize reports to get great job cost reports, just like a so-called "construction accounting package." That's why we feel so strongly that QuickBooks Pro is right for most construction companies.

Should You Believe Us?

All three authors have been in construction, using computers, and using QuickBooks and QuickBooks Pro for many years. We've helped hundreds of contractors set up and use QuickBooks and QuickBooks Pro. We're confident that what we've done for others we can do for you, too.

Karen Mitchell was a general building contractor and is currently co-owner of Online Accounting (www.onlineaccounting.com) which uses the Internet to help train contractors on QuickBooks Pro and Master Builder. Karen conducts seminars nationwide for contractors who use QuickBooks Pro. She is a frequent speaker at many construction trade shows such as: A/E/C SYSTEMS, JLC Live!, and NAHB's PCBC (Pacific Coast Builders Conference). Karen has written several books including: Construction Forms & Contracts, Quicken for Contractors, Contractor's Guide to QuickBooks Pro, Architect's Guide to QuickBooks Pro, Interior Designer's Guide to QuickBooks Pro, and Real Estate Investor's Guide to QuickBooks Pro.

Craig Savage has been a general building contractor, remodeler and custom homebuilder for over 25 years. He was an editor at The Journal of Light Construction magazine for many years, director of the JLC LIVE! Training Shows, Vice President of Marketing & Sales at www.BobVila.com, and most recently, VP of Marketing at Building Media, Inc.

In his free time Craig is a construction management computer consultant. He started Construction Business Computing and Macintosh Construction Forum newsletters, and his articles have appeared in Architectural & Engineering Systems, Architectural Record, Fine Homebuilding Magazine, Computer Applications Newsletter, Remodeling News, NAHB Commercial Builder, NAHB Single Family Forum, Remodeler Magazine, Mac Week, Document Imaging, Imaging World, and A/E/C Computer Solutions.

Craig is a regular speaker at the A/E/C Systems, NAHB, NARI, CSI, and PCBC annual conventions. He also instructs at seminars sponsored by the University of Wisconsin College of Engineering, and the University of California Santa Barbara Extension.

Other books he has co-written for Craftsman Book Company are Construction Forms & Contracts and Quicken for Contractors. With Taunton Press he wrote Trim Carpentry Techniques.

Jim Erwin is a partner in several second-generation family-owned construction companies in upstate New York that are involved in land development as well as residential and light commercial construction. He's an active member of the National Association of Home Builders and has written articles on using computers in construction for a variety of construction magazines. He's also the creator of GC/Works (published by sYnapse Software, Inc.), a full-featured software solution for the construction industry that uses Quicken or QuickBooks Pro as its basis.

What Comes Next?

But don't just take our word for it. Here's a brief summary of some of the features we'll show you to make QuickBooks Pro specific for your construction business needs.

Payables/Receivables

One of QuickBooks Pro's greatest strengths is in tracking money owed to you (Accounts Receivable) and money you owe others (Accounts Payable). For example, when you buy materials from a vendor and receive an invoice or delivery slip, you enter the information in a screen form called a Bill. You've seen lots of these, even if you've never used a computer and don't know anything about accounting.

QuickBooks Pro tracks payables and receivables so you can see at a glance what's owed and what's due. You can even see what's due on several different reports: Accounts Receivable Aging, Open Invoices, and Customer Balance Summary. Having all this information available almost instantly should help you sleep better at night. And it helps you make better decisions. For example, it's nice to know how long it's been since you received the last check when a customer asks for "just a little more work" on a project.

The Estimating Programs and Cost Data

QuickBooks Pro doesn't come with cost estimating data. And the estimating function built into QuickBooks Pro is limited, as you'll discover in Chapter 12. That's why we include the National Estimator and Job Cost Wizard programs. You can create an estimate with National Estimator and then import it into QuickBooks Pro. Everything you need for estimating is on the CD inside the back cover of this book and gets installed when you select the "Complete" installation.

Purchase Orders

There are three good uses for the purchase orders in QuickBooks Pro. The first is to track orders placed for special order items, such as windows, doors, and skylights. Another is to track what you've committed to pay subcontractors. For example, suppose a subcontractor bids a project at a certain price. You can use a purchase order to track the bid price to compare it with the bill he submits. The third use is to establish a schedule for multiple payment draws for a subcontractor. If you agreed to pay a framing contractor, say, 30 percent on completion of the floor framing, 30 percent on completion of the walls, and 40 percent after the roof framing, you can use purchase orders to keep track of those payment schedules and payments you make against them.

Time Recording and Payroll

Payroll and time billing are flexible and sophisticated functions in QuickBooks Pro. The timecard window looks like a paper timecard, so data entry will be a familiar task. You'll find QuickBooks Pro's payroll function to be very accommodating.

QuickBooks Pro payroll handles tax withholding, additions, deductions, and company contributions. Deductions such as health insurance, payments to a retirement plan, or union dues are simple to set up and report. So are company contributions such as health, life, and workers' comp insurance paid by the company. You can record irregular payroll events such as bonuses, reimbursed travel expenses, and advances against salary. QuickBooks Pro even keeps track of sick and vacation time due employees.

QuickBooks Pro payroll reports provide all the information you need to file state and federal employer tax forms in any of the 50 states. That's part of the QuickBooks Pro payroll system. Intuit, the developers of QuickBooks Pro, have a small additional charge for the current tax table. Payroll tax tables are updated automatically as tax rates change.

If you want, you can use the QuickBooks Pro Online Payroll Service to pay all of your state and federal taxes and file all the necessary forms (including W2s) for a modest cost. You can have QuickBooks Pro print payroll checks, or use the QuickBooks Pro Online Direct Deposit Service to deposit employee paychecks automatically at nearly any bank.

What's on the CD?

We hope you bought this book because there's a CD in the back. We've loaded the CD with everything you need to get the most out of QuickBooks Pro:

A QuickBooks Pro data file with a Chart of Accounts, items list, class list, and memorized reports for you to adapt to your business. Just plug in your own company data - vendors, subs, customers, etc. and you're up and running.

National Estimator, an easy-to-use estimating program with over 200 pages of construction cost estimating data for general contractors. The subtotals you create in National Estimator become cost categories in QuickBooks Pro.

Job Cost Wizard, software that converts your National Estimator estimates into QuickBooks Pro format so you can create invoices and track costs on every job. (Requires Windows Vista, XP, 2000, ME, or 98SE.)

ShowMe, a 60-minute interactive video that shows how to use National Estimator, Job Cost Wizard, and QuickBooks Pro to estimate and track job costs.

Sample business forms in the Forms folder. You'll find a grid to track change orders and a timecard to collect payroll data from tradesmen in the field. Other forms will help you organize information gathering in your office. Estimators may like using the estimate summary form to collect estimating data for transfer to QuickBooks Pro. To use these forms, you'll need a word processing or spreadsheet program such as Microsoft Excel, Microsoft Word, Microsoft Works, WordPerfect, or Lotus 1-2-3.

However, the CD in the back of this book doesn't include QuickBooks Pro. You won't get much out of this book without a working copy of QuickBooks Pro. So the first step will be buying and installing QuickBooks Pro if you don't have it already.

Fortunately, you can get QuickBooks Pro at most large software outlets. For the lowest price, try searching for a dealer on the Web. Some dealers offer expedited delivery at little or no cost. The CNET site lists dozens of merchants who offer QuickBooks Pro. To see the current price and terms offered by each of these merchants, go to http://shopper.cnet.com/.

How Do I Use This CD?

To use the CD in the back of this book, you'll need a computer running Windows (Vista, XP, 2000, ME, or 98SE), a CD-ROM drive, and 21 to 40 Mb free on your hard drive (depending on your computer's configuration).

If you're using a version of QuickBooks Pro older than the 2007 version, many of the illustrations in this book may not look exactly like what's on your screen. That's because this manual is based on QuickBooks Pro version 2007. If you're using version 2000 - 2006, the changes will be mostly cosmetic. Version 99 and older versions are different.

Installing the CD

To install everything on the CD, put the Contractor's Guide to QuickBooks Pro CD in your CD drive (such as D:). If installation doesn't start automatically after a few seconds:

Click Start button
Click Run
Enter D:SETUP

Then follow the instructions on the screen. We recommend you select the "Complete" installation when you're asked which type of installation you want to use.

When installation is complete, you'll see a new program group when you click Start and then click Programs. The new program group name is Construction Estimating. In that group, click on National Estimator 32 to start the program.

If you've installed an earlier version of National Estimator in the National folder, SETUP will automatically update obsolete files without affecting any of your estimates.

Get Help by Phone

Everything you need to know about National Estimator and Job Cost Wizard is available on the Help files that come with each program. Just click Help on the menu bar or click the question mark at the right end of the toolbar, or press the F1 key.

If you have trouble installing or using National Estimator or Job Cost Wizard, call Craftsman Book Company (Monday through Friday from 8 a.m. to 5 p.m. Pacific time) at 760-438-7828.

If you need help with QuickBooks Pro, call Intuit technical support (Monday through Friday from 6 a.m. to 4 p.m. Pacific time) at 888-320-7276 or call Online Accounting (Monday through Friday from 8 a.m. to 5 p.m. Mountain Time) at 888-254-9252.

Removing the Installed Files

To remove any of the programs installed from the Contractor's Guide to QuickBooks Pro CD from your hard drive:

Choose Start, Control Panel, then click on Add or Remove Programs.
Click the name of the program you want to remove, Contractor's Guide to QuickBooks Pro 2007.
Click Change/Remove.
Click Yes.

Conclusion

Most contractors would agree that accounting is what they like least about running a construction business. When we started out, we felt the same way. We had a well-founded fear of accounting and an irrational loathing of computers. But using a computer for the first time isn't much different from using a Skilsaw for the first time. Treat it with respect. You'll gain confidence with every use.

We wrote this book because so many of our friends and colleagues asked us for a simple guide to setting up a construction accounting system. We've worked hard to keep it simple and still provide all the information you need. We feel the mission has been accomplished and hope you agree.

Now it's time to take the plunge. In Chapter 1, we'll wade right in by giving you some choices on how best to start using QuickBooks Pro for your company accounting.

Contractor's Guide to QuickBooks Pro 2007

According to a recent national survey, more construction contractors use QuickBooks Pro and QuickBooks than all other accounting programs combined. And for good reason. QuickBooks Pro excels at all the routine paperwork in a construction office: writing checks, keeping track of your bank balance, sending out invoices and statements, creating up-to-the-minute profit and loss statements for the month, year or by job, writing payroll checks, paying suppliers and subcontractors, tracking job costs, comparing estimated and actual costs for each job, and much more.

But there's a lot to learn in QuickBooks Pro. And converting to a new accounting system can be a complex and confusing task, even if you have a strong background in accounting and plenty of time to install the new system. That's why this book was-written-because most construction pros aren't accounting experts and have more important work to do at the job site.

Contractor's Guide to QuickBooks Pro 2007 will walk you step-by-step through QuickBooks Pro's detailed setup procedure and then explain item-by-item how you should be using QuickBooks Pro every day. In days, rather than weeks, you'll create a first-rate accounting system that's an asset to your company.

Here you'll find simple, well-illustrated instructions for customizing the setup for QuickBooks Pro 2007, including what each screen on your monitor should look like. This manual explains every choice you need to make and every button you need to click on. Includes a CD in the back with software you'll want to use when estimating costs with QuickBooks Pro. Here's what's on the CD:

A QuickBooks Pro 2007 file preconfigured for a construction company. The file has a chart of accounts already entered, plus a complete set of memorized reports. Just plug in your own company data-vendors, subs, customers, etc. And at the click of a mouse, you have all the information needed to run your jobs.

National Estimator-an easy-to-use estimating program with more than 100 pages of construction cost 'estimating data for general contractors. Dozens of other databases are available. (QuickBooks Pro doesn't come with any estimating data.)

Job Cost Wizard-converts your National Estimator estimates into QuickBooks Pro estimates so you can create and send invoices, track job costs (charge every check to a cost category in your estimate) and compare actual and estimated costs. You'll know exactly where you made and lost money on every job.

Blank construction forms you can open on your computer (with nearly any of the popular word processing programs), customize, fill out, print and send to customers and subcontractors.

With this book, the other programs included in this package, and QuickBooks Pro 2007, you have at your fingertips all the financial tools needed to keep a company running strong and in the black. Just add your own company data.

The Authors

Karen Mitchell, Craig Savage and Jim Erwin are contractors, accountants and QuickBooks Pro experts. They've spent years studying and simplifying the installation of QuickBooks Pro in construction offices. Karen, Craig and Jim tour the country giving accounting seminars to professional groups, consulting with individual contractors and actually setting up QuickBooks Pro accounting systems for builders. They'll help you get excellent results with QuickBooks Pro the same way they've helped hundreds of other construction professionals.