Behind the scenes-how I use QuickBooks as an accountant

by | Jul 4, 2023 | Accounting

Behind the scenes-how I use QuickBooks as an accountant

Today I want to do something different and lift a curtain on how I use Quickbooks (QBO) and the reporting capabilities it offers to run my business. After all, like many of you in my audience, I am a professional services business first.

How often do I touch my QuickBooks file? Truthfully-every few days at least, or every day most often. I use QBO to track my time, issue invoices, and of course record my expenses.

Time tracking

Most of my pricing is based on the value-based flat fee, however, I still track all of the time I spend both working on the business (marketing, meetings, trainings) and time spent in the business (client work) in order to better understand where I spend my time and how much time I spend in various areas, to ensure that my flat rates are equitable. I do have some hourly engagements for which I definitely use time tracking features QBO offers.

As a solopreneur, I don’t use QuickBooks payroll, and quite honestly my preference is with Gusto when it comes to DIY payroll or a dedicated payroll provider (I have several great ones in my network if you ever need a recommendation for one).

Expense tracking

It is no surprise that I prefer to run my books on an accrual basis for financial reporting purposes (cash basis for tax purposes). I already have my accounts receivable in QBO because I use it to bill clients, but I also set up recurring bill templates -one of my favorite features in QuickBooks-in order to capture monthly recurring expenses.
The reasoning is two-fold. First of all, I am a lot more comfortable with the accrual method of accounting (occupational hazard), but the bigger reason is that it allows me to have the view on my income and expenses when income is earned and expenses are incurred, which ultimately provides a more accurate representation of my financial performance. It also allows for more meaningful comparisons between different accounting periods, since income and expenses are recognized consistently over time.
If you are going to be budgeting, forecasting or creating any financial models, or would like to have your financials serve their purpose of aiding you in business decisions, I encourage you to consider switching to accrual method for internal reporting purposes.


When it comes to reporting, I do use classes in my own books. It is a feature available to QuickBooks Plus and above, so to be fully transparent my accountant file is free, thus it doesn’t cost me extra to have this functionality. What does class tracking allow me to do? Class tracking allows me to track my revenues by different income streams-such as tax, monthly accounting, and advisory services. All income and expenses have a class associated with them. Running my Profit and Loss Statement by class provides a more granular level of detail and informs me better when it comes to the 3 distinct income streams.

My chart of accounts has a cost of sales section, which includes all of the costs directly associated with delivering my services to clients-therefore my subcontractor expenses, any software that is directly related to service delivery (my client portal, my tax software, my other accounting tools) are all included in the Cost of Sales. Why is that? Whether you are a service-based business or a product-based business, you need to know what your gross profit is! Without isolating expenses related to the cost of delivering your service or product, you have no view on your gross margins.

Speaking of margins, my favorite profit and loss report to run is called “Profit and Loss as % of total income”. It easily provides me with both gross and profit margin information, and also reports all of the operating expenses and % of income. Profit margins are important in ultimately informing my pricing decisions and expenses reported as % of income can be quite eye opening if you are trying to control or cut spending.

The other favorites for profit and loss reporting are Profit and Loss comparison to prior year, profit and loss by month, and profit and loss by class.

To be entirely honest I don’t look at my balance sheet all that much, but I do occasionally look at my equity section and compare the owner’s draw amounts to my retained earnings amounts. Since the balance sheet shows financial position from inception to date, the equity section can show me how much money I have taken out, compared to how much money I made-it can be quite an enlightening exercise for a sole proprietor.

Other functionality

Other functions I love as an accountant are the “reclassify transactions” tool and the audit log.

Reclassify transactions tool allows me to reclassify transactions in bulk in case they were incorrectly categorized when being accepted in the bank feed, and also, assign class to them, in case it was initially left blank.

The audit log allows me to research any transactions that may have been altered or deleted by other users, in cases when the prior month bank reconciliation is all of a sudden out of balance, for example.

If you ever need help trying to figure out how to maximize your QuickBooks functionality or leverage reporting to make better business decisions, please do not hesitate to reach out!