QuickBooks: How to Set Up Customers and Vendors

The following steps will help you customize QuickBooks to best serve your particular business. First, you will have to define the type of business you own. Is it a service business, such as architecture, law, or medicine? Do you sell products, such as a retail or wholesale business?  Do you have a combination of both, such as a cleaning service that provides supplies to its customers? These questions give you a chance to think about your business model — a great exercise in itself.

Next, do you need to collect sales tax? One of QuickBooks’ features is tracking sales tax so you can prepare monthly and quarterly reports to file your sales tax returns more easily. In your business, do you need to prepare estimates? If so, the program can provide you with professional-looking quotes or bids to your customers. Will you need to send billing statements to your customers? If this is the case, the next option for billing statements would be answered with “yes.” If you selected “yes,” then the next question also needs to be answered “yes” to “using invoices.” If you are not receiving full payment at the time of service, an invoice is provided to the customer. Now that we have handled the customer side of the business, it is time to tackle the vendor side.

This section will show you how to set up your company in QuickBooks on the vendor side. Do you want QuickBooks to track what you owe to your vendor? If so, then you will answer “yes” to having the program manage the bills you owe. If necessary, QuickBooks can track time for billing purposes, as well. Next, does your business have employees? If so, QuickBooks can provide an additional module to track payroll and the tax filing information that goes along with that or it can just provide information to your accountant, who will handle those filings for you.

Next, we will set up the chart of accounts. The chart of accounts includes each specific category for you to track your financial information. These are broken into various groupings so that the information appears in the proper place for accounting purposes. For example, the first account to be set up should be your checking account. QuickBooks provides a list of categories for the most common types of financial information and allows you to pick and choose from the list to fit the needs of your business. You can also modify the list by adding your own categories to it. When setting up your chart of accounts, it may be beneficial to have your accountant assist you. That way, the initial listing will serve both your informational purpose and provide the breakdown that your accountant will need for tax purposes.

You have now completed the file setup for your business, including the customer and vendor sides. See that wasn’t too bad – was it?