Millions of small business owners have switched over from QuickBooks desktop to QuickBooks Online in recent years. Many of these small businesses are saving thousands of dollars per year in operating expenses by outsourcing their QuickBooks Online bookkeeping and accounting services to firms like mine. We are experiencing a gig-economy and the number of self-employed individuals is steadily rising with each passing year. These entrepreneurs need help! While I have the skills to teach people how to use QuickBooks Online, I can’t say that it would be easy for an inexperienced user to hit the ground running. Small business owners that have recently signed up with a QuickBooks Online subscription need to start with these 5 critical beginning entries:

Customized Chart of Accounts

  • This is one of the most important lists you will ever create in your new QuickBooks Online account
  • It contains the accounts for your business income, expenses, assets and liabilities
  • The Chart of Accounts needs to be “refined” and “customized” for your business
  • This should be done BEFORE you start adding transactions into your new QuickBooks Online account
  • A well-designed chart of accounts helps you make sense of your Company Financials
  • It is important to setup these accounts correctly from the start of your business
Setup Bank Account in Chart of Accounts

Customized Products and Services

  • Add Products and Services you sell in QuickBooks Online before creating Purchase or Sales Forms
  • These Products and Services appear on all Customer Invoices and Sales Receipts
  • If you Purchase Products or Services for resale, they should be entered here as well
  • Each Product and Service item you sell you can specify a sale price and purchase cost
  • The purchase description shows on your Purchase Orders, Bills, Checks and charges
  • It is important to establish the cost and price of the products and services that you sell
  • Your beginning Product Inventory value is driven by the initial product inventory setup
  • Your Company Sales Reports will contain the Products and Services that you have sold
  • Your Products and Services always have more detail than your income accounts
  • You may have few high-level income accounts and hundreds of products and services
  • Products and Services are mapped to your income and cost of goods sold accounts
  • It is a priority to setup your Chart of Accounts before your Products and Services
Products and Services Selection

Customer and Vendor Lists

  • You should setup your “Customers” and “Vendors” in QuickBooks Online before adding transactions
  • When setting up your customers be sure to enter information in all the required fields
  • Setup the default tax code, payment terms, invoice delivery and payment method
  • Obtain a PDF copy of your vendor W-9 forms to attach to their vendor profile in QuickBooks Online
  • Enter complete vendor information in QuickBooks Online, it will populate on the annual 1099 form
  • Business owners must issue a Form 1099-MISC to each person they have paid at least $600 in rents, services (including parts and materials), prizes, awards and other income payments to throughout the tax year that they have paid with cash or checks
  • The rule is that you must file a 1099-MISC whenever you pay an “unincorporated” independent contractor $600 or more during the year

Vendor payments made with a credit card, payment card or third-party networks such as PayPal are not subject to reporting on 1099-MISC reporting (see Form 1099-K). You can find more information on the IRS rules for 1099 reporting here:

Customer Entry
Vendor Entry

Outstanding Customer Invoices

  • Enter any outstanding customer invoices into QuickBooks Online after completing entries noted above
  • Use the original invoice date so that it will align with your prior accounting system data
  • Some businesses use third-party applications for industry specific customer invoicing, be sure to match invoice numbers
  • These invoices need to be “additionally” entered in QuickBooks Online to create the A/R balance
  • QuickBooks Online should have “matching” Products and Services to the third-party application
  • You can turn-on “Custom transaction numbers” in the Advanced Company Settings
  • This will allow you to create your own invoice numbers to match the 3rd party numbers
  • Keep in mind that there are options to explore for “importing” invoices into QuickBooks Online
  • Make sure all customer invoices, payments, deposits or sales receipts are in QuickBooks Online
  • Be sure to enter any missing historical transactions in QuickBooks Online, some may not convert
  • You need to verify the accuracy of your sales tax liability and payment history in QuickBooks Online
Outstanding Customer Invoice

Outstanding Vendor Bills

  • Enter any outstanding vendor bills & credits into QuickBooks Online after completing steps noted above
  • Use the original date so that it will align with your prior accounting system data
  • Verify the transaction history of bills, credits, expenses and bill payments in QuickBooks Online
  • Be sure to enter any missing historical transactions in QuickBooks Online, some may not convert
  • Purchase information from Product and Service items will populate in vendor bills
  • Purchase information from Product and Service items will populate on purchase orders
  • Note that you DO NOT manually enter connected credit card charges as bills in QuickBooks Online
  • Note that connected credit cards have their own bank feed and account register
  • You can categorize an expense directly in the connected bank account feed
  • You can match an entered bill to a payment that comes through the bank feed
Enter outstanding vendor bill
Regina Pitts
Regina PittsPrincipal Accountant & Bookkeeper
Member of the QuickBooks ProAdvisor Program

Accounting and Bookkeeping Support by a QuickBooks ProAdvisor Program Member

I founded Lend A Hand Accounting because I believe accounting and bookkeeping services should be affordable, efficient, and flexible. We use flat fee pricing, which makes our accounting services a comfortable fit for any budget. At Lend A Hand Accounting, we’ve found a formula that really works! You select the accounting services you need, and control when you want to start or stop services. It is all in your hands! We’ve cut out the need for endless phone calls and long trips to the accountant’s office.

Feel free to call or text me now at 360-637-4799. We can also get started right away. Go ahead and create a free account and we can automatically look at your books and let you know where you stand.

We really appreciate your business and look forward to serving all of your accounting and bookkeeping needs. Thanks again!


The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.