Getting Started with QuickBooks Online
Setting up QuickBooks Online (QBO) correctly is the foundation of accurate bookkeeping and financial management for any professional service business. Consultants, agencies, and freelancers require a structured accounting system that ensures proper invoicing, cash flow management, and tax compliance. Having the correct setup from the start prevents costly mistakes and saves considerable time in the long run.
A properly configured QuickBooks Online system helps track billable hours, manage project costs, and generate insightful financial reports. The platform’s automation features reduce manual data entry and minimize human error. Understanding the complete setup process ensures that your financial records remain accurate, organized, and tax-ready throughout the business year.
Step 1: Choose the Right QuickBooks Online Plan
QuickBooks Online offers several subscription tiers to meet different business needs and complexities. The Simple Start plan ($30/month) provides basic income and expense tracking for solo entrepreneurs, while the Essentials plan ($55/month) adds bill management and multi-user access for growing businesses. The Plus plan ($85/month) includes project tracking and inventory management, and the Advanced plan ($200/month) offers comprehensive features, including workflow automation and custom fields.
Most service-based businesses find the Plus plan most suitable because of its project tracking and advanced reporting capabilities. This tier provides the right features, including time tracking, project profitability analysis, and budget management tools. The ability to track billable hours against projects and generate detailed profitability reports makes it particularly valuable for professional service providers.
Plan Selection Guide
- Simple Start ($30/month) – Best for:
- Solo consultants just starting out
- Single-user access needs
- Basic income and expense tracking
- Simple invoicing requirements
- Up to 20 monthly invoices
- Essentials ($55/month) – Best for:
- Small agencies with 2-3 team members
- Need for bill payment management
- Basic time tracking requirements
- Up to 40 monthly invoices
- Multiple user access (up to 3)
- Plus ($85/month) – Best for:
- Growing professional service firms
- Project profitability tracking needs
- Inventory tracking requirements
- Budget management
- Up to 65 monthly invoices
- Multiple user access (up to 5)
- Advanced ($200/month) – Best for:
- Larger professional service organizations
- Custom workflow automation needs
- Advanced reporting and analytics
- Custom role access controls
- Priority customer support
- Unlimited monthly invoices
- Multiple user access (up to 25)
Step 2: Customize the Chart of Accounts
The Chart of Accounts is the fundamental organizational structure for all financial transactions in your business. A well-designed Chart of Accounts should reflect your business operations, making it easy to track different revenue streams, categorize expenses, and generate meaningful financial reports. The structure should align with tax reporting requirements while providing the detail needed for business analysis.
Recommended Chart of Accounts Structure
- Income Accounts:
- Professional Services Revenue
- Consulting Services
- Advisory Services
- Project Management
- Training Services
- Retainer Income
- Implementation Services
- Other Income
- Speaking Engagements
- Commission Income
- Referral Fees
- Interest Income
- Expense Accounts:
- Direct Project Costs
- Contractor Payments
- Project Materials
- Project-Related Travel
- Client Entertainment
- Operating Expenses
- Payroll Expenses
- Salaries and Wages
- Employee Benefits
- Payroll Taxes
- Health Insurance
- Office Expenses
- Rent/Lease Payments
- Utilities
- Office Supplies
- Cleaning Services
- Technology
- Software Subscriptions
- Hardware/Equipment
- IT Support
- Cloud Services
- Professional Development
- Training Programs
- Certifications
- Conference Fees
- Professional Memberships
- Marketing and Business Development
- Advertising
- Website Maintenance
- Social Media Marketing
- Networking Events
- Professional Services
- Legal Fees
- Accounting Services
- Insurance Premiums
- Banking Fees
Step 3: Connect Your Bank Accounts
- Bank Integration Process:
- Navigate to Banking > Add Account
- Search for your financial institution
- Enter secure credentials
- Select accounts to connect
- Choose data import timeframe
- Bank Rules Configuration:
- Create rules for recurring transactions
- Set up auto-categorization
- Configure split transactions
- Establish vendor recognition
- Define custom conditions
- Essential Bank Rules:
- Software Subscription Management
- Automatically categorize recurring software charges
- Track subscription expenses separately
- Monitor technology spending
- Utility Payment Processing
- Identify and categorize utility payments
- Track facility-related expenses
- Monitor overhead costs
- Office Supply Expense Distribution
- Split purchases between supplies and equipment
- Track consumable vs. durable items
- Monitor departmental spending
Step 4: Set Up Invoicing and Payment Processing
Invoice Template Customization
- Basic Template Setup:
- Navigate to Settings > Custom Form Styles
- Choose a base template
- Upload company logo (300x300px recommended)
- Select brand colors
- Configure fonts and sizes
- Content Customization:
- Add custom fields for:
- Project codes
- Purchase order numbers
- Contract references
- Department codes
- Customize field labels
- Configure default terms
- Set up footer messages
Payment Processing Configuration
- Merchant Service Setup:
- Enable QuickBooks Online Payments
- Configure payment methods:
- ACH (1% per transaction)
- Credit Cards (2.9% + $0.25)
- PayPal integration
- Set up deposit account
- Configure payment notifications
- Payment Terms Setup:
- Standard Terms:
- Net 30: Due in 30 days
- 2/10 Net 30: 2% discount if paid within 10 days
- Due on Receipt: Payment due immediately
- Custom Terms:
- Retainer: Due by 1st of month
- Milestone: Due upon completion
- Split Payment: 50% upfront, 50% on completion
Step 5: Enable Project Tracking and Profitability Reports
Project Setup Process
- Project Configuration:
- Basic Project Settings:
- Project name
- Client information
- Start and end dates
- Project manager
- Budget amount
- Billing method
- Advanced Settings:
- Labor cost rates
- Expense categories
- Billing increments
- Progress milestones
- Time Tracking Setup:
- Time Entry Configuration:
- Billable rates by service
- Non-billable categories
- Minimum time increments
- Approval workflows
- Employee Settings:
- Individual cost rates
- Billable rate markup
- Overtime calculations
- PTO tracking
Step 6: Configure Tax Settings and Sales Tax Tracking
Tax Configuration Setup
- Sales Tax Configuration:
- Initial Setup:
- Configure tax agencies and filing frequency
- Set default tax rates for your jurisdiction
- Create tax groups for multiple rates
- Define tax rules for different products/services
- Advanced Configuration:
- Set up tax exemption tracking
- Configure automated tax calculations
- Establish tax payment schedules
- Create jurisdiction-specific rules
- 1099 Contractor Management:
- Contractor Setup Process:
- Create vendor profiles with tax identification
- Configure 1099 payment tracking
- Set up contractor categories
- Establish payment thresholds
- Annual Reporting:
- Review payment classifications
- Verify contractor information
- Generate 1099 forms
- Track filing deadlines
Step 7: Implement Internal Controls
Essential Internal Controls
- User Access Controls:
- Permission Levels:
- Administrator
- Accountant
- Bookkeeper
- Time Tracking Only
- Reports Only
- Access Restrictions:
- Banking access
- Payroll data
- Financial reports
- Customer information
- Review Procedures:
- Daily Reviews:
- Bank transactions
- New invoices
- Bill payments
- Cash positions
- Weekly Reviews:
- Aged receivables
- Pending bills
- Time entries
- Project progress
- Monthly Reviews:
- Bank reconciliation
- Financial statements
- Budget variance
- Tax obligations
Expert QuickBooks Online Setup with Duncan Fly Bookkeeping
Setting up QuickBooks Online correctly requires careful attention to detail and a deep understanding of accounting best practices. At Duncan Fly Bookkeeping, we specialize in helping professional service businesses establish efficient, accurate, and scalable financial systems.
How Duncan Fly Bookkeeping Can Help
- Professional Setup Services:
- Complete QuickBooks Online configuration
- Custom Chart of Accounts design
- Invoice template customization
- Bank feed and rule setup
- Tax settings configuration
- Project tracking implementation
- Training and Support:
- Staff training sessions
- Process documentation
- Ongoing technical support
- Best practices guidance
- System optimization
- Regular System Reviews:
- Monthly reconciliation
- Quarterly system audits
- Tax compliance checks
- Performance optimization
- Software updates
Take the Next Step
Don’t let incorrect QuickBooks Online setup hold your business back. Duncan Fly Bookkeeping provides the expertise you need to:
- Save time with automated workflows
- Improve cash flow with efficient invoicing
- Generate accurate financial reports
- Ensure tax compliance
- Make better business decisions
Contact Us Today
Schedule your free consultation to learn how we can optimize your QuickBooks Online setup:
Call: 404.465.4250
Email: s.dinkins@duncanfly.com
Location: Atlanta, GA
Our certified QuickBooks Online ProAdvisors team is ready to help your business thrive with properly configured accounting systems. Let’s discuss your specific needs and create a customized setup plan to save you time and money while providing the financial insights your business needs to grow.