How to Set Up Advanced Settings in QuickBooks Online

QuickBooks Online (QBO) is an easy application to use on the internet but it has complexities as well. The software […]

QuickBooks Online (QBO) is an easy application to use on the internet but it has complexities as well. The software allows users to manage their accounting and other business transactions. The differences in businesses and their transactions can be managed by changing the settings in the application. Advanced settings are therefore essential for users to manage these matters.

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The article here will show you how to navigate to the advanced settings in QuickBooks Online and change the appearance of your financial reports. You will learn to set fiscal year and accounting methods, enable many time-saving essential tools, and configure your charts of accounts to personalize advanced settings in QBO.

So, Let’s dig into it and learn more.

What Are Advanced Settings in QuickBooks Online?

The advanced settings in QBO, like any other application’s settings, provide an opportunity for users to customize QB accounts in depth. It affects what shows in the users’ financial reports, along with their profit and loss reports, cash flow statements, and balanced sheets. It includes essential preferences and tools that can enable and disabled based on your business requirements. These settings ensure proper Set up of Charts of Accounts, automate actions such as transaction entries, and better categorize the transactions.

Steps to Set Up Advanced Settings in QuickBooks Online

There are a total of nine categories under the advanced settings in QuickBooks Online. You can choose these preferences accordingly.

Step 1: Go to the Advanced tab

The advanced settings in an application can be accessed through the settings. Follow the below steps to navigate to the advanced tab.

  • Go to Settings (Gear Icon) and click Account and Settings in the first column under Your Company.
Account and Settings
  • In the left menu, you will find the advanced option.
  • Click on the Pencil icon to make changes in the appeared categories of advanced settings.
Settings under the Advanced tab in QuickBooks

Now that you know how to access the advanced settings categories, you should be careful to make changes in each of these to get an appropriately customized setup of your QB account.

Let’s check the categories and preferences present under the advanced settings.

Step 2: Choose an Accounting Method and a Fiscal Year

It includes setting up your fiscal year setting closing dates, and specifying your accounting method.

Advanced Accounting settings in QuickBooks Online
  • Click on the option beside “First Month of Fiscal Year” which will allow you to select your preferred fiscal year. It is followed by a tax year option where you should select your preferred tax year.

Note: Usually both these years are the same. But you can contact a tax professional if you are unsure of selecting a tax year different than the fiscal/calendar year (January 1st to December 31st).

  • Select your accounting method between accrual and cash. You will be able to select either of these methods while printing reports. If you have a small business, you can use the cash method for tax returns and the accrual method for internal reports.
  • Enable the option and enter the closing dates of your prior fiscal year. Select whether to view a warning before changing a prior period or enter the required password to make such changes.
  • Close the books is the bookkeeping system where you can turn it on to prevent inadvertent changes to prior accounting periods. Without it, you will experience an error in the beginning Balance Sheet for the current period.
  • If you select allowing changes after entering a password, type a password and confirm it.
  • Click on Save after you are done with the changes.

Step 3: Select Your Company Type

Requires users to select the tax form that their companies use.

Select Your Company Type

Select one of the options from the drop-down box based on the tax form you have filled out for your company.

It includes:

  • Sole Proprietor: Sole proprietors are single-owner businesspersons who fill Schedule C (Form 104). These owners do not file with the state to be a corporation or these are limited liability companies (LLCs) with one owner.
  • Partnership: These businesses have two or more owners and do not file to be a corporation with a state. These companies fill the Form 1065 to report their business income.
  • S-Corp (S Corporation): These are corporations or LLCs that filed with the IRS to be treated as small business corporations. The business income reports of these companies are filed through Form 1120S.
  • C-Corp (C Corporation): The corporations that are not treated as small businesses must report their income via Form 1120.
  • Non-profit Organizations: These companies receive tax-exempt status from the IRS and report their annual activity via Form 990.
  • Limited Liability: You can choose this if your company is an LLC but you are not sure how you will file your taxes.
  • Not/Other/None: If you are unaware of how your company is organized, choose this option.

Press Save at the end of your preference selection.

Step 4: Customize Your Chart of Accounts

It is used to enable or disable the usage of account numbers in reports.

Customize Your Chart of Accounts
  • Enable account numbers to organize the charts of your accounts.
  • Under the shipping account, specify which income account you prefer to track the shipping income.
  • Specify which account to track if you give discounts to your customers upon early payments under the discount account.
  • Under the tips account, select a current liability account to track unpaid tips, as these tips are considered current liability unless you distribute them to employees.

Note: If you cannot find the Shipping, Discount, and Tips accounts on your screen, turn them on in the sales form content settings under the Sales option in Accounts and Settings.

  • You can select the preferred option if you want to mark up expenses that are billed to your customers.
  • You can treat customer expense reimbursement as a reduction of expense or income. Specify an income account if you treat them as income.
  • Click on Save after finalizing your selections.

Step 5: Create Categories To Allow for Detailed Reporting

This preference allows you to add ‘Location‘ and ‘Class‘ fields on your forms to track the profits and losses of specific products (class) in a particular place (location).

Create Categories To Allow for Detailed Reporting
  • Track classes help to enable reporting of all income and expenses by product lines or departments. You should enable the option to warn you when a transaction isn’t assigned a class.
  • Choose to assign classes to each row of a transaction for smooth transactions from multiple classes.
  • To track classes in specific locations, specify the type of location from the drop-down box and select any option (fields such as business, store, property, department, division, or territory).
  • Press on the Save button at the end.

Note: You can also go to All Lists from the gear icon and select the lists for classes and locations. Select each list, press New, and write the name of your preferred class and location.

Step 6: Configure QuickBooks Online Automations

It includes pre-fill forms and preferences to automatically apply credits and debits in QuickBooks Online.

Configure QuickBooks Online Automations

It is recommended that all the automation options are enabled to evaluate which ones are essential for your business. You can always disable the options that you don’t like later.

  • Prefill forms allow automatic filling up of the form based on the last saved information on vendors, employees, or customers.

Note: Please ensure that the information that is copied is correct. In case of any differences, you will need to update those fields with the right information.

  • Enable the Automatically Apply credits option to automatically apply credits to newly formed invoices.
  • Enable the Automatically invoice unbilled activity option and select “Remind me to Create Invoices” instead of automatic QuickBooks generated invoices.

You can change the preference once you are confident that unbilled activities should always be invoiced.

  • Turn on the Automatically apply bill payment option so that QB will apply bill payment to the oldest overdue bill.
  • Click on Save after selecting all preferences.

Step 7: In QuickBooks Online, Turn on Projects

This category ensures that you see all expenses, sales, and timesheets by projects. It is helpful for contractors to check different projects from the same customer.

Turn on Projects in QuickBooks Online
  • Turn on the Organize all job-related activity in one place option

Once enabled, you will see an option named Projects in the left menu of the dashboard. Explore it to track the sales and expenses of each project.

  • Press Save after enabling the option.

Step 8: Configure Time Tracking Options

It is used to specify the timesheets as defaults. By tracking the details of the time your employees spend, you can analyze the expenses and profitability via customer, projects, class, and location.

Set Time Tracking Options
  • Under the First day of work week, select a day in alignment with your weekly payroll periods, if applicable. If not, select any preferred day you wish to start your work week.
  • Turn on the Show Service field option to track the service done by your employees. You will be organizing your employees better with its help.
  • Turn on the “Allow Time to be Billable” option to designate a time entry as billable on either a single-time activity form or timesheet. You will get the option to show an employee’s billing rate to the user who is inputting the hours.
  • After the selections, click Save.

Step 9: Set up Currency options in QuickBooks Online

This option is available for QuickBooks Online Essentials, Plus, and Advanced. It allows you to record transactions in multiple currencies.

Set up Currency options in QuickBooks Online
  • Click on the drop-down box and select your home country’s currency. You cannot alter this selection once the multicurrency is enabled.
  • Turn on multicurrency only if you are sure of your foreign transactions.

Note: You cannot turn off a multicurrency option once enabled. Therefore, if you are unsure of your transactions, it is recommended that you learn more about multicurrency before continuing.

  • Tick on the checkbox stating “I Understand I Can’t Undo Multicurrency“.
  • Click on Save.

Step 10: Make a Decision about Whether to Switch on the Business Network

This option is available in the latest versions of QuickBooks Online. You can turn it on to connect with other QuickBooks users. When enabled, your company will be visible and searchable in the QuickBooks Business Network. You can also search for other vendors and customers, send invitations, and use the Accounts Payable automation feature. However, these facilities are also available if you disable your visibility but your business will not be searchable.

Switch on the Business Network
  • Turn on the Allow Members to find me option.
  • Click on the Save button.

Step 11: Set Other Preferences in QuickBooks Online

It includes date and number format, customer label, warnings regarding transaction number duplication, and waiting time before you sign out automatically.

Set Other Preferences in QuickBooks Online
  • Select the date and number pattern that will appear on the reports.
  • Select how you will refer to your customers on your forms.
  • Enable all the warnings that are mentioned to avoid duplication of the transaction numbers and journals.
  • Select the time frame of inactivity after which you will be automatically signed out of your QB account.
  • Once done, Press Save.

QuickBooks Online includes some of the effective options that save time and allow accuracy in reports. The article clearly describes how to use these preferences through advanced settings in the application. However, if you are still doubtful, contact our experts without a second thought.

Accounting Professionals, CPA, Enterprises, Owners
Accounting Professionals

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+1-800-596-0806 or chat with experts.

Frequently Asked Questions

What Happens if I Avoid Personalizing my Advanced Account Settings in QuickBooks Online?

QuickBooks Online has a default setting that runs the application once you start using it. However, the default settings largely vary depending on the type of company and the transactions made. Therefore, if you avoid customizing the settings it can result in problems while entering transactions and understanding your business?

Why Can’t I Turn off the Multicurrency option once Turned on?

The Multicurrency option cannot be turned off once turned on because the currency conversion information will require to be accounted for in the system moving forward. In case you are not sure, you should talk to your accountant.

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