How to Be a Good Bookkeeper Using Quicken • Stephen L. Nelson

If you’re a new bookkeeper for a business that uses Quicken accounting software, you could probably use a bit of help and encouragement. Let me try to do that here. Specifically, I will explain what you should know about your computer, Windows, and Quicken. And I can explain how you should perform some of the standard small business financial recordkeeping.

What You Need to Know to about Quicken Software

Accounting systems do three things: They let you calculate profits, they generate business forms, and they let you keep records of assets and liabilities.

Quicken lets you calculate profits by tagging bank account deposits as income and bank account withdrawals as expense. If this approach doesn’t work for the small business you’re keeping the books for, you need to use another program.

The standard version of Quicken lets you generate only one business form: a check. The Home & Business version of Quicken lets you generate both invoices and checks. If you need other business forms, such as statements or purchase orders, you need to use another program.

Also, note that Quicken keeps detailed records of bank accounts only. If you need to keep detailed records of other business assets, such as inventory, you need to use another program.

What You Need to Know About Windows and Your Computer

You need to know how to work within the Windows operating system to use Quicken; the more you know about Windows, the easier you’ll find using Quicken. You can first read my book, Quicken for Dummies, and get most of the useful information, and you can also read the Microsoft Windows documentation.

Spend a few days—maybe even a week or two—working with Quicken. Be sure you’ve entered a series of checks and deposits, and experiment with Quicken’s reports. If things still don’t click for you, you may be trying to do too much with Quicken.

What You Don’t Need to Know

As a bookkeeper, you need to know how to keep financial records that let your employer assess profitability and cash flow, how to keep records for a bank account and reconcile the account, and in some cases, how to prepare payroll checks and returns. But there is also a list of things you don’t need to know—information that goes beyond the scope of your job:

You don’t need to be an expert on federal or state income taxes

It’s helpful if you know a few things, but, for example, your boss shouldn’t expect you to understand the income tax rules for employee fringe benefits, asset depreciation, or partnership taxation. Your boss can get this type of information and analysis from a CPA or from an attorney who specializes in income tax planning.

You don’t need to be a computer genius

Yes, you need to know how to work with Windows and Quicken, but you don’t need to know how to drop an Ethernet card into a computer or reformat the hard disk. A local computer retail or repair shop can take care of these things.

You also don’t need to (and shouldn’t) provide legal advice to your employer

An employer who wants to incorporate, deal with an employee’s legal threats, or determine whether a contract is fair should talk to an attorney.

A Weekly Bookkeeping Checklist

Use the following list of tasks as a checklist at the end of each week:

Enter all the payment and deposit transactions for the week.
Back up the Quicken file to a removable disk so that you won’t lose the data if there’s a computer problem or a human error.
Check to see if you should remit any payroll tax deposit money by looking at the payroll tax liability account balances.
Print a copy of the check register for the week and store it as a permanent financial record.

A Monthly and Quarterly Bookkeeping Checklist

Here is a checklist of tasks you should usually complete at the end of each month:

Reconcile all your bank accounts.
Print monthly Cash Flow and Profit and Loss Statement reports. Give a copy to the owner for assessing the month’s profitability and cash flow, and put another copy in a permanent financial reports file.
Prepare any monthly or quarterly payroll tax reports. Most businesses prepare the quarterly 941 payroll tax statement.
Make quarterly estimated tax payments for the owner, or remind the owner to make the estimated tax payments. A small business owner is typically required to make quarterly payments of estimated taxes owed on April 15^th, June 15^th, September 15^th, and January 15^th.

An Annual Bookkeeping Checklist

Here are the things you should do at the end of each year:

Print annual Cash Flow and Profit and Loss Statement reports. Give one copy to the owner for assessing the year’s profitability and cash flow, and put another copy in a permanent financial reports file.
Prepare a Tax Summary and Tax Schedule report.
Consider creating a disk version of the Tax Schedule report so that the Quicken data can be exported to a tax preparation program.
Prepare any annual payroll tax reports. Most businesses prepare the annual 940 payroll tax statement and W-2 employee wage statements.
Archive a copy of the previous year’s financial records.

Two Things Bookkeepers Should Never Do

There are a couple of things you should never do. If you’re not careful, doing either of these two things can, quite literally, lead to financial ruin.

Don’t Borrow Payroll Tax Deposit Money

Don’t ever borrow the payroll tax deposit money, and don’t ever help the business owner borrow the payroll tax deposit money. The IRS takes a very dim view of mishandling this money. If you’re the bookkeeper and you’ve actively participated in borrowing the payroll tax deposit money, the IRS can collect the money from you. (The IRS assumes that this borrowing amounts to stealing and that, as an accomplice to the theft, you may as well be the one to pay.)

If you’ve already been doing this, my advice is that you stop immediately. If the small business you keep the books for owes payroll tax money it can’t repay, I suggest you confer with a tax attorney.

Don’t Participate in Misrepresentation

Financial misrepresentation occurs when you (or the business owner with your help) juggle a few of the financial figures to make the business look a little more profitable or a little healthier. Although the practice may seem innocent enough, it’s a serious crime. Never participate in misrepresentation.

A business might be tempted to juggle the figures to get a bank or a vendor to lend money or to get an investor to contribute money. When this happens, the bank, vendor, or investor contributes money because of a lie. If the bank, vendor, or investor loses money or discovers you’ve lied, both you and the business owner can end up in serious trouble. People do go to jail for this.

If you’ve been participating in financial misrepresentation or are being asked to participate, I suggest that you try to find a new job and that you talk with an attorney to see if there is some way you can extricate yourself from the mess.

Income tax evasion is basically just another form of financial misrepresentation. In this case, however, it’s the IRS that’s being lied to rather than a bank or an investor.

If you’re interested in learning more about doing your bookkeeping with Quicken, feel free to contact us.