New Business Direction LLCYou work hard for your money. Strong internal controls can keep it from disappearing unnecessarily.
You trust your employees or you wouldn’t have
hired them. That’s what everyone says as they watch a valued staff member being hauled off in handcuffs. But I trusted him.
Whether your accounting tasks are done on one PC or you have multiple users working on different screens, it’s critical that you make use of all that QuickBooks offers in terms of internal controls. You’ll also need to establish some common-sense rules.
First Stop: Audit Trail
An audit trail is a very large report that displays every addition, deletion and modification of every transaction. In older versions of QuickBooks you could turn it on and off, but it’s permanently on now.
Because of its size, you’ll probably have to use QuickBooks’ filtering tools to zero in on the user and/or date(s) you’re looking for. Go to Reports | Accountant & Taxes | Audit Trail. Click Customize Report | Filters to set up your search.
Your audit trail won’t alert you when someone tries to enter a prohibited area, and it won’t detect changes to lists. Setting up permissions will help (Company | Set Up Users and Passwords | Set Up Users), but you need more than that.
Figure 1: Be especially careful when granting user access to areas that contain customer, vendor and employee information.
Run the Right Reports
Other QuickBooks features can help prevent fraud. Review these reports regularly:
- Closing Date Exception. Why were those changes necessary?
- Voided/Deleted Transactions. Is there supporting documentation? Should you be reviewing these daily?
- Expenses by Vendor Detail. Look for irregularities, especially multiple payments made to a vendor in a short period of time.
- Check registers. Use the Balance Sheet for this. Go to Reports | Company & Financial | Balance Sheet Standard and customize the report for the correct period and – if necessary – for specific customers, vendors and/or jobs.
Adhere to Best Practices
You undoubtedly implement financial best practices in your personal life. You reconcile your accounts. You don’t give your online banking password to anyone. And you glance through your recently-posted transactions on your financial institutions’ websites.
If your company is large enough that you have multiple accounting employees, you probably can’t be as hands-on as you are at home. But you can still set up internal control procedures.
Figure 2: Debit? Credit? Reverse the transaction? No one should be making General Journal entries but you. It’s easy to err here; talk to us before using this feature.
For example, if your company has grown to the point where you’re removed from the daily workflow, you may still want to have approval rights for some procedures, like bank balance adjustments, refunds and credits, printed checks (you should still be signing them), timesheets and expense reports.
It goes without saying that you should password-protect your QuickBooks company file and change the password regularly, even – and especially – if you’re the entire accounting department. And protect yourself from external fraud. We can do a review of your security procedures and make suggestions.
Reinforce the rules
Know who your employees are (consider running background checks) and, if you can, rotate the duties assigned to accounting staff. If you have only one person managing all of your bookkeeping work, conduct an even more thorough background search: credit, references, criminal activity, etc.
Finally, make sure that all employees understand the definition and consequences of fraud. Let them know about the steps being taken to prevent it, but do some unannounced auditing on your own. Include a session on fraud in orientation and get current staff up to speed. Explain that this is necessary for their protection, too. Make it easy to report fraud anonymously, with no fear of repercussions.
This may seem like a lot of extra tasks in your workday, but imagine the time you’ll lose tracking down fraudulent activity if it occurs. So spend a fraction of that time upfront.
If you have questions on this subject, or anything else Accounting or QuickBooks related, give us a call or email. We’re here to help.
This article of QuickBooks Tips and Tricks was based on the 2013 version of QuickBooks.
Using QuickBooks Mobile, you’ll improve business relations, put out fires before they start and unchain yourself from your office computer.
There are only a few reasons why you wouldn’t be using QuickBooks Mobile on your smartphone. Maybe you don’t have a smartphone. Or when you’re out of the office, you don’t want to be available for accounting work. Or you might not think that it has enough features to make it worth using.
While the first two reasons are matters of personal preference, the third just isn’t true. QuickBooks Mobile automatically – and almost instantly – synchronizes the data from your desktop or laptop computer copy of QuickBooks. While it’s only focused on sales, not payables or payroll, you can manage receivables quite nicely whether you’re in a customer’s office or at a trade show or community event – or sitting on the couch at home.
Figure 1: You can see this screen no matter where you and your smartphone are (the-recently-upgraded Android version is pictured here).
Countless Scenarios
There are numerous situations where you might want to access, add or edit customers, estimates, invoices, sales receipts or payments when you’re not near the PC where QuickBooks is installed, like these:
- You’re a mobile service provider (i.e. appliance repair, locksmith, tow truck operator, pizza delivery) and you want to accept payment on site.
- You do a half day of onsite training and your client wants to pay you cash right then. You can record the payment and email a sales receipt.
- You’re on the road and you want to see how well your bookkeeper is managing receivables. QuickBooks Mobile displays three views: recent activity, today and upcoming.
- You’re with a client who would like to give you a check to get current, but he or she can’t find the invoice. Rather than calling your office and sitting on hold until someone has time to look, you can pull up the form on your smartphone to discuss it.
Figure 2: You can record sales receipts and payments on your smartphone – even schedule appointments that move to your Google calendar.
The Perils of Payroll
QuickBooks Mobile doesn’t support payroll, but Intuit Online Payroll does. Like QuickBooks Mobile, the app itself free (of course, you have to pay for the service itself). You can view the most recent payroll run and employee information, as well as preparing, previewing and approving the current payroll.
Neither app is available yet for the iPad, though QuickBooks Online is.
Figure 3: Missed your flight and afraid you’ll miss the current payroll run, too? Intuit Online Payroll gives you access from your Android or iPhone.
Paper or Plastic?
If you’ve been in business for very long and still don’t accept credit cards, you have an idea of how many sales you’ve lost. You’ll need to get a merchant account from Intuit Merchant Service for QuickBooks (fees apply). A merchant account allows you to accept plastic through QuickBooks itself, your web browser, your web storefront – and on your smartphone or iPad.
You can also download Intuit’s free GoPayment app. You can either swipe cards on the free mobile reader or type numbers in. Your customers sign their names on the surface of your mobile device, and you can print, text or email a receipt. There are no monthly fees, no long-term contracts, and you pay as you go. 
Figure 4: You’ll need to get acquainted with the Intuit Merchant Service Center to work with credit card payments.
It would be nice if those credit card payments were just instantly zapped into the right places in QuickBooks, but alas, it isn’t so. You’ll need to do some setup and processing both within QuickBooks and in the online Intuit Merchant Service Center. We can help you with setup and your initial transactions to make sure all of your payments get through and are deposited and/or credited correctly.
We think you’ll find that once you start using all of the mobile payment services that Intuit offers, you’ll wonder what took you so long.
I was telling a friend of mine about the topic of this months’ newsletter and he said “you’re the expert in QuickBooks® and you make a living from setting it up and cleaning it up and teaching people how to use it – why in the world would you tell people NOT to use it?”
The answer is simple – QuickBooks® is a really great program, it’s relatively low cost and it works well for most small businesses. However, one size does not fit all. It’s like that suit in the back of your closet. If QuickBooks® doesn’t fit, it won’t work and it won’t get used.
Fortunately, QuickBooks® has many solutions in their product line-up and with our expertise and knowledge we can customize and tailor a program specifically for you and your small business.
Data File Sizes and Transaction Limits
What impacts whether you should use QuickBooks® Pro or Premier or the more powerful version, Enterprise Solutions, is the size of your data file today and how that data is expected to grow over the time period for which you want to keep all transaction data in one (1) company data file.
The rate of growth of QuickBooks® company data files varies significantly from company to company. There is no “average” or “typical” data file size, since businesses track different information. How quickly a file grows depends on the number of transactions, the amount of information entered in each transaction and the number of “links” per transaction.
If your business generates more transactions than QuickBooks® can handle, performance may be affected. Technically, QuickBooks® Pro and Premier can handle two billion transactions in a single company file. In practice, however, tasks like running reports and finding transactions can take longer if the file grows too large.
We recommend that QuickBooks Pro and Premier data files should not exceed 200MB and that Enterprise Solutions files should not exceed 300 MB. These are general guidelines, based on several factors. There are no specific maximum file sizes and your system will not come to a crashing halt if you exceed these recommended sizes, however, as the data file grows, the overall performance of the software declines and the risk of data corruption increases.
To see how large your data file is currently, open your QuickBooks® file and press the F2 key. A Product Information box will appear and your data file size will be listed on the left hand side of the screen under File Information.
Item or List Limitations
QuickBooks® also has item limitations – counts that cannot be exceeded. Companies with list requirements that exceed those in the following table are not a good fit for QuickBooks®. This list highlights some of the more important physical limits and it is not an all-inclusive list. These counts are “combined” counts. For example, in Premier, you can have 14,500 customers, vendors AND items combined, not 14,500 per list.
| List Name | Pro and Premier | Enterprise Solutions |
| Chart of Accounts | 10,000 | 10,000 |
| Names (customers, vendors, employees and other names) | 14,500 | >100,000 |
| Items (including inventory) | 14,500 | >100,000 |
| Classes | 10,000 | 10,000 |
| Price Levels | 100 | 750 |
*For an all inclusive list click here
For companies that require a more robust inventory, we recommend using Enterprise Solutions, QuickBooks® Point of Sale or an add-on software such as Fishbowl.
To find out how many items your data file is currently using, open your QuickBooks® file and press the F2 key. A Product Information box will appear and your List Information will be shown on the right hand side of the screen – be sure to scroll down to see all of the lists.
User Access Limitations
QuickBooks® limits the number of users who can access the company data file simultaneously. Companies that require more users simultaneously accessing the company data file than QuickBooks® supports are not suited for QuickBooks®.
Inventory Method Limitations
Companies that require an inventory method other than average cost (such as FIFO or LIFO) may want to use QuickBooks® with an add-on software for the inventory feature. Note that an exception is QuickBooks® Online Plus – as of mid-2010 it offers Inventory using the FIFO cost method. Another exception is QuickBooks® Enterprise Solutions for 2012 with Advanced Inventory which has a FIFO option as well.
| QuickBooks® Product | # simultaneous users |
| Pro | 3 |
| Premier | 5 |
| Online Plus | 5 |
| Enterprise Solutions | 30 |
| Online | 25 |
Summary
Although QuickBooks® works quite well for companies of various sizes and across many industries, there are a few situations in which QuickBooks® may not be the best solution.
If you are interested in finding out more about any of the QuickBooks® line of products or if you would like to discuss what solution is best for your small business, please call us.
This article of QuickBooks Tips and Tricks was based on the 2012 version of QuickBooks.
