How to Set Up QuickBooks for Construction

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QuickBooks is one of the most commonly used accounting software systems being used for small businesses. QuickBooks Pro is able to manage the accounting for a small construction business, though there is a more advanced program available through QuickBooks Premier that offers additional features for additional money. There is divided debate as to whether the Premier version warrants the additional expense over the Pro version. The contractor version of the QuickBooks Premier has features that are specific to job costing and billing for the construction industry. The setup of a construction company, regardless which version you purchase, is the same.

Open QuickBooks. Click “Create a new company.” Click “Start interview.” Enter your company information. This includes your company name, tax ID, address, phone and fax number, e-mail address and web site. Click “Next.”

Select your industry, “Construction General Contractor.” Click “Next.”

Indicate your company’s organizational structure. Are you a sole proprietor, partnership or LLP, LLC, corporation, S-corporation or a nonprofit? Click “Next.”

Enter the first month of your fiscal year. Most companies use January. If you’re unsure it’s best to seek the advice of an accountant. Click “Next.”

Set up and confirm your passwords if you want to use them. Click “Next.”

Click “Next” again to save your company file, then designate a name of the file and the location on your computer where you want the file to be housed. Click “Next” to further customize your company data.

Answer the questions about what you sell. Will you be selling only services or only products? Or will you be selling both? If you currently only sell one or the other, but think you may at some point expand and want to sell both, click both. Having the capability and not using it is easier than not having it, needing it and needing to set it up later. Click “Next.”

Indicate whether you charge sales tax. If you currently do not charge sales tax, but think that at a later time you may possibly do so, click “yes”. Clicking “yes” doesn’t mean that the system will always charge tax. It will only do it when you advise it to. It’s better to have the capability and not use it than to need it and not have the capability.

Indicate whether you want to be able to create estimates using the QuickBooks software. QuickBooks will recommend that you select “yes” and chances are good that you will like to have this option. Click “Next.”

Indicate whether you want to use sales receipts in QuickBooks. It’s unlikely that you will since this option is typically used in retail sales when a customer pays for goods at the time of receipt. In the construction industry this is an unlikely scenario. Click “Next.”

Indicate whether you want to use billing statements in QuickBooks. QuickBooks recommends this for the construction business. Click “Next.”

Indicate whether or not you want to use progress invoicing. This is used when you bill a customer incrementally and usually based on meeting project milestones. Click “Next.”

Indicate whether or not you want QuickBooks to manage your payables, or what you owe to your vendors. This is one of the greatest features of QuickBooks. Click “Next.”

Indicate how you will pay your bills. Will you print checks through QuickBooks on preprinted checks or will you use a separate checking system with check numbers that will have to be manually entered into QuickBooks? Click “Next.”

Indicate whether you accept credit cards. Click “Next.”

Indicate whether you want to track your time or the time of others who are completing work for your company. This will be time spent on a customer’s project that will allow you to bill the project. Click “Next.”

Answer the question about your employees. Do you have regular W-2 employees or 1099 contractors? Do you have no employees at all? Click “Next.”

Indicate whether you accept currency other than U.S. dollars. Click “Next.” Again, click “Next” on “Using Accounts in QuickBooks.”

Select either today’s date or a specific date, such as fiscal year start date that you want QuickBooks to begin tracking your financial data.

Answer the question related to the setup of your bank account. If you do not have your last bank statement handy click “No” and skip ahead to step 23. If you do have your statement in front of you it’s best to enter the data now. Click “Yes” and “Next.”

Enter a name of the bank account that you are providing information for, such as “Mainland Bank – Checking” or “Fantasy Bank – Money Market”. Name it something that will clearly indicate what it is. Later, when you are depositing funds or paying bills, it eliminates confusion over which account the money is supposed to go to or from. Enter the account number and routing number. These will appear on your checks and on your bank statements. Enter the date that your account opened, or on which you intend to have your financial data tracking begun.

Enter the “Statement End” date which should be printed directly on your bank statement. Enter the closing balance from the statement. Click “Next.” Enter “Yes” if you have another account to set up. Repeat steps required to enter bank account information. Otherwise click “No” and then “Next.’

Review the list of accounts that have been automatically setup for your business. Those with a check mark placed next to them are accounts that you’ll be able to use. Place a check next to any that don’t have one but that you think you’ll use. Remove a check from any that have a check but that you know you won’t use. It’s best to leave these alone if you’re at all unsure. Changes can be made later when you’re entering receipts or invoices and all of the accounts can be customized. This account list is a good starting point. Click “Finish.”