As your business grows – and especially once you start to work with outside suppliers – you’ll likely need an accounting software package. For most businesses QuickBooks is the unavoidable choice. If you want to get help from an accountant or eventually hire a bookkeeper QuickBooks is practically mandatory.

QuickBooks has the potential to make seemingly impossible tasks look easy. Once you get QuickBooks configured right, it’s gratifying to see your transaction history loaded into tax software like TurboTax, and to see the correct IRS forms completed almost instantly. And, you’ll sleep better knowing you’ll have precise profit-and-loss data within a few days after the close of each month. You’ll also know exactly how much sales tax to send to your state each quarter (if required), and you’ll be confident that the bills you’re paying are correct.

Unfortunately, QuickBooks can also make many basic, daily record keeping tasks seem impossibly difficult. Even after reading books on double-entry accounting principles used by the software, I found that setting up and maintaining my company’s books with QuickBooks was hugely frustrating, and it seemed to consume limitless amounts of time.

While I’m no Certified Public Accountant (CPA) and can’t offer specific help setting up QuickBooks for your business, I can share a few pointers that I wish I’d known before wasting what seemed like an eternity in QuickBooks Hell.

Keys to QuickBooks

Used correctly, QuickBooks can provide a great deal of value in tracking and reconciling items such as:

• Bills, payment card charges, and business expenses in general
• Key business accounts including your checking account, online merchant account, and sales taxes payable to your state
• Purchase orders, and the payments that you send to suppliers
• High-level financial results, with the ability to feed this data to TurboTax

However, we find other activities to be impossibly difficult with QuickBooks:

• Working with individual customer transactions reported by your shopping cart and merchant account
• Planning your future inventory needs and manufacturing activities

Before finding our really smart CPA, we paid several other accountants to try and make our QuickBooks setup workable. We quickly learned that while many people call themselves ‘experts,’ most were only familiar enough with QuickBooks to make it work for one particular type of business. Nobody seemed to understand the software well enough to help us set up efficient processes for our online store.

Setting Up QuickBooks for an eCommerce Store

Fortunately, after trying to manage inventory for several years with an expensive version of QuickBooks, we eventually found our great CPA. We followed his advice to discard that version of QuickBooks, buy the more basic QuickBooks Pro (often sold for under $200), and start fresh with the features that we found usable. We also switched to planning our inventory with an Excel spreadsheet, and then entering the correct information into QuickBooks at the end of each month.

For our particular business, here are some of the key guidelines we eventually learned with help from our smart CPA.

• Don’t import individual online transactions into QuickBooks; instead, create QuickBooks entries dated the last day of each month to match the few top-line totals (like Payments received, Payment fees, and Refunds sent) reported for the month by your payment processor.
• If you sell physical goods, don’t use QuickBooks to manage builds or forecast inventory; instead, enter monthly inventory adjustments in QuickBooks, using the data you track in Excel, so that QuickBooks can calculate your Cost of Goods Sold and the value of inventory on hand.
• Don’t choose a bad eCommerce platform, payment gateway, or software add-on only because it claims to integrate with QuickBooks. We learned this the hard way, after testing and rejecting many alternatives.

Using these guidelines we’re now able to close our books within a few days after the close of each month, and to easily track the information needed to pay suppliers and tax authorities. And, our sales revenue in QuickBooks exactly matches the 1099K report that PayPal sends to the IRS each year.

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