Which version of Quickbooks Online do I need?

Which version of Quickbooks Online do I need?

Self Employed

This version is for self-employed individuals that file their income and expenses on their personal return, Schedule C. There are a lot of limitations to this version and you cannot upgrade a Self Employed version to any other version. There is not a payroll option.

Simple Start

This version is for small businesses on cash basis with one user. You can send invoices and accept payments, print 1099’s for subcontractors, and create estimates. You cannot manage bills and track expenses by job/project. If you need to simply pull in and code income and expenses, this will work nicely for you.

Plus

This is the most common version of quickbooks online. It allows up to 5 users and you can utilize Accounts Receivable and Accounts Payable, track expenses by job/project, track inventory and run great reports. This is the most comprehensive version that will handle the majority of small businesses.

Advanced

This is quickbooks online version for small/medium sized companies and can accommodate up to 25 users. In addition to the “Plus” tools it allows for further customization and a dedicated account team.

Payroll

Payroll can be added to any Quickbooks Online version with the exception of self-employed. There are 3 payroll versions.

Payroll Core -This is full service payroll with next day Direct Deposit.

Payroll Premium – This is full service payroll with same day Direct Deposit and HR Support.

Payroll Elite – Same as Premium except it offers a dedicated HR advisor.

What is a S-Corp?

What is a S-Corp?

An S-Corp is an IRS election. It is not a legal entity. When you create your business you will select either an LLC or a C-Corp. Once your entity has been registered with the Secretary of State, you can apply for your EIN#. After obtaining your EIN#, you can fill out Form 2553 to make the S-election.

The S-election is a preferable tax treatment. As an LLC that elects S-Corp status, it eliminates self employment tax. As a C-Corp that elects S-Corp status, it eliminates tax at the corporate level.

Who can elect S?

There are specific rules for the election, but basically small businesses that are LLC’s and C-Corps will qualify. The specifics can be found here: https://www.irs.gov/instructions/i2553

When to Elect S?

You must complete and file Form 2553 by March 15th for the current year, or anytime in the current year for the tax election to take effect the following year.

Relief for Late Elections

If you fail to file by the March 15th deadline and this is your first year in business, you can file Form 2553 with your first year 1120-S tax return and add the following to the top margin of the tax return, “INCLUDES LATE ELECTION(S) FILED PURSUANT TO REV. PROC. 2013-30.”

Additional Requirements as an S-Corp

The main trade-off of receiving preferable tax treatment with an S election, is that the owner(s) is required to pay themselves a reasonable salary and withhold taxes. Another additional cost is having to file a separate business tax return (1120-S). As a single member LLC that hasn’t elected S, you can file your LLC business with your personal tax return on a Schedule C.

How to Create Recurring Transactions in Quickbooks Online

QuickBooks Online saves time and improves accounting accuracy in numerous ways. One example is its support for recurring transactions.

It’s easy to get distracted when you’re doing dull, repetitive accounting work. That distraction leads to errors sometimes. So, besides the time you’re spending on work that could be automated, you have to tack on additional time to chase down your mistakes.

QuickBooks Online already reduces repetitive data entry by saving your lists of customers, vendors, products, etc., and making them accessible when you’re creating transactions. But it does more to save time and minimize errors by allowing you to create recurring transactions. Enter a transaction like an invoice or bill once, and QuickBooks Online memorizes it for future use!

Here’s how it works. Let’s say you have a customer who wants to rent a printer from you for one year. You create an invoice for one month’s rental. At the bottom of the screen, click Make recurring. A partial view of the screen that opens is pictured below.

QuickBooks tips

QuickBooks Online allows you to set up a transaction to repeat at scheduled intervals.

Much of this screen will have already been filled in. You’ll need to enter a name for the template you’re creating at the top of the screen, one that will remind you of its content. In the second field, the drop-down list displays three options for how the recurring transaction will be handled by QuickBooks Online They are:

  • Scheduled. Your invoice will go out automatically at the scheduled interval, with only a change to the date. As with any automated process, you should be very careful when selecting this option.
  • Reminder. You will get a reminder ahead of each occurrence so you can make any necessary changes before sending.
  • Unscheduled. No automation is involved here. The invoice is memorized, but you’ll have to remember when it needs to go out.

If you chose Reminder, the next field will read Create (x) days in advance. Enter the number of days here. On the next line, you’ll only have to check or uncheck the Options.

Under Interval, you’ll tell QuickBooks Online when the invoice is scheduled to go out. You can choose from DailyWeeklyMonthly, and Yearly. The invoice in this example should be processed and sent on the first day of every month. The start date is January 1, 2021, and it will end on December 31, 2021. If your recurring transaction should continue to go on indefinitely, you’ll have the option to select None from the drop-down list under End. You can also choose After.

Check the fields below this line to make sure they’re correct. You can change the message if you’d like and add an attachment. If everything looks correct, click Save Template in the lower right corner.

Using Recurring Transactions

If you’ve set this transaction up to recur automatically, you don’t have to do anything more with it unless you need to edit it at some point. If you need to do so, or if you’re responding to a reminder (or chose not to be reminded), you can access the list of transactions you’ve memorized by clicking the gear icon in the upper right and selecting Recurring Transactions under Lists. A screen containing this section will open:

QuickBooks tips

Once you’ve created recurring transactions, you have several options for managing them.

The table that appears will contain other columns describing the recurring transactions, like Type and Interval. The image above shows the end of each row that reads Edit until you open the drop-down menu. You can see what your options are. They include Use, which you would select when you want to edit and/or send a transaction. You can also create a DuplicatePause the recurrences temporarily, Skip next date, or Delete the template. Click the arrow next to Reminder List in the upper right and select Run Report to see the Recurring Template List Report.

As you can see, recurring transactions can not only save time, but they can also help reduce errors and minimize unnecessary work. They’re not overly difficult to create, but you should use caution if you choose to automate them. We’re available to answer your questions about this useful tool and about any other element of QuickBooks Online. Stay healthy, and here’s to 2021!