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QuickBooks Online Tutorial – First Time Setup

A tutorial on setting up your QuickBooks Online US for the first timeWho is this tutorial for?

  1. Someone who is setting up their books for the first time in QuickBooks Online US, but has an existing set of accounting records (whether it is QuickBooks or some other accounting software package)
  2. Someone who wants to have a walk through of reconciling their books for the first time

Who is this tutorial not really for?

  1. Someone who wants to import their QuickBooks Desktop data into QuickBooks Online. You may still find parts of this tutorial useful, but QuickBooks Online has a desktop import guide at https://cdn.qbo.intuit.com/c36/v51.114/pdfs/QBDTImport.pdf that will be more relevant to you.

I wrote this tutorial while doing a review of QuickBooks Online. If you're new to QuickBooks Online, or want to see what it's like, I recommend checking out the review.If you have any questions or corrections, please leave a comment below.

Note: For an up-to-date review and comparison of online accounting software, please check out my ebook.

Topics

  1. signup
  2. company preferences
  3. what information can I import
  4. chart of accounts
  5. trial balance
  6. bank account setup
  7. contacts setup
  8. reconciliation
  9. more help and info

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Signup

Signing up is pretty easy.

QuickBooks Online US signup

QuickBooks Online US signup (click to enlarge photo)

As seen in the above screen shot, no credit card, 30 day free trial. I entered my info and was ready to go.This is the dashboard screen that greets you at the start.
this is your start screen

this is your start screen (click photo to enlarge)

The to do list seems like a nice guide to help you get started with setting up your company. However, I'm going to ignore that list and go into the account settings.go back to top

Company Preferences

To do change your company settings, go to Company > Preferences. You'll get a massive list of things to change.

company preferences

company preferences (click photo to enlarge)

This preferences screen is hard core. It has a TON of conifgurable options. You keep scrolling, and scrolling, and scrolling. The customization nerd in me loves this screen, as well as all the explanation of what each setting does. I can see people getting overwhelmed though.QuickBooks Desktop used to force you into configuring all these options when you set up your books for the first time, so in a sense, it's nice that QuickBooks Online does not make you go through this screen at the start if you don't want to. That being said, if you're serious about setting up your books, I would go through your company preference first as it does have a lot of important features you want to get right before doing too much in your books.Here's all the features:

  1. Company Contact Info (this is the company contact info that your customers will see, which is different from the company info under Your Account > Your Account which is purely for QuickBooks' billing system): name, address, email, website, phone
  2. Company: Employeer identification Number (EIN), fiscal and tax year, tax form to use (sole propreitor / corporation / etc...), closing the books, account numbers, quickfill autosuggest, customer terminology, email alerts, autorecall (recalls past transactions and autofills for you), setup interview, log out after inactivity
  3. Categories: Location tracking (tracking your income / expenses by location), class tracking (tracking your income / expenses in differnt ways, such as consulting income vs products income)
  4. Products and Services: Options to be able to associate products and services (in other software these are called items) with specific accounts as well as be able to give them more detail such as: description, quantity, and price. Also has options around tracking quantity and price as well as inventory tracking
  5. Sales form entry: Custom fields (allows you to create custom fields on customer invoices, estimates, sales receipts, refund receipts, and credit memos), custom numbers, delayed charges, deposits, discounts, estimates, message to customers, sales tax, service dates, shipping, terms, apply credits
  6. Form delivery: Customize forms, delivery method, email message, email attachments, html emails, statements
  7. Invoice Automation: Allows you to automatically create invoices for customers who have unbilled activities
  8. Accept credit cards: Option to turn on the feature at an additional cost (QuickBooks Merchant Service) or link to your current merchant service provider
  9. Accept online payments: Option to turn on the feature at an additonal cost (QuickBooks Payment Network)
  10. Vendors & Purchases: Manage bills, expenses by customer, split lines, duplicate checks, duplicate bills, terms, apply bill payments, purchase orders
  11. Time tracking: Allows you to track time and charge customers
  12. Payroll: Setup your payroll preferences
  13. Reports: Cash/accrual, display/print settings, more options

This reminds me of why people need / want training to use QuickBooks. So many options! To properly go through those options, I think it would take me an hour or so.go back to top

What information can I import into QuickBooks Online

QuickBooks Online has a comprehensive article on what data you can and cannot import at https://qboe.custhelp.com/app/answers/detail/a_id/1062/sltr/1.The data you can import is:

  • QuickBooks Desktop company data
  • Transactions from your bank via QBO, OFX, of QFX files
  • Customer or Vendors data from Outlook, Excel, or Gmail
  • Charrt of accounts via Excel
  • Products and services via Excel

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Chart of Accounts

QuickBooks has a default chart of accounts set up for you. Since I'm trying to move my existing set of books (QuickBooks Desktop from Canada which can't be imported to any online version of QuickBooks), I have to modify these charts of accounts.I found the ability to import data hidden under Company > More > Import Data.

import data

import data

This Import Data function is great, because when I click further onto the more link under chart of accounts, it gives me a list of what I can import as well as a downloadable sample file.
chart of accounts more link

chart of accounts more link

Here's what the file looks like. You can import a CSV or Excel file.
sample chart of accounts for import

sample chart of accounts for import (click photo to enlarge)

Once you fill out the sample chart of accounts with your data, you can import it and make sure the fields in your XLS file match QuickBooks Online's Chart of Accounts fields.
match your chart of account fields to QuickBooks Online fields

match your chart of account fields to QuickBooks Online fields

The import seems fairly successful. Out of the 44 accounts imported, I only have 3 errors.
step 3 of importing chart of accounts - review data

step 3 of importing chart of accounts - review data (click photo to enlarge)

To correct the data is simple. I choose to categorize my account with a type of account that QuickBooks understands. I sometimes feel that QuickBooks makes you over-categorize things, such as chart of accounts. As you can see from the screen shot below, I can't simply choose bank as a type of chart of account. I need to further categorize the bank account as a checking account. This over-categorization is also true for other types of chart of accounts and is present in other areas of QuickBooks. I feel this needlessly complicates use of the software.
categorizing chart of accounts

categorizing chart of accounts

Even though my 44 accounts were uploaded, the "type" of account needs to be further categorized, since QuickBooks wants more detail than an account simply being an expense account or an income account. If you look at the screen shot below, you'll see that all the expense accounts were categerozied as Expenses > Auto. I have to manually go through and choose the correct "type" of account for each one.
further categorizing the chart of accounts

further categorizing the chart of accounts

After further categorizing my chart of accounts, I click on "import 44 records" and get to the final stage, the Import Summary. At this stage I'm told that 6 chart of accounts were not imported because they already exist in QuickBooks Online.
step 4 of importing chart of accounts - import summary

step 4 of importing chart of accounts - import summary (click photo to enlarge)

Since those accounts already exist, I choose to "ignore selected records". I can now see my chart of accounts. I found out I have many duplicated accounts, since by default, QuickBooks Online had already set up a chart of accounts.
duplicate accounts

duplicate accounts (click photo to enlarge)

Since I have duplicate accounts, I now have to manually delete the accounts I did not set up. If I were to do this again, I think I would try to modify existing accounts. That would have probably been a faster process. When I try to delete accounts a weird things happens, I'm not able to delete the accounts. I get a pop-up window asking "Are you sure you want to delete?", but when I hit yes, the account is still there.
can't delete accounts

can't delete accounts

I find out that if you log out and log back in, QuickBooks Online will stop displaying the deleted chart of accounts.go back to top

Trial Balance

You can't import a trial balance into QuickBooks online, so you'll have to enter your trial balance numbers the manual way, which is through a journal entry window. The journal entry window can be found under Banking > More > Journal Entry.

how to do a journal entry in QuickBooks Online

how to do a journal entry in QuickBooks Online

If you know how to enter a journal entry, then entering your trial balance is a piece of cake. If you don't, it's actually pretty straightforward. Enter your account name and the Debit or Credit Balance.
journal entry to enter trial balance

journal entry to enter trial balance

I ran into an error caused by me not entering a name for the accounts receivable. I chose to make up a customer named "trial balance customer".
accounts receivable needs a customer name

accounts receivable needs a customer name

The fake "trial balance customer" worked and I have now succesfully imported my chart of accounts and trial balance.go back to top

Bank Accounts Setup

Download your bank transactions into QuickBooks Online by going to Banking > Downloaded Transactions.

"downloaded transactions" function

"downloaded transactions" function

For a quick summary of why downloaded transactions are cool visit the on-line downloaded transactions page http://quickbooksonline.intuit.com/on-line-banking-software/ or simply look at the screen shot below.
benefits of downloaded transactions

benefits of downloaded transactions

When you go to downloaded transactions you will get a pop-up window with the chance to find your bank. Once you find your bank and login, you will then get a chance to associate your online bank account with a bank account in QuickBooks Online.
associating banks

associating a bank

While QuickBooks is downloading your transactions (which takes a few minutes), a youtube video shows up in your pop-up window to let you know how downloading your transactions works. I think this is a nice touch, the information you need when you need it (and you have nothing better to do because you're waiting).
youtube video of downloaded transactions feature

youtube video of downloaded transactions feature

I have to say, I really like QuickBooks Online's "Downloaded Transactions" interface. For a lot of transactions, you can simply assign a name to a vendor or customer from a drop-down box and then choose which account to assign the transction to.
assign a name and account or simply match

assign a name and account or simply match

If you've already entered the transaction into QuickBooks, you can match the transaction instead.
possible matches found

possible matches found (click photo to enlarge)

match unaccepted transactions

match unaccepted transactions

There are two tabs, one for "unaccepeted transcations" and one for "Accepted Transactions". I liked this since for some transactions, I may want to add more detail, such as splitting accounts (assigning a transaction to more than one account).
unaccepted transactions and accepted transactions

unaccepted transactions and accepted transactions

In case you're wondering how to edit an accepted transaction further, click on the link after "Assigned to:" and that will take you to a detailed window where you can modify your transaction.
get more details by clicking on the link after "Assigned to:"

get more details by clicking on the link after "Assigned to:"

the transaction detail

the transaction detail

I like how you can also "undo" accepted transactions. This is handy for when you screw things up, which is bound to happen.
undo accepted transactions

undo accepted transactions

Can't connect to your bank?

If you are having difficulty connecting to your bank through QuickBooks Online, you can manually import QBO, QFX, of OFX files (which are files that you should be able to download from the majority of banks). The process is overly complicated, as you have to click on "How Do I?", then "Import my Web Connect or OFX file", then "Upload the file to QuickBooks Online Plus", then "Start the WebConnect mini-nterview", which then pops up another window. The process shown in the 3 screen shots below.

manually import transactions

manually import transactions

manually import transactions - part 2

manually import transactions - part 2

manually import transactions - part 3

manually import transactions - part 3

I think QuickBooks Online has this feature hidden this way since they want everyone to automatically connect to their banks, and why not, since they're the company that is arguably the best at doing this. However, if you are trying to bring in bank data more than 90 days old, you will have to do this through this manual "Webconnect" process, meaning that QuickBooks has buried a feature that I believe a lot of people will need to use. This is especially true for first time users.Most banks do provide QBO, QFX or OFX files, but there are situations when you'd want to import a more standard, CSV (comma separated value) file type. I wish that QuickBooks Online would also import CSV files.I had one bank which QuickBooks Online couldn't read the QBO file. QuickBooks Online instructed me to contact the bank to fix it. Luckily I had the QBO file from another Bank whose import worked successfully. A quick look at the first part of the code and I noticed a difference. The top part had "NONE" in the good file while the bad file didn't have it. I added a couple lines of "NONE" and presto, it worked! I don't expect any regular users to this, but if your comfortable opening up a text editor, you yourself may be able to fix a problematic QBO file.
added NONE to my QBO file to make it work

added NONE to my QBO file to make it work

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Conacts Setup

QuickBooks Online can import your list of contacts (customers and vendors). To import customers, go to Company > More > Import Data. From there click on Customers or Vendors, depending on the type of contact you are importing.

import data

import data

For a complete list of the fields you can import, go to https://qbo.intuit.com/c36/v51.114/749085035/helpwindowframeset/showtopic/help_admin_import_which_fields?size=1&Before you import, you can download a sample file, making it easier to edit your data before importing.
import customers window

import customers window

The sample import file looks like this.
sample file for importing contacts

sample file for importing contacts

Since QuickBooks allows for more details about customers than the above screen shot, it's a shame that you can't import more fields.When you import your contacts, it's a simple process of matching fields.
match your fields to QuickBooks Online's fields

match your fields to QuickBooks Online's fields

You then review your data.
review your data

review your data

After you review your data, QuickBooks Online may have some errors that you need to correct.
correct errors when importing customers

correct errors when importing customers

Setting up vendors is the exact same process as setting up customers.go back to top

Reconciliation

To reconcile, you go to Banking > Reconcile (if you can't find the menu item, you might need to click more to see it).

reconcile menu item

reconcile menu item

You fist choose the account you want to reconcile, the end statement date, and the statement ending balance. After that, you'll get taken to a reconcile screen.  Money going out of your account will show up on the left hand side, money going in to your account on the right side.
all done - everything matched!

all done - everything matched! (click photo to enlarge)

I'm impressed with the downloaded transactions and reconcile functions of QuickBooks Online. It was a straight-forward process that went smoothly. If you've read my other software reviews, you know that when I don't like things I'm not afraid to say so. In this case, the reconcile worked flawlessly. The reconcile was smooth because the downloaded transactions allowed me to enter transactions in advance so that the reconciliation would be a breeze.A useful feature in the reconcile function was that you could click on an individual transaction if you wanted more detail. It was also handy to see how the numbers changed on the bottom left hand of the screen (Beginning balance, checks and payments, deposits and other credits, statement ending balance, cleared balance, difference).If you've used the desktop version of QuickBooks for reconciling, it's pretty much the exact same thing.go back to top

More help and info

If you have any questions, please feel free to ask in the comments section below. Also, be sure to visit my QuickBooks Online Review for a full tour of the software. Lastly, you can try out QuickBooks Online for a free 30 day trial at http://quickbooksonline.intuit.com/, so you can always check it out before buying.


9 Comments


Lou
August 13, 2012, 11:49 am

I'm stumped. I incorrectly deleted a credit card charge because I thought I had duplicated it. In fact, I hadn't so I reentered it. Now I go to reconcile with the credit card bank statement and the beginning balance is off by the amount I deleted and when I check off all the purchases, the reconcile statement is minus that exact amount. \nCan you help me to correct this?

    smallbizdoer
    August 17, 2012, 2:27 pm

    Hi Lou, \n \nMy 30 day trial with QuickBooks Online expired, so I don't know for sure how to correct your exact situation. \n \nYou might be able to undo the transaction by looking in your "activity log" (found under the Company tab) and undoing the deletion. \n \nThe other place you may be able to try is in "downloaded transactions" (found under the Banking tab). If you click on the "unaccepted transactions" or "accepted transactions" tabs, you may be able to find it.

Julian
August 14, 2012, 1:42 am

I have been on the phone to "technical" for nearly 4 hours, importing the data is a massive problem, even they admit they have big problems and are working on it but can't give any date they will have a fix. Try importing nearly 2000 customers! let alone trying to import chart of accounts. \n \nWhy can't QB get the import from desktop to include all data? their answer is to run the old desktop on your computer aswell and refer back to that if you need to look at old transactions, what is the point of changing to online………none unless you are a new business.

    smallbizdoer
    August 17, 2012, 2:09 pm

    Yes, switching from Desktop to Online is not always a smooth procedure. I can sympathize with the pain. I've found it usually best to close the Desktop books as of a certain date and then open up a new set of books online after that date. More work, but I find you can trust the data more. That advice is not just for QuickBooks, but for any accounting software package. \n \nFor your 2000 customers, did you ever try splitting up the imports into smaller numbers? \n \nImporting a chart of accounts was a frustrating process for myself. \n \nThe point of online is anywhere, any time access (provided you have an Internet connection), simultaneous users, no upgrades necessary, no backup necessary (although, I would download a local copy periodically). It's also the integration with apps and bank data.

Kate
January 25, 2013, 12:54 am

How do I enter a credit card? How di i get the info I loaded into the trial to communicate with the bank?

    smallbizdoer
    January 26, 2013, 1:32 am

    Hi Kate, \n \nAre you able to give a little more information about what you're looking to do? \n \nDo you mean how to enter an expense for something you purchased with a credit card or how to set up a credit card account and import your credit card transactions?

kristy
January 27, 2013, 4:12 am

Hi Greg, I've been using QB for 20 years. Currently running QB Pro 2010. I'm looking for an online accounting solution. My database is currently too large for the cloud. We have so many vendors, items and clients that are no longer active. Is it possible to import sections and pick and choose which I want to continue with? For example, import my client data and delete the ones I don't want to bring over; and do the same with Vendors. Also, can I import some data and create new data, such as new items for example? Thank you for your input..

    smallbizdoer
    January 29, 2013, 1:11 am

    Hey Kristy, \n \nI think the key is to clean the data before importing. I would create a copy of your data, then clean the copy as much as possible. In case you get rid of too much by accident, you can always go back to your original records. \n \nFor the new data, yes, QuickBooks online has tools to import some data, as mentioned in part 3 of this tutorial.

Leigh
June 13, 2014, 2:33 pm

I love the organization of your material! Step-by-step, with clear visuals of what you SHOULD be seeing. This will make setting up my own accounts just that much easier. Thanks! \n