Handling Complex Bills (Part 1)

Another Common QuickBooks Mistake

There are many times the Bills you receive are complex and should be distributed into many accounts. Worker's Compensation Insurance payments, and most other insurance coverages, but even basic billings can require them to be distributed to multiple accounts.

All these add up to causing your financial reports to be inaccurate and benchmarking will not have significant value unless the expenses are properly distributed each month.

This is a very Common QuickBooks Mistake that may be considered an Advanced QuickBooks Process. To properly distribute your Bills & Expenses a review of what the items included are for (and not just what they are) is important to begin the process...

Step1: Determine how the Costs will be distributed

  • Business Insurance as well as Medical and Disability Insurance are often too complex to properly distribute without assistance.

It may be the easiest to create an Excel Spreadsheet to obtain the proper distribution.

Spreadsheet Created to Properly Distribute Business Insurance Premiums

There many scenarios where a spreadsheet is your best option especially if the amounts can change regularly such as will medical insurance and even Business Insurance Packages. In Medical, Disability, Dental/Vision Insurance Billings, employees can change coverage, new employees added, and others may drop. In addition if the company is contributing a portion of the costs as a benefit, it will be very helpful to have a spreadsheet created for these. With Business Insurance Packages, they may include liability, building coverage, employee tools, company vehicles, loaner/rental vehicles, and even Worker's Compensation Insurance. All these simply should not be distribute to just, "Insurance". In cases where vehicles change often such as with loaners/rentals and company vehicles, a spreadsheet to calculate the distribution is definitely best. If the payment each month is actually not just that month premium then the steps for Accruals should be followed.

Step 2: Create a Bill/Check/Charge for the Bill Received

  • Distribute the Bill to Accounts as needed.

Bill Created to Properly Distribute Business Insurance Premiums

The above is an example of a Business Insurance Policy that includes several different types of insurance: Company Autos, Loaner/Rental Vehicles. Trailers/Other Motorized Units, Building & Fire, General and Garage Keepers, Inland Marine, Umbrella, and Worker's Compensation.

Each should be distributed to the correct account and not just be lumped into one insurance cost. If you are using a Bill for this, make sure to put the correct due date and terms before the next step.

If the amount can vary in one area during the policy period such as Loaner/Rental Cars, you can still memorize the Bill and just change the last line depending on each monthly Bill received.

When you pay this Entered Bill, you can either pay by Check, Credit Card, or EFT. If you have the payment automatically withdrawn from your account or use a credit card on file, it is unnecessary to use a Bill entry. In these cases, it is better to use a check or charge.

Check Created to Properly Distribute Business Insurance Premiums

In Review:
The Key Points to This Process Are:

  • Using a spreadsheet to properly calculate the distribution is a good idea
  • Do Not just lump everything into on Account just because it is "Insurance"
  • If the payment is not just for a single month, setup an Accrual (Prior Issue)
  • Bill date must be the month the expenses is to be taken
  • Memorize transaction to improve processing. (Next Month)

I hope this explained a more accurate method to distribute complex and/or varying expenses so you can analyze your business performance better.

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Credit Card Processing

How much do you spend for your total cost of taking credit cards ?
Do any of these describe your situation?

  • Customers charge whole bill to get "their points" or "Cash Back"?
  • Hidden fees add up to make your "real costs" higher than before?
  • You pay equipment rental/lease payment to process credit cards?
  • You pay a monthly fee to use the Merchant Account?
  • Quoted rates are not the rate for your customer charges?
  • Tired of every company saying they can "beat" the rates?
  • Thousands of dollars each year off your bottom line?

We have found two simple solutions:

  1. A Standard processing program guaranteed to reduce your processing costs, or they will give you $500.00 for trying.
  2. A customizable program which can totally eliminate all your processing, equipment, PCI, and monthly fees to ZERO !

The Edge program is an innovative new offering made possible by the recent Supreme Court ruling that allows you to share or transfer the costs of processing back to the customer. This wasn't possible a few years ago since it was against your merchant services agreement.

Edge now offers a customizable programs that will allow you to encourage payment by check or cash, and stop these unnecessary costs to your business.

This program also allows for zero equipment fees, transaction fees, and all the hidden costs, or share the costs based on charge levels. You could decide to take all credit cards for deductibles up to $500.00 at no sharing costs, but for charges above this amount you can even set a sliding scale. As an example; $501.00 - $1000.00 the customer shares half the costs, and over $1000.00 they pay the whole costs. Believe it or not, customers will still use their rewards card even if a non-cash fee is added, just to get their points, but it can not cost you anything!

You can also individually decide when processing to override the fee as well for your "best" customers.

This new program is a game changer ... how much money can this save you on your bottom line ?

If you have missed our earlier issues of QuickBooks Tips & Tricks, you can catch up on past issues by Clicking Here.

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The Credit Card Processing Challenge

If after reviewing the Edge Program to eliminate 95% or more of your credit card fees, we have partnered with a provider, PayProTec, that will guarantee they will save you money of give you $500.00 for trying !

Click the Certificate below, print it out, fill out your information and send us your last two credit card statements ... we will do the rest, and save your money !

Ideas to Improve Your Business and/or Lower Costs
There are several options here that we have found are very beneficial to the business and at the same time lower your costs. Whether to use QuickBooks Payroll or a 3rd Party Service is a key decision to make.
Payroll Options:
If you are using QuickBooks, the most obvious selection is to use Intuit Payroll.
There are three basic Intuit payroll options ... Basic, Enhanced, and Full Service.
The Enhanced is the most common option used by small businesses since it included the tax filing forms for State and Federal, where the Basic option does not. However, this means you are responsible to do the payroll using Intuit's tax tables, pay your taxes on time, file all the returns, pay at least $400.00 - $500.00 each year for tax table usage and per employee fees each pay period, and a required QuickBooks upgrade every third year. *
The system has the ability to connect electronically to pay and file Federal Taxes, and if your State allows it, do the same for your State taxes. When setup properly the system will notify you well when all this is due, but I often see that this has not been done and late filing penalties then happen. It is your responsibility to pay and file on time.
It is also important that the Payroll Items are setup correctly, so your payroll is distributed properly.  We have often found this not to be the case, because the client had their CPA or Accountant set it up. This is almost always a mistake because  they are not concerned about providing you with operating information to run your business, just your taxes. We often see that all payroll is distributed to one account, wages ... which for benefits of the business owner is completely incorrect.
A Full Service Payroll option transfers the responsibility and liability of maintaining accurate payroll records and paying on time to the service provider and not on you. Intuit does have a Full Service Payroll Option like other 3rd party offerings, however Intuit's option does not support all State forms and they are priced on the high side.   For this reason, if you are looking for a full payroll solution there are other better offerings available.
* Intuit has a per employee fee that ranges from $2.00 - $4.00 depending on how the employee is being paid (Check or Direct Deposit). They also cease providing tax table updates in the third year for the older QuickBooks versions. So if payroll is to be used, you will be required to upgrade QuickBooks to the current version to continue to use payroll.
A Better 3rd Party Full Payroll Solution
We have reviewed and worked with dozens of third party payroll services only to find that they have flaws that do not fit well with the industry, or they do not properly integrate into QuickBooks. This forces manual distribution through a Payroll Clearing Account and journal entries to properly allocate the payroll to proper accounts.
ADPrun is the best and most reliable solution we have found for all businesses under 50 employees.

Why Choose ADPrun ?

  • Simple to Use
  • Imports into QuickBooks better than any other on the market
  • No more Required QuickBooks Upgrades*
  • Very Cost Effective and Simple Pricing
  • Print your own checks or have delivered
  • Employee Portals, so their documents are always available
  • No Hidden Fees
  • Additional HR Tools can be added
We highly suggest you check out your options ... they are providing discounts that make this payroll service a great value, and very competitively priced.
Click to Check it Out

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Your IT Infrastructure

When computers first entered our industry, most of the industry still was in the 1970's in understanding what the future was to bring. We have seen so many poorly designed and maintained systems in our industry. Some of our clients are being almost held hostage by an IT company maintaining their system, and all at a very high cost of operation.

We also see clients that have to wait minutes for their system and programs to boot up or run. We also see hardware setups that are simply begging for issues to happen. None of this has to continue.

One of the most important considerations is your Internet connection. Since most of the systems today and in the future will be more dependent on this, it is very important to continue to keep yours upgraded.

There are still areas in our Country that you have few options for this, but you need not just give up, continue to check each quarter what may become available that can be of great value.

If you do have competition in your area, you will find it can not only upgrade your service significantly, but also lower your costs as well. Today 1000mb (1 gig) speed is becoming readily available by many providers. What is a disappointment is that your current provider may have it available, but unless you contact them, they will continue to provide you what you have at the rate you are currently paying.

One client of ours, when I checked with their provider was setup almost 10 years ago. They were only receiving 5mb download and 1.5mb upload speeds for over $200.00 per month! We switched companies and got 300mb download with 25mb upload for $80.00!!!

Check out the competition every year (at least) and use their offers to get it with your current provider and get better speeds at a lower cost, or if necessary switch.


Many providers today don't even require a contract. Any provider that is trying to "lock you in" is one to be concerned with their product offering.

We also have worked with clients to set up their network system and workstations that simply requires little or no maintenance. It all starts with the hardware we have specifically chosen for our industry.

We have found a very affordable solution to your entire computer setup and network. We simply have very few support calls, you don't have unexpected costs, and productivity loss with systems that are so slow you could have a coffee break between tasks.

We also have very competitive leasing options to fit your budget.

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Stop Spending $$Hundreds on Pre-Printed Checks!

If you print your checks out of QuickBooks, you probably are spending hundreds of dollars more than you should. If you have multiple accounts maybe even thousands!

We have worked with many companies over the years that offered software that allowed printing checks on blank stock, but all of them in the past either charged an upgrade fee when you updated your QuickBooks, or required special blank stock ordered at a higher price than what we have now.

PrintBoss is the best software we have found that integrates perfectly into QuickBooks, and lowers your costs at the same time ...

Typically we find clients paying $300.00 or more for pre-printed checks for each account they have. That is ridiculous.

This program will also print deposit forms as well and the checks are 75% to 90% less than pre-printed checks, and much more secure, because if stolen, the checks are completely blank paper!

If you have missed our earlier issues of QuickBooks Tips & Tricks, you can catch up on past issues by Clicking Here.

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Click the Title to Open and Read

If you are a Collision Shop, we would like to give you our latest eBook titled, Financial Insights & Improving Your Business... For The Collision Industry Owner.

This valuable resource is specifically designed for the Collision Industry Owner.

The Second Quarter eBook will be released soon. It will build upon the basics covered in this eBook ... so if you haven't already read this one, you should before the next becomes available.

Just click the cover below.

Please take the time to review this new resource, as well as the other free eBooks we have created to help you. This latest eBook includes additional tools we are sure your will find valuable.

Our company AEII, QuickBooks R Us, is always here to assist any small business with a full range of services, and provide the training and support needed to achieve excellent results. We have assisted businesses worldwide ... And we specialize in the collision repair and service industry

Since it is still early in the year the best time to upgrade your chart of accounts to reflect better details for your financials is now.

Schedule a free session to discuss any QuickBooks needs you may have below:

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Click the Title to Open and Read

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Hidden Credit Card Fees Are Costing You Thousands !

In this month’s QuickBooks & Tricks we will finish the series on why many clients get frustrated about how their Profit and Loss each month moves up and down like a roller coaster, but the business by all indications is doing the same.
This last cause often has the greatest effect on the Financial Reports if not accounted for properly, but not all business types will need to consider it, Work in Process (WIP).
What is WIP ?
In accounting to get an accurate financial picture, the sales and costs associated with each job need to aligned in the same month, otherwise it causes an artifically higher or lower gross profit in a given month. Sales (Revenue) is normally booked when the job has been completed, and the customer accepts it as completed.  WIP is simply the jobs that are not completed at the end of the accounting period (month), and typically have costs that have been incurred. In some businesses this can be very minimal since the turn rate on their jobs do not span longer than a day.
However, in a collision shop, construction company, and really any business that completion of the typical jobs take more than a day, there are jobs in which labor (payroll), parts, supplies & materials, and even subcontracted services have been paid out, but the sale will not be taken until a later month. This requires WIP adjustments made to properly align the costs and sales of each job.
In some cases if the jobs are spread across many months there may be additional considereations, but for the sake of this month’s issue, we will be focusing on making standard WIP adjustments.
Before we begin, if you have not already read the last two month’s QuickBooks & Tips listing the other causes to this issue, you can do so by clicking the links below:
Determining WIP
At the end of each accounting period (typically month end) there needs to be a method of determining the costs already incurred for jobs that will not be taken as a “sale” that month. In some situations this can be thousands of dollars of already paid out costs. This can include employee direct labor payroll, parts, supplies, materials, and outside contracted services (towing, subcontractors, permits, licenses, etc). These will vary dramatically by business type and can also vary widely each month. These adjustments should be your actual costs for each, and include items purchased “on account” but not actually paid for yet.
If your business has a 3rd party management system, they generally have reports available for Work in Process. You will only utilize the costs listed on the report, but this report will not be accurate if all jobs have not been closed and sent into QuickBooks that will be included in the month’s sales. The WIP report on most systems is a very fluid report, so this report should be one of the last items performed during the month closing process. Again, your goal is to align the sales and costs for each job into the same month, so not having all the sales for the month in QuickBooks before running the WIP Report will be very inaccurate.
Attempting to determine the WIP manually can be very challenging unless detailed records of costs associated to each job are kept and can be combined for monthly totals. This is an area 3rd party management systems provide a great benefit.
WIP Adjustments
WIP adjustments are made using either the reports from 3rd party management systems, or by having a method of tracking all the costs manually.
At the end of the accounting period/month a memorized Journal Entry or Zero Dollar Check is created that will reduce the COGS expenses for the amount determined that were paid for jobs that are not going to be taken as a sale until a later period. For the offsetting entry at the same time, the WIP Accounts will increase that same amount.
WIP Accounts
WIP Accounts are Current Asset Accounts on the Balance Sheet, and will vary based on the business type. For this article, we will be providing examples based on a collision repair shop, but there will be many similarities to many other business types.


Figure 1 – Typical WIP General Ledger Accounts (Collision Repair Industry)
You may have noticed that even though industries such as Collision Repair have several COGS sub labor, parts, materials, and sublet accounts that are often tracked, the WIP Accounts only have main category accounts. This is because it is not necessary to have every COGS Account listed in the WIP section. The actual adjustments will include each COGS and Sub Account.
Figure 2 – Typical General Ledger Memorized WIP Adjustment Journal Entry (Collision Repair Industry)
You may also notice that there are no Supplies and/or Materials entries. This is because if a 3rd party management system is being used, the costs for these items are a calculated costs, not necessarily actual costs. During the setup of the management system, it is inputted what calculated costs of these items will be used for Job Costing purposes within the system.
If there are actual invoices that have been paid for supplies and/or materials for any job that will be part of WIP, they can be used as well. Another way is to utilize an agreed percentage for these costs each month. For example if the calculated costs of the supplies/materials on the WIP Report are $2030.00, you may elect to include 25% – 50% which would add an entry for 1330.00 WIP – Materials Total of $507.50 – $1015.00 and decrease the COGS for Materials and Supplies the same.
In most instances, the WIP adjustments will increase your Gross Profit and Net Profit.
Reversing Entries vs WIP Change
Once the monthly entry is made typically on the last day of the accounting period, there are two methods how to finish the process:
  • Reversing Entry on the first day of the following month
  • Entering Only WIP Change Each Month
Reversing Entries
These entries are made on the first day of the following month, and are the most common and easiest way clients finish the WIP Adjustment Process, but it has some downfalls. The reversing entry on the following month will transfer all the costs again into the COGS and out of the WIP Asset Accounts. This will return the WIP Accounts to zero balances on the first day of the following month, but increase all the COGS accounts as well, even though the jobs probably still have not been completed.



 Figure 3 – Typical General Ledger Memorized WIP Adjustment Journal Entry Reversal (Collision Repair Industry)
Special Tip:
In QuickBooks once you open the original WIP Journal Entry, there is a “Reverse” Button on the Tool Bar in the Main Tab. Just click it, and change the date of the entry to the first day of the following month.
This will as mentioned earlier zero out the WIP Accounts and transfer the costs back into the COS Accounts.
The key downside to this method is that if you wanted to just check your current month profitability before the next WIP Adjustment is made, it will generally report a much lower Gross Profit and Net Profit than actual, unless you also run the WIP Report and do WIP Adjustments to offset the current WIP costs.
Entering Only WIP Change
The most accurate method, if we are splitting hairs, is to only enter the “Change of WIP” each month. So, after the first month’s WIP Adjustment is made, you do not do a Reversing Entry the beginning of the following month.
This method however requires a spreadsheet created to make the math easier at the end of each month. Over the years, I have created these WIP Spreadsheets for many management systems since their reports are different. I have always tried to make the spreadsheet follow the management system’s report for easy entry, and provide the Journal Entry to match the memorized transaction in QuickBooks. It is possible to actually create an import file for QuickBooks, but I have never had a client request this feature.



 Figure 4 – WIP Change Spreadsheet (Collision Repair Industry CCCone Management System)
The spreadsheet follows the management system report and each month the entries are inputted. In this example materials are being included at 50% of the calculated costs.
The spreadsheet does the calculation of the “Change in WIP” each month and provides the Journal Entry needed each month.



Figure 5 – WIP Change Journal Entry (Collision Repair Industry CCCone Management System)
Whether you use the first or second method is up to you, but if your business type has jobs that carry over from one accounting period to another, you should include WIP Adjustments in your accounting process for closing the month.
The whole purpose of this three month series of QuickBooks Tips & Tricks is designed to improve your QuickBooks accuracy. Otherwise your P&L will move up and down like a roller coaster, and your financial information to run your business is simply inadequate.
Next month, we will look at another very common mistake made by QuickBooks clients … how to properly track loans, leases, and depreciation.



Well we have just begun our final quarter of the calendar year, and before you know it,  it will be year end time. Have you analyzed your year end profitability and tax liability yet ? If not, this is the time to do so, begin to get your QuickBooks in order for the year end closing, and getting ready for the new year to come.


There are many responsibilities you have to get ready for the year end, but there are many Holidays and personal events that will hinder your time as well. Year end closing normally requires a great deal of “Clean Up” to correct accounts and verify them for a good new year beginning, and certainly before you turn them over to your CPA for tax preparation. 
You may also consider benchmarking your financials against industry key performance indicators (KPI’s), and even consider what your budget should be for capital equipment expenses. Keep in mind, it may be best for your tax liability to get the needed purchases done before the end of the year, but it takes good information and analysis to determine this.
There are several resources you should consider to get assistance in this area… the first being our company AEII, QuickBooks R Us. We are here to assist any small business with these services, and provide the training and support needed to achieve their goals. We have assisted businesses worldwide … why not yours ?


Again, if you are thinking about upgrading your chart of accounts to reflect a better detail for your financials the best time to make the transition is at year end. However, to schedule this type of project, needs to be done now, and not wait until the end of November or December.


If you have missed our earlier issues of QuickBooks Tips & Tricks, you can catch up on past issues by Clicking Here.
Thank You and I look forward in sharing QuickBooks Tips and Tricks with you next month …


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