How To Use QuickBooks

Learning How To Use QuickBooks®

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by L. Kenway BComm CPB Retired

Published August 2010 | Edited June 5, 2024

Accounting System Flowchart | Finding the PD7A report in QBO | Customizing Reports | Performing Period End Closing Entries | Tracking GST/HST as a Registrant and a Non-Registrant

Today we are going to chat about how to use QuickBooks ® to create four very handy and useful custom reports to track ... cheques issued, customer deposits, construction holdbacks and top customers.

We'll begin by taking a look at the QuickBooks ® accounting system flowchart and end the chat with closing procedures and how GST/HST is handled.

While you don't have to have formal bookkeeping training to use QuickBooks®, you do need to have a basic understanding of accounting principles to ensure you have accurate data ... and there are certain procedures you must follow to ensure you have accurate data.

I have found over the years that the more input accountants have had in this product, the less user friendly it has become ... but for good reason. So like you, I can get frustrated learning how to use QuickBooks® each time a new version comes out. As with most things, the frustration goes away as I climb up the learning curve.

 “QuickBooks is easy? I agree! So is a pencil. But if I sit you down at a drafting table does it make you an architect?”

Sara Laidlaw Woodruff


10 Part QuickBooks® Primer

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QuickBooks Desktop vs. QuickBooks Online

QuickBooks Desktop (QBD) is local application you download to your computer. It can be installed on more than one computer for an additional fee. Intuit switched to subscription model pricing in 2022 replacing the one-time purchase licenses. As of July 2024, Intuit is no longer accepting NEW subscribers to all desktop products except QuickBooks Enterprise products. New subscribers are encouraged to consider QuickBooks Online.

QuickBooks Online (QBO) is a cloud based service that was introduced to Canada in March 2012. You access the SaaS (Software as a Service) platform from your internet browser. It is subscription based. System updates and upgrades are automatic and seamless.

QuickBooks® Desktop WorkFlow Flowchart

When you first enter the QuickBooks® program, you are presented with a flowchart of the accounting system. It gives you an overview of how your bookkeeping work flows ... and your first clue as to how to how to use QuickBooks®. If you flow the workflow process, you will be more productive and efficient.

The chart below is older version. The newer versions have additional items added to it like "accept credit cards" and "HR estimates and insurance".

Study the chart and notice the different areas of the program. Learning what each area is for will make learning how to use QuickBooks® Desktop go faster.

Each version has five sections:

  1. Vendors (for accounts payable and expenses ... money leaving the business)
  2. Customers (for accounts receivables and sales ... money coming into the business)
  3. Employees (for payroll and/or time tracking)
  4. Company (for COA and list management)
  5.  Banking (for banking functions).
QuickBooks Flowchart

Try to understand the bookkeeping process by studying the flowchart.

Let me say again ... when learning how to use QuickBooks® Desktop ... before you do anything else ... stop and look over the flowchart.

Once you understand the bookkeeping workflow, things start to become easy. When in doubt, stop what you are doing and find out where you are on the flowchart. Then go from there.

The flowchart shown above varies. It depends what version you are using and what features you have. So if your chart doesn't look exactly like this one, don't worry about it. How to use QuickBooks® Desktop is pretty much the same for each version ... only the features change to accommodate different sizes of businesses.

Customizing Reports in QuickBooks®

When learning how to use QuickBooks®, make sure you take time to learn how to customize reports tailored to your informational needs. Here are five that might come in handy.

  1. T4A Report in QBO
  2. Track Checks Issued (or Invoices Issued by Number)
  3. Customer Deposits
  4. Construction Holdbacks
  5. Top Customers

Where Do I find the PD7A Report in QBO?

Okay I bet you think what a stupid question ... go look under the Reports tab then All Reports then Manage Payroll. Well if it is there ... it sure doesn't jump out at you ... and that would be too logical and easy.

No, Intuit decided to put the report under Taxes > Payroll Tax > Monthly (or Quarterly) Forms > PD7A.

Once you've viewed the form and submitted it online, don't forget to archive the report because QBO doesn't seem to let you go back and view prior PD7A reports ... no idea for the logic on that one.

Customizing Bookkeeping Reports
How to Use QuickBooks Online® To Create a T4A Report

As Tiffany Stewart CPA CMA points out in her article "Those Pesky T4A & T5018 slips!", QuickBooks Online (QBO) does not have a formal T4A report yet like QuickBooks Desktop (QBD) does. Her article walks you through how to create a T4A report and a T5018 report in QBO.

You'll need to read Tiffany's blog for more detail but for an overview, here is what you do:

  1. Run a Profit and Loss (P&L) report. Reports> Recommended> Profit and Loss
  2. Set the Report Period to "Last Year". If you have a fiscal year that is not the calendar year, you want to select "Last Calendar Year".
  3. Set the Accounting Method to "Cash".
  4. Set the Display Columns By to "Suppliers".
  5. Because you only want those suppliers that require of "Fees or other amounts for services" in Box 48 on the T4A, you need to click on Customize (button at the top right hand side of the report)> Filter> Supplier> then manually select your T4A contractors.
  6. Click on Run Report.

You will now have the amounts paid out to each your suppliers.  As Tiffany states, this only for works for participating provinces. BC, Saskatchewan and Manitoba businesses may not be able to use this report IF you were required collect PST on your contractors's service fees. If the contractor's services only attracted GST (which is often the case), then you can still use this report to collect your information for T4A slip preparation.

Be sure to memorize the report by clicking on Save Customizations so you can easily use this report again. REMEMBER though that you will ALWAYS have to review your filter list to ensure it has the proper suppliers selected. This will ensure you catch any new contractors you did business with before you memorized the report.

Read Tiffany's blog to see how to get your T5018 information.

Customizing Bookkeeping Reports
How to Use QuickBooks ® To Track Cheques Issued

Have you been wondering how to use QuickBooks® to track the cheques issued during the month in your QuickBooks® accounting system?

Learn how to use QuickBooks DESKTOP VERSION

A quick and easy way to get a cheque listing is to go to Reports / Banking / Missing Cheques. Create the report for the time period you want.

What I do is modify the report heading to Cheque Register Summary and memorize the report for easy access. I make a point of printing this report each month-end for my financial reporting package.

Learning how to use QuickBooks® to create this customized report will enable you to track the sequencing of your cheques for your audit trail.

During the month, I update it and keep it handy for easy reference throughout the month too.

If you need to see the cheque details, then choose Reports / Banking / Cheque Detail.

The reason I prefer my "summary" report is that I can scan for a cheque quickly. The "detail" report prints a lot of pages and to use it, I have to flip a lot of paper.

So there are two ways to get track the cheques you have issued. It's your choice which you use.

Learn how to use QuickBooks ONLINE VERSION

QBO doesn't actually seem to have any banking reports like QBD. I created my Cheque Register report (because I like to make sure that all cheques are accounted for ... even voided ones) as follows:

  1. Going to Transaction Detail by Account Report under the Accountant Reports tabs ... so you may have to ask your bookkeeper to create this report for you. I'm okay with this because in my mind this is an internal audit control feature that should not be available to all QBO users.
  2. Click on Customize.
  3. Set Transaction Date to "All Dates".
  4. Leave the default setting to the accrual accounting method but change Rows/Columns Group by: "Account".
  5. Set sort by to "#" ... in ascending order and created date to "all dates" or just the period you are reviewing.
  6. Under Lists, set transaction type to "Cheque Expense" and distribution account to the bank account you want the cheque register for or you could set it to "All Bank Accounts".
  7. Under Header/Footer, change the title from "Transaction Detail by Account" to "Cheque Register".
  8. If you don't like the default columns displayed, you can click on the "Change Columns" button and customize it to your preference.
  9. I then saved my customizations to My Custom Reports.

I also created a similar report to track my invoice numbers ... because again I want to ensure all numbers are accounted for ... even voided invoices. This means I never delete an invoice because I want the numerical sequence accounted for.

You already know I'm going to tell you that I investigate all missing or duplicate numbers shown in the Cheque Register or the Invoice Listing. The whole point to the exercise when learning how to use QuickBooks data that you've painstakingly entered is to manage and monitor your financial health, help you make better business decisions ... and to safeguard your business assets. 

Customizing Bookkeeping Reports

How to use QuickBooks DESKTOP to Track Customer Deposits

Guess what? There are also two methods to book customer deposits/prepayments.

If you use the liability method to process your customer deposits in your QuickBooks® Desktop accounting system, here's how to use QuickBooks® Desktop to keep track of who paid deposits.

  • Create a Transaction Detail by Account report found under Reports/Accountant and Taxes.
  • With the report open, customize the report. Begin with a click on Modify Report.
  • Look for Total By in the columns section. Select Customer.
  • Click on Filters tab.
  • Filter the report by account and select the Customer Deposit account in the liability section.
  • Click on Header/Footer tab.
  • Change the Report Title to Customer Deposits.
  • Click on ok.
  • Click on the Memorize button to save the report for easy use ... consider adding it to your icon bar by going to the View drop down menu.

Here is an example of what the report would look like.

After customizing, the report shows your customer deposit transactions so that you can track who still has an unapplied or unused deposit. A customer deposit account should show a zero balance once the full deposit has been applied to an invoice or several invoices.

If you print a Sales Report by customer or by item, the deposit transactions will show up there as well, but not as nicely as this customized report.

This is an excellent example showing how customizing your reports in your QuickBooks® Desktop accounting system will help you make good business decisions based on solid information.

How to use QuickBooks ONLINE to Track Customer Deposits

That said, this method did not work when I tried it in QuickBooks® Online. There is a bit of a transition when learning how to use QuickBooks® Online. I got the same results as Desktop by modifying the process just a bit. Here is how to get your customized Customer Deposits report in QuickBooks® Online:

  • Run a Balance Sheet report found under Reports > Standards.
  • Click on the Customer Deposits account information to drill down to a detail report. You should find the account under your Current Liabilities.
  • Customize the report by clicking on the Customize button in the top right hand corner of the report.
  • I prefer to see debit and credit columns rather than the amount column so I added the debit and credit columns by clicking on the Change columns link. Then I removed the following columns: Adj, Name, Account, Split, Amount as well as there revaluation columns and unrealized gains (loss) columns. I reordered the columns to my preferences by holding my mouse down on the dots and sliding it up or down.
  • Expand Rows/Columns by clicking on the arrow to the left. Look for the Group by box. Select Customer.
  • Next, expand Filters by clicking on the arrow to the left.
  • Under the Distribution Account, select Customer Deposits.
  • Expand the Header/Footer section.
  • Change the Report Title to Customer Deposits.
  • Click on Run report
  • Click on the Save Customization button to save the report for easy use ... This adds it to the Custom reports section of the Reports tab.

Learning how to use QuickBooks® Online requires patience especially if you have been using QuickBooks Desktop for years and are extremely proficient in it.

Customizing Bookkeeping Reports
How to Use QuickBooks ® To Track Construction Holdbacks

Holdbacks are not revenue ... and not subject to tax until the holdback amounts are billed. So it's important when accounting for holdbacks to have a way to track and monitor them.

Here is how to use QuickBooks® to track and bill construction holdbacks.

Begin by setting up a current liability account named Holdbacks.

To facilitate invoice preparation, create an Other Charge list item also named Holdbacks. Code the item to the current liability account you just created above.

When you invoice your customer, show your customer the holdback by selecting the Holdback item in your drop down list. Enter your holdback amount as a negative amount. For example if your percentage of work completed to date is $5,000 with a 10% holdback, enter -500.00 as your holdback amount.

On your final invoice to bill your customer for the completion of the job, select the Holdback item ... but this time ... enter the amount as a positive number. This will clear out your holdback account and reclassify it to sales where it now becomes taxable.

Finally, setup up your QuickBooks® accounting system to create a customized report so you can easily keep track of the status of the holdbacks. I think these instructions will work but there are so many versions now, you may have to modify the instructions slightly to accommodate your version.

  • Create a Transaction Detail by Account report found under Reports/Accountant and Taxes.
  • With the report open, customize the report. Begin with a click on Modify Report.
  • Look for Total By in the columns section. Select Customer.
  • Click on Filters tab.
  • Filter the report by account and select the Holdback account in the liability section.
  • Click on Header/Footer tab.
  • Change the Report Title to Construction Holdbacks.
  • Click on ok.
  • Click on the Memorize button to save the report for easy use ... consider adding it to your icon bar by going to the View drop down menu.

If you have done everything correctly, the report should look very similar to the example report shown in the Customer Deposits segment above.

Good To Know

A useful resource for you if you are working with construction holdbacks, and learning how to use QuickBooks® to report it, is the CRA publication GST Memoranda G300-6-7 Partial Payments (GST 300-6-7). It explains the general rule for when GST/HST is payable:

The general timing of liability rule, under subsection 168(1) of the Act, is that tax is payable by the recipient of a taxable supply on the earlier of the day the consideration for the supply is paid and the day the consideration for the supply becomes due. Tax is generally collectible by the supplier at the same time that it is payable by the recipient.


Under subsection 152(1) of the Act, consideration, or a part thereof, for a taxable supply, is deemed to become due on the earliest of the following days:

(a) the day that the supplier first issues an invoice in respect of the supply for that consideration or part and the date of that invoice;

(b) the day the supplier would have, but for an undue delay, issued an invoice in respect of the supply for that consideration or part; and

(c) the day that the recipient is required to pay that consideration or part pursuant to an agreement in writing.

Customizing Bookkeeping Reports
How to Use QuickBooks ® To Track Your Top Customers

The Sales by Customer report shows you where your revenue comes from and who your top customers are. You can use it to determine if you have any concentrated credit risk. Here's how to create the report.

  • Click on Sales under the Report menu.
  • Now select Sales by Customer Summary ... how hard is that?
  • Click modify. Select sort by total and % of column.
  • Shorten the report by clicking on the collapse button. This hides the job information.
  • Feel free to change the report heading to something else if you want.
  • Memorize the report to save your customizing and for future use.

Consider how to use QuickBooks sales information to improve your customer relations and grow your business by finding creative ways to utilize the information.

For example, the September 2010 Admin Books Newsletter (Administrative Bookkeeping Co., Inc.) suggests you select your top 10 customers and send them a hand written note with a small gift ... or share the names of the top ten customers with your employees so they can provide them VIP service.

Take a look at the percentages. Does one customer stand apart from all the others or represent more than 10% of your business? Make plans on how your business could sustain revenue if your top client left.

QuickBooks® Closing Procedures

What Are QuickBooks® Closing Procedures For Month-End and Year-End?

Learning how to use QuickBooks® to close your books is much simpler than most other accounting programs out there.

The QuickBooks® accounting system does not require any period end entries, that is why it is important to set your closing date when you have completed your month-end procedures or year-end procedures.

Good to Know

Learning how to use QuickBooks® short cut keys will make your data processing more efficient. Huge, huge time savers!

This features allows you to always have access to prior years' data right down to the transaction level. It also allows you to create comparison reports.

QuickBooks® automatically performs the following period end adjustments:

  • The income and expense accounts are automatically zeroed out at each year end.
  • The net income is automatically posted to the Retained Earnings account, which is created by QuickBooks®, for any reporting period.

QuickBooks® does not reclassify the equity account. YOU need to book the closing entry to clear the Owner's Draws and Contributions to the Owner's Equity account.

The "closing" procedure is date driven and occurs based on the reporting dates of the financial reports you request.

QuickBooks® has a great feature for report time periods - This Month, Last Month, Year-to-Date, etc. that makes it quick and easy for you select your reporting period.

Good To Know

Soooo, here is how to use QuickBooks® to close each month-end period:

  1. Perform your month-end procedures.
  2. Close your accounting period by setting the closing date. (See step 18 of month-end procedures.)
  3. Safeguard your data against accidental change by backing it up.
  4. Determine who has the right to change transactions in the closed period.

That's all there is to closing the books!

Tracking GST/HST in QuickBooks®

Learning how to use QuickBooks® to track GST/HST depends on whether you are a GST/HST registrant or not. We'll look at both.This section was created using a 2009 version of QuickBooks® and before HST was implemented in B.C. and Ontario. I haven't updated it because BC will be returning to PST on April 1, 2013. All the instructions here should work in QuickBooks versions 2010, 2011, and 2012.

Please keep this in mind while learning how to use QuickBooks® sales tax module.

MORE>> Handling HST/GST If You Are NOT An Registrant

QuickBooks® Accounting System
Handling HST/GST

If You Are A Registrant With CRA

In the QuickBooks® accounting system, it is not necessary to have three accounts like you do when you handle GST/HST manually. One account called HST/GST Payable handles everything.

As long as you are properly booking your entries and managing your sales tax in the sales tax windows, the QuickBooks® accounting system keeps track of your GST collected and input tax credits for you. When you need to determine the amounts to report to CRA, you run your sales tax report for the details.

Here's an overview of how it works, using versions 2009 through to 2012. Tracking sales tax has five steps:

1. Turn on the sales tax feature. This creates the Manage Sales Tax icon found on the right hand side in the Vendor section of the flowchart.

  • Just be sure to go to Edit>Preferences>Sales Tax. Turn on the sales tax feature by answering Yes to "Do you collect sales tax?".
  • Tick the Customer and Vendor Tax Codes so you can customize the tax code when necessary.
  • Set your default sales tax codes to S for GST and PST (taxable items) and E for non-taxable items.

2. Setting up sales tax items and codes along with coding individual customers, vendors, sales items, and expense items.

  • QuickBooks® uses Items to setup sales tax codes which automatically applies the correct taxes on your sales forms, your bill payments forms, and/or cheque payments.
  • Your initial Canadian sales tax codes and sales tax groups are setup for you. If there is a sales tax rate change, you may have to modify some of the items and codes.
  • It will handle provincial taxes as well. Setup your PST information through the Edit Vendor Window for Minister of Finance.
  • Setup your GST information through the Company Information window.

3. Collect sales tax through the sales forms - invoices and sales receipts.

  • The default code setup in Step 1 was S for both GST & PST. If you are an HST province, your default code will be HBC or HON or HNS ... you get the idea.
  • You can change the sales tax code down to the customer level so that a customer can be customized. For example, you can change the default tax code from S to G for GST only customers by clicking on your Customers icon and selecting the customer you want to edit or directly in the invoice window.

4. Capture your input tax credits through enter bills form and write cheque form.

  • The default code setup in Step 1 was S for both GST & PST. You can change this so that a vendor can be customized. For example, you can change the default tax code from S to Z for zero rated GST vendors.

5. Pay your sales tax to CRA using the Sales Tax Drop Down Menu. Click on File Sales Tax. Here is where you find the sales tax reporting features and sales tax payment cheque form (which is NOT the same as the Write Cheque form).

  • To find out what you need to report on form GST34-2 and how much you owe, run your sales tax liability reports.
  • It is very important to pay your liability through the sales tax window NOT write cheque. If you use write cheque, your liability reports will be incorrect.

As long as you are entering your data correctly, the QuickBooks® accounting system automatically tracks your sales taxes for you.

A payable or receivable is automatically setup when you use the File Sales Tax function ...

When you get your GST/HST refund from CRA, use Receive Payment under the customer drop down menu to record your entry to undeposited funds account and clear the receivable.

If you owe, use Pay Bills to clear the payable when you make your GST/HST payment to CRA.

To organized and accurate record keeping in your accounting system! 

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