Monthly Bookkeeping Service Delivery Notes

Monthly Service Delivery: Overview

  • Focus of the module: the pieces of the bookkeeping cycle included in the monthly service delivery for clients.
  • Key monthly tasks covered: adding a client, monthly tasks, bank feeds, bank feed rules, accounts receivable (AR), accounts payable (AP), payroll, sales tax, uncategorized transactions, high-level review of financial statements, closing the books, sending financials to clients, and year-end tasks.
  • Variability across clients: some tasks may differ based on client needs; this module covers the basics applicable to most clients.
  • Structure of the course: walk through each component piece by piece, with real-world examples and hands-on practice.

Core Monthly Tasks in Bookkeeping (Overview)

  • Bank feeds: connect QuickBooks Online (QBO) bank accounts and credit card accounts to the client’s bank accounts; data flows from bank to QBO.
  • Bank feed rules: using rules to categorize recurring transactions automatically (not deeply covered in this segment, but mentioned as part of monthly process).
  • Accounts Receivable (AR): invoicing, payments, undeposited funds, and deposits. AR tasks depend on whether you provide AR services for the client.
  • Accounts Payable (AP): entering bills and paying bills. Only if you provide AP services.
  • Payroll: only if the client has employees and you are handling payroll (or if they do payroll themselves).
  • Sales tax: ensure data collection for filing and remittance.
  • Reconciliations: monthly reconciliations for balance sheet accounts, including all bank accounts, credit card accounts, and loans (receivable/payable loans as applicable).
  • Uncategorized transactions: handle transactions lacking a clear category; move to an "uncategorized transactions" expense account and request details from the client.
  • High-level financial statement review: glance at the financials to verify accuracy and completeness.
  • Close the books: process for closing monthly books.
  • Sending financials: prepare and send monthly financials to clients.
  • Year-end tasks: special tasks that occur at year-end beyond monthly routines.
  • Note on scope: some items may be omitted or adjusted based on client needs; this module gives a solid baseline for month-to-month work.

Bank Feeds: What They Are and How They Work

  • Definition: Bank feeds are the connection between a QBO bank account and the client’s online bank login, pulling transactions into QBO.
  • Data flow: Bank → QuickBooks Online (QBO) automatically imports transactions.
  • Backup processes: sometimes you need to upload history or manually add transactions if a transaction doesn’t come through.
  • Imperfections: bank feeds aren’t perfect; some transactions may be missed, and connections can drop and need re-connecting.
  • Accounts involved: bank accounts and credit card accounts are typically connected to online banking.
  • Practical implication: expect to review and sometimes supplement bank feed data with manual entries or uploads.

Accounts Receivable (AR) and Accounts Payable (AP)

  • AR (if provided): invoicing, payment processing, undeposited funds, and deposits.
  • AR fallback: if you don’t provide AR, skip these steps.
  • AP (if provided): entering bills and paying bills.
  • AP fallback: if you don’t provide AP, skip these steps.
  • Practical note: the module emphasizes that AR/AP tasks depend on the scope of services you offer for the client.

Payroll and Sales Tax

  • Payroll: included only if the client has employees and you’re managing payroll, or if the client runs payroll themselves.
  • Sales tax: ensure you have all data needed to file sales tax returns and remit payments to the authorities.
  • Importance: accurate payroll and sales tax handling affects cash flow and compliance.

Uncategorized Transactions

  • Definition: transactions that come in via bank feeds or are manually entered but lack proper categorization.
  • Example: many Amazon purchases may appear without a clear category.
  • Approach: move these to an expense account named "uncategorized transactions" and request details from the client.
  • Impact: helps keep the chart of accounts clean and improves accuracy of the financial statements.

Reviewing Financial Statements (High-Level) & Closing the Books

  • High-level review: a quick check of balance sheet and income statement for reasonableness before sending to clients.
  • Closing the books: a defined month-end process to finalize the period.
  • Purpose: ensures timely, accurate reporting and prepares data for client review.

Year-End Tasks and Deliverables

  • Year-end tasks: tasks that are not monthly but occur at year-end (e.g., closing procedures, tax prep handoffs, and year-end reporting).
  • Deliverables: cleaned books, reconciliations, and financials ready for client review and tax preparation.

Adding a Client to QuickBooks Online (QBO)

  • Two main pathways:
    1) Client with existing QBO file: invite you as an accountant user.
    2) Create a brand-new QBO file from your QBOA (ProAdvisor) account.
  • Inviting as an accountant user:
    • Client signs in to QuickBooks.
    • Go to Settings > Manage Users > Accounting Firms tab.
    • Enter your business email (the same one used for QBOA login).
    • Send the invitation; you’ll receive an email invitation and complete the setup to access the client’s books.
    • Troubleshooting if it doesn’t work: clear browser cache, try incognito, or use a phone; screen-share with the client to walk through the invitation.
  • Creating a brand-new file:
    • In QBOA, choose Add Client.
    • Enter client basic information (business name, test data, etc.). Use a disposable email for testing if needed; do not use your real business email for the test.
    • Choose a subscription plan and billing option; select direct discount to get a 30-day free trial (avoid billing your firm directly by choosing this option repeatedly).
    • Pick the plan (e.g., QuickBooks Online Plus) and optional modules (time tracking, payroll integration, etc.).
    • Set yourself as primary admin to have full rights; save.
    • Open the new file and complete initial setup (entity type, service scope, etc.).
    • Entity type examples: Sole Proprietor (covers LLCs without multi-member structure; multi-member LLC behaves like a partnership; S-corp election affects classification).
    • Initial setup focuses on essential features: send and track invoices, organize expenses, track bills, track sales tax; inventory is not included for most service businesses in this demo.
  • Test company vs real company:
    • A sample/test company can be used for practice but beware that data won’t persist the same way in a real client file.
    • The provided test data allows you to practice the monthly service delivery workflow.

QuickBooks Online Interface Updates: What to Expect

  • What is meant by a new interface: the visuals and layout change, not the underlying work process.
  • Philosophy: QuickBooks adds features to improve efficiency, enabling you to work faster and serve more clients with greater value.
  • Core work remains the same (invoices, bank categorization, reconciliations); the look-and-feel changes, not the fundamentals.
  • Rollout timeline (example given in the video):
    • July 1: Optional switch to the new interface for clients and bookkeepers.
    • August 4 to 11: Widespread move to the new interface; user can switch back if desired.
    • Early September: Those not yet on the new interface will be moved; switching back will not be available after this point.
    • By October 1: All users are expected to be on the new interface.
  • Practical recommendation:
    • If you encounter the new interface (August 4/11 period), switch back to the classic interface to continue following the current training materials.
    • You can switch back and forth during the transition, so don’t worry about getting stuck.
  • Training support: a walkthrough video with navigation tips and a comparison to the old interface will be released to help users adapt.

Importing Data into QuickBooks (Bank and Credit Card Transactions)

  • Preparation: download two files from the training resources (bank transactions and credit card transactions).
  • Bank transactions import process:
    • In QBO, go to Gear icon > Import (or Transactions > Bank Transactions).
    • Ensure the file is a .CSV (bank statement history) and that you have an account created to attach the data to.
    • If you don’t have a bank account, create one (e.g., Wells Fargo Checking).
    • Common questions to answer during import:
    • Is the first row a header? Yes.
    • How many amount columns? Two columns (2 columns with amounts).
    • Date format: MM/DD/YYYY (or the format shown to you in the screen).
    • Map fields: Date, Description, Amount. If your file has two amount columns, map which column corresponds to money received (credit/debit) and which to money spent.
    • Important mapping correction: In the initial import, you may need to switch the mapping so that money received is a Debit (to increase the bank balance) and money spent is a Credit (to decrease the bank balance).
    • After mapping, select all transactions and confirm import.
    • Post-import: view in Banking Center, review uncategorized or miscategorized items, and adjust as needed. The bank balance will initially show as zero until transactions are categorized or matched.
    • If the bank account name contains typos, you can edit the account name after import.
  • Credit card transactions import process:
    • Similar steps: Gear icon > Import, or Banking Center > Import Data.
    • Create a new Credit Card account (e.g., Chase credit card) to attach imported data.
    • Map fields as with bank transactions: Date, Description, Amount; correct mapping to reflect debit/credit correctly for credit cards (expense transactions should increase the card balance—i.e., a Debit on the card account; credits reduce the balance).
    • After import, you’ll see a second tile representing the credit card account in the Banking Center.
  • Note on duplicates and review:
    • QuickBooks may flag transactions that appear in both the bank and credit card feeds as potential duplicates; this will be addressed in later lessons.
  • After data import: you’ll have a data foundation to practice other monthly tasks (invoicing, payments, deposits, reconciliations).

Creating Invoices and Customers (Hands-on Practice in the Demo File)

  • Customer setup:
    • Create customers such as Jane’s Bakery, Jack’s Hardware, Doggy Daycare, Running World, Redline Consulting, etc.
    • For each customer, you can fill basic details (e.g., billing address, payment terms). Default terms can be set in Account and Settings later (e.g., Due on Receipt).
  • Product/Service items and income accounts:
    • Create noninventory items like Promotional Magnet under an advertising category.
    • Create income accounts (e.g., Promotional Materials Income) and assign to the item.
    • You can set whether the item is taxable or non-taxable (for services, often non-taxable in many jurisdictions).
  • Sales tax setup for a sample customer:
    • Add sales tax for the customer and set up automatic sales tax using a sample address (e.g., 6548 Any Street, Charlotte, NC).
    • Confirm customer is not tax-exempt and that the default tax rate is based on the sale location.
    • You can view the calculated tax on the invoice and override if needed.
  • Invoice customization:
    • QuickBooks is moving toward a new invoice template; you can customize template, logo, colors, fonts, and print settings.
    • You can adjust what content is displayed on the invoice and customize the email message that accompanies the invoice.
  • Example invoices created in the demo:
    • Jane’s Bakery: Promotional Magnet, $350, non-taxable.
    • World consulting invoice: Marketing Consulting service, $6,000, non-taxable, date set to January 5.
    • Doggy Daycare: Monthly Social Media (service) $1,200 and Monthly Newsletter Email $1,000, both non-taxable.
    • Jack’s Hardware: Marketing Consulting $2,000 and Social Media $1,400, non-taxable.
    • Redline Consulting: Monthly Social Media $500, non-taxable.
  • Display and review of invoices:
    • All invoices can be viewed in the Invoices list and overview; you can adjust dates if needed (e.g., fix January 5 date to January 5 or January 20 for corrections).

Receiving Payments and Undeposited Funds (Deposition Workflow)

  • Receiving payments: two common approaches
    1) Receive Payment from the customer record (e.g., accounts receivable screen): pick the customer, select the open invoice(s), set payment date, payment method (check, card, etc.), and either deposit to a bank account directly or into Undeposited Funds if not deposited immediately.
    2) Use the Customer record’s Receive Payment flow: select the customer, apply payment to one or more invoices, set a date, and choose deposit method (Undeposited Funds or a bank account).
  • Example workflow from the demo data:
    • Doggy Daycare payment for $2,200 on Jan 16 via check routed to Undeposited Funds, applied to the $2,200 invoice.
    • Jack’s Hardware: $3,400 payment via QuickBooks Payments (online) on Jan 22; deposited to Undeposited Funds and later to a bank account.
    • Marketing consulting payment: $500 payment via check on Jan 22; deposited to Undeposited Funds.
    • Running World: $5,500 paid by check; deposit partly ($5,500 of $6,000) to Undeposited Funds; remaining balance ($500) remains open.
  • Depositing funds from Undeposited Funds to a Bank Deposit:
    • Go to New > Bank Deposit.
    • QuickBooks lists transactions in Undeposited Funds; select the transactions to deposit and specify the deposit date.
    • Deposit into the appropriate bank account (e.g., Wells Fargo checking) and save.
    • Repeat for each deposit until Undeposited Funds balance reaches zero.
  • Undeposited Funds reconciliation note:
    • After deposits, the Undeposited Funds balance should reconcile to zero as you complete deposits; deposits reflect in the Bank Register as well.
    • In newer versions, QuickBooks may automatically reconcile undeposited funds upon deposits; verify balances after deposits.
  • Customer-level visibility:
    • Customer cards show open invoices and payments; if a payment is partially applied, the customer record reflects the remaining balance.

Practical Tips, Common Pitfalls, and Real-World Context

  • Always confirm the bank feed mapping during import; incorrect mapping (Debit vs Credit for bank inflows/outflows) can misstate the bank balance.
  • Do not rely solely on automated categorization; review imports for accuracy and reclassify as needed to align with your chart of accounts.
  • When adding a new client, ensure you use the correct email for the QBOA account versus the client invitation; misalignment can prevent access.
  • Use test accounts and test data to practice the workflow before handling real client data.
  • Be mindful of the interface transition window; while you can switch back and forth, plan your training and client communication accordingly to minimize confusion.
  • Prepare for year-end by understanding which tasks are monthly (to be repeated) and which are year-end (special tasks beyond monthly routines).

Connections to Foundational Principles

  • Double-entry accounting basics underpin all tasks described: every debit has a corresponding credit, and every transaction affects at least two accounts.
  • The bank is an asset; increases are recorded as debits, decreases as credits; this underpins the correct mapping during bank feed imports and reconciliation.
  • The cash handling process (Undeposited Funds → Bank Deposit) is a practical implementation of matching customer payments to bank cash in transit before they hit the bank account balance.
  • The chart of accounts structure (assets, liabilities, equity, revenue, expenses) guides every setup decision during new client onboarding and invoice creation.

Key Formulas and Data Relationships (LaTeX)

  • Bank balance update after a deposit or withdrawal:
    B<em>extend=B</em>extstart+extDebit<em>extbank−extCredit</em>extbankB<em>{ ext{end}} = B</em>{ ext{start}} + ext{Debit}<em>{ ext{bank}} - ext{Credit}</em>{ ext{bank}}
    where a debit to the bank increases the balance and a credit to the bank decreases it.
  • General cash flow for a deposit from customer payments (when using Undeposited Funds):
    • For each deposit of amount $d$ from Undeposited Funds to a bank account:
      B<em>extbankoB</em>extbank+dB<em>{ ext{bank}} o B</em>{ ext{bank}} + d
      U<em>extundepoU</em>extundep−dU<em>{ ext{undep}} o U</em>{ ext{undep}} - d
  • Matching payments to invoices (simplified representation):
    • If an invoice $I$ of amount $A$ is paid, Accounts Receivable decreases by $A$ and Cash/Bank increases by $A$ (net $0$ impact on equity, assuming full collection).
  • Tax and revenue adjustments in invoices (example for a non-taxable service):
    • If a service is non-taxable, Tax amount = 0; otherwise, taxable amount $T$ is calculated using the applicable tax rate $r$ over the taxable base:
      extTax=rimesText{Tax} = r imes T
  • Example numbers used in practice (from the transcript):
    • Invoices: $6{,}000$ (marketing consulting), $2{,}200$ (consulting, etc.), $1{,}200$ (social media), $1{,}400$ (social media), $500$ (monthly service).
    • Payments: $2{,}200$, $3{,}400$, $500$, $5{,}500$ (partial payment).
    • Deposit dates: various dates such as Jan 16, Jan 22, Jan 27.

Summary: What to Take Away for the Exam

  • The monthly service delivery comprises a repeatable cycle: bank feeds, AR/AP as applicable, payroll and sales tax handling, uncategorized transactions management, reconciliations, and the closing/communication steps.
  • Bank feeds are foundational but require occasional manual adjustment; reconciliations ensure the books align with bank statements.
  • AR/AP tasks depend on service scope; always confirm with the client what you are responsible for.
  • Data import workflows (bank and credit card) require careful mapping of fields and correct debit/credit interpretation for bank accounts.
  • The user interface transition to QuickBooks Online is a temporary phase; understand both the current and new interfaces and how to navigate between them during the rollout.
  • Practical data-entry steps (creating customers, products/services, invoices, payments, and deposits) are essential skills for the monthly service delivery and form the backbone of client reporting.