 QuickBooks Online 2024, delete general ledger accounts or make them inactive. Get ready and some coffee because we're getting the books on track with QuickBooks Online 2024. First, a word from our sponsor. Yeah, actually we're sponsoring ourselves on this one because apparently the merchandisers, they don't want to be seen with us. But that's okay whatever because our merchandise is better than their stupid stuff anyways. Like our crunchy numbers is my cardio product line. Now, I'm not saying that subscribing to this channel, crunching numbers with us will make you thin, fit, and healthy or anything. However, it does seem like it works for her, just saying. So, subscribe, hit the bell thing and buy some merchandise so you can make the world a better place by sharing your accounting instruction exercise routine. If you would like a commercial free experience, consider subscribing to our website at accountinginstruction.com or accountinginstruction.thinkific.com. Here we are in our QuickBooks Online Bank Feed Practice File. We set up in a prior presentation. Once we have the QuickBooks File set up, the next thing we typically need to do is lay down those foundational items kind of like the infrastructure of the accounting system so that when we go into the normal data input, the normal flow, the normal accounting cycle, we can construct that on top of or within or in conjunction with these foundational infrastructural items. So, first let's take a step back and think about some of the major goals of the accounting process, the bookkeeping process. One being, of course, the creation of the financial statements. That being the balance sheet, the income statement, which can also sometimes be called the profit and loss reports. And then we can also construct other reports remembering that all other reports are usually giving more information about one or multiple line items on the major financial statement reports, balance sheet and income statement, and are also typically being constructed in conjunction or at the same time as we're constructing the balance sheet and the income statement. So that goal is typically met with data input forms, which are found in the plus button, and the data input forms are the things that create the journal entries and the journal entries have two accounts that will be affected that will create the financial statements. Note that we have cycles within cycles that will be run. So we typically think of the accounting cycle possibly running on a yearly cycle and then within that on a monthly cycle. And then within that we can break it out into the customer or revenue cycle vendor or expense cycle and possibly a payroll cycle. And then within each of those cycles, we can then break down the actual forms that will typically be used, which could differ depending on what kind of industry that we are in. So then another goal that we have is to communicate with the people that we're doing business with, which includes the customers, vendors and the employees in such a way that we can facilitate transactions, we can do business and keep everyone basically happy. That will be also helped out with the items on the left hand side, which I would call the centers, the sales center or customer center, the expenses center or vendor center, and then the payroll center if we're doing payroll within QuickBooks. So those are some of the primary objectives that we are doing, creating the end result financial statements and as we're creating those, we're communicating with those we're doing business with as efficiently as we can, building good relationships as we do so. In order to do this stuff on the left, we can think of the foundational items up here in the cog. Now I'm not going to go into all of these foundational items because we have another course or section that goes into each of them in detail. But just to get a sense to get an idea, we have the account and settings, which the defaults are typically pretty good, but you could go into each of those settings, which we have another course or section option want to look at it using the manage of the users. So who's going to be using the financial statements which you can adjust, and then primarily we have these lists. Now many of these lists can be found elsewhere. But if I go into the lists, then we can see the primary foundational items one being the chart of accounts. So that's going to be a huge one, because all of the financial transactions that we create here have the double entry accounting system, which means that at least two accounts are affected with each form basically most forms that actually record a transaction. And so you need the underlying foundational infrastructure of accounts in order to record those transactions. So that's going to be the main one. And the other main one is going to be the products and services, meaning when I input data input forms, if I'm selling whatever I'm selling, I'm going to have to populate that on the invoice. So I can create that sometimes you might have a very simple system where you don't really need much because you might be just getting money from YouTube or something in which case you might just use the bank feeds to record a deposit and not have to enter invoices or sales receipts. But if you're entering sales receipts and invoices and or if you're dealing with inventory and tracking them on a perpetual inventory system, then the items will be important as well. Okay, so I won't go into each of these in detail. That's going to be the general overview. So right now we want to think about the chart of accounts. I usually don't go into the chart of accounts with the lists up top because they also have it over here in the transactions. So I typically go into the transactions and then the chart of accounts is up here on the right. QuickBooks Online could change that. You know, QuickBooks Online is re-upping and changing around their design all the time, but there will be a chart of accounts somewhere in there. So upload your transactions fast, linking business to the bank accounts. We'll do that later. So that's what we'll do. You're using a zero of 250 accounts included in your plan. Find out how to manage and so on. I'm going to close that. Okay, so here we have our chart of accounts. Now, if you're starting a new QuickBooks file, you have a couple different options in terms of how you're going to deal with your accounts. One, you might have another QuickBooks account that you're transferring over such as QuickBooks desktop or some other accounting software like Peach Tree, Sage 50 or whatever that you're transferring over. You could attempt to pull in all of the prior transactions into QuickBooks. And the benefit of that would be that you can then run reports that are comparative reports in QuickBooks because you would have the past data. However, there's a downside to that as well. One is it can be difficult to transfer the stuff in depending on what your prior accounting system was. Even if it was QuickBooks desktop, which you would think would be the easiest one to just transfer everything in with, in part because, for example, the inventory doesn't have the same flow assumption. I don't believe desktop typically having weighted average online typically having first in first out. So that could cause the problems if you're going to try to transfer and you're using the inventory tracking system also with job cost systems. QuickBooks online has projects and then the desktop has jobs and you could convert the jobs. So it's not a perfect thing. Also, you might just want to start over from a certain point within the new software so you can clean things up from one point going forward. So you might not want all of your vendors for all of time pulling over from decades ago that you don't deal with anymore. So it could be a good time to say, hey, look, I'm going to start a new accounting system and I'm going to start everything from scratch from this point going forward. And everything prior to that point is in the old accounting system. So that's another method that you can use pulling in your beginning balances. And we have a whole nother course or section using basically that method if you want to take a look at that. Now you also might be in a situation where you're starting a completely new business and you don't have a prior accounting system or you have a very limited prior accounting system. So then the question is, well, I have all these chart of accounts. I haven't used, I don't have never had a chart of accounts before. So what do I do? Do I keep QuickBooks chart of accounts or do I want to construct my own? Those are the primary two options you have. So if you're not familiar with the accounting, then it might be best to try to say, hey, look, I'm going to use QuickBooks chart of accounts to the best of my ability. And then every time I then create a transaction, which in this practice problem we will do with the bank feeds. So as the transactions go through the bank feeds, we will assign the bank feeds to an account to record the transactions. We'll talk more about that later. And the question is, should I just create accounts as I do the bank feeds? Or do I want to try to use QuickBooks chart of accounts? And so the safest thing to do might be to say, hey, look, I'm going to try to use QuickBooks chart of accounts. And if I was to do that, then I'm going to every time I enter something from the bank feeds, I'm going to look in here into the chart of accounts to see if QuickBooks has an account for it. If it does, then I'll use that chart. I'll use that actual account. If QuickBooks does not have an account, but they have one that's similar to the name that I would prefer, then I will go in here into the chart of accounts and edit the name so that it matches what I want it to be. Well, what I do not want to do is have two accounts that are very similar in name, such as the telephone and the phone, for example, because then it's likely that you'll start posting things to two accounts just by mistake that both look like the same thing. So if you want a different account that's different, slightly named different, then you want to go in here and change the name. And only when there is no account will I actually add a new account. And then after like a month or two of data input, what you want to do is go into the QuickBooks chart of accounts, look for the accounts that you have not used, and make them inactive. Why? Because having this massive chart of accounts is too much, right? It's too much to deal with. Now, we did that in a prior course or section, that method. This time, what I would like to do is say, hey, look, I'm going to create my own chart of accounts as we enter transactions from the bank feeds. And that way I have a chart of accounts that's completely custom to me, which could be more easier for me to understand what's going on. Oftentimes, if you're doing QuickBooks for like your personal bookkeeping, then that might make more sense because there might not be a chart of accounts that is set up for you personally as well, because you could use QuickBooks for personal expenses as well. So what I want to do is go through this entire thing and make inactive as many accounts as I can. And QuickBooks will not let me make all the accounts inactive, but I'm going to make most of them inactive, and I'll explain QuickBooks chart of accounts kind of as we go. So, and then when I do the actual transactions from the bank feeds, we'll build new accounts. So the chart of accounts has the ordering will typically be, and I would keep this ordering, you can change it, you can order by alphabetical order, but I would keep the ordering by account type, and that's basically balance sheet accounts on top of incomes, I mean, yeah, balance sheet on top of income statements, balance sheet accounts are assets, liabilities, equity, and then the income statement accounts are income and expense. And then within that category, you have specialized categories such as the bank account here. So this is a bank account. Now later, I'd like to create my own bank account. So I'm going to see if they let me delete this one. I'm just going to go in and delete them all or make them inactive because they won't let me delete them. So I'm going to make it inactive, make account inactive. You're about to make one account inactive. This will remove it from the account and category fields. You can make it active again later if you need to. So I'm going to say, yeah, continue. Now the accounts receivable, we typically can't make that inactive and may not want to even if we're not using accounts receivable because the accounts receivable has a special use in that it's tied to the customer accounts. So I'm going to keep that one as is. Notice they gave me two inventory accounts, which is kind of funny. So I'm going to remove one of them. I'm going to say, let's make this one inactive. And then we've got the inventory, other loans. And note that also that a lot of times when you're a small business most of your accounts are probably going to be expense accounts. You might not be using a whole lot of these balance sheet accounts. And then the expense account, even the expense accounts are probably, they have more than you're going to use. But when you're doing bank feeds, those are the accounts you're usually going to be creating. So I'm going to start to see if I can do multiple with a batch action this time. So I'm going to say, let's check this one off loan to others, payments to deposit. They're not going to make me allow me to make this inactive because it's a clearing account, I believe. So I'm going to leave that one there prepaid expenses. I'm going to try to make those inactive uncategorized assets. I don't think they're going to allow me to make that inactive because that's a dumping ground account. So if I tried it wouldn't let me I'm guessing. And then the build, maybe I'll keep the building land. And then these ones, the long term office equipment. I don't really like the name of that one. I'm going to get rid of all of these, all of these sub accounts. Now these fixed asset accounts, QuickBooks. Look at all this detail they're trying to put in. I think they're trying to help people out to tell them what kind of things might fall into office equipment. But what you really want to do with these fixed assets is try to tie them out with what's going to happen on the depreciation schedules which are often created with other software like the tax software because the tax code has its own depreciation method. And if you're having your information in the tax software you may as well, the tax software also has the capacity usually to do both tax and book depreciation. So whether you want to have your books on a tax basis which would be the easy thing to do or on a book basis then you could still use the tax software to help you to calculate it rather than trying to do it yourself and therefore your categories you're going to want to make more specific to the tax software categories so that your sub ledgers easy to follow. So we've talked about that in the prior course or section. We might dive into it a little bit more this time but here I'm going to try to make all of these inactive. So make them inactive. Boom. It's got to think about it a little bit. It's like that's a lot of them. She's like I don't know. Is it going to let me do it? Got it. Failed. It failed. Well it only failed on one of them. Okay. Wait a second. There's my failing thing. Okay. So it wouldn't let me do it. So let's try to go through these one at a time again. It won't let me make all of these inactive. That's great. So let's try to go loan. Let's make them inactive one at a time. Make it inactive. Make it inactive. I don't think it let me do it because of the sub accounts. It needed to make the sub accounts inactive before that one. Accounts payable. I'm going to keep that one. It's similar to accounts receivable and then it has a sub ledger. Customer prepayments. I'll keep that one. Actually now let's try to remove that one. Lines of credit. I'm going to remove sales tax I might need. I'm going to keep that short term loans. Now I'll add I'll add them if I need to. Long term loans. Mortgages. Federal. Estate. Estimated tax. Estimated tax. Estimated tax. Estimated tax. Estimated tax. Estimated tax. I'm going to remove it. I have to keep that one. So let's see if they let me remove all those. Make them inactive do not fail me again. And then and then draw. So then in the equity section equity section opening, balance equity, is a dumping ground account for quickbooks. So they probably not going to let me make that inactive owners draws. I'll keep that because if it was a sole proprietorship, I'd be drawing money out if it was a corporation. We might change the name to like dividends possibly owner investment I'll keep that I guess because that's going to be when we put money in as a sole proprietor if it was a corporation It would be called, you know common stock and then Personal expenses so so now now it has this in the equity now personal expenses You would think is the form of draws, right? So again QuickBooks is trying to like tell you With these accounts what things you might categorize in equity but I Think it's getting like a little too detailed in here for it. So I'm not gonna do it that way. I'm gonna make these inactive We'll talk about Draws later, but I think there's too much going on in the equity section. So I'm gonna make it inactive and I'm gonna make this inactive and Then see I made the sub accounts inactive first so that it let me Take out these personal expenses Make inactive if you try to make the parent account inactive first it won't let you do it It's doing the same thing for health care in equity accounts So it's trying to group all of your draws out and this in this way I'm not sure that's the way that that you may or may not want to do it in that really detailed way QuickBooks again trying to cover all of its bases with this massive chart of accounts Which which is I think actually gonna lead to people being more overwhelmed and confused Because there's too much going on with it. So I'm gonna make them inactive and Then personal health to do let's make it inactive Okay, and then we've got the retained earnings as an equity That's a required Account because that's like the account that the income statement will roll in so they probably wouldn't allow me to make that inactive State estimated taxes. I'm gonna do I thought I removed that I thought I've removed you and And then you've got your income accounts So billable income is a default account if you're gonna use billable expenses So they probably won't let me make that inactive Refunds to customers. Yeah, I'll keep that one sales is typically an income account That's gonna be used when you sell inventory So I'll keep that but note that they have sales of products and sales that seems repetitive to me So I'll get rid of one of them I'll get rid of the normal sales and I'll keep the sale of product one and so I'm gonna say there's that and Then services so we have service income. I'll keep that Uncategorized income quick books probably will not let me delete that because it It's gonna be a dumping ground if quick books need to put a plug in somewhere. I'm gonna say We're gonna get rid of the types of cost of goods sold. I'm just gonna keep one cost of goods sold account So I'll get rid of that I'll get rid of that and then I'll get rid of that and Then Okay, and then the advertising now all of this stuff. I'm basically going to remove So now you got advertising and look how detailed they're getting in there again You might want that detail, but but some people might not I'm gonna do my own on We're in the expenses now and when you do the bank feeds the expenses are gonna be The the major accounts that you'll be creating so I'd like to just build my own as we go So I'm gonna say no, I'm just gonna remove this building a property rent I'm gonna remove it business license. I'm gonna remove it commission and fees all these expenses I'm just gonna remove them and construct them as we do the bank feeds ourselves and then the con the Contributions to charity now I'm gonna remove those and then I'll try to remove these sub accounts If I remove the parent account at the same time it'll it might confuse quick books So I'll take all of these batch action make inactive Do it there and then I can say okay. Let's go back down. So employee benefits. I'm gonna remove Entertainment with clients. There's the dumping ground account for the For the sales team. It was a client engagement when we went to the Whatever the fancy restaurant in the casino or whatever was important whatever I'm just gonna remove all these sub accounts So quick books is really liking their sub accounts as you can see here Some people that might be a structure that you want to make but it may not be as well So remove them here. I'm gonna get rid of all these sub accounts taxes paid travel and I'm getting rid of the sub accounts first so I can then delete the parent accounts without confusing Quick books or make them inactive scrolling back up Make those inactive poor five or if you please and then we're gonna say Building so build expenses income income uncategorized costs to good soul. We have two costs to good souls. That's funny Let's get rid of one of those make inactive. Why do you have two costs to good soul quick books? Why are you trying to confuse me? Why are you trying to confuse me? I'm gonna get rid of the shipping as well the general business Expense insurance interests legal new mules office payroll purchase repairs and maintenance supplies taxes travel Uncategorized it probably won't let me delete that because that's a dumping ground for quick books if they need to force something to be in balance I'm getting rid of the sub accounts again Home office which again only applies in certain cases, right? So the quick books is trying to like cover all the bases. So we have weight vehicle expenses So we have way too many accounts This is why we're gonna create our own because you've gone overboard You've gone overboard the board only extends Five feet and you went like eight feet off of the end of it quick books. That's what you did so we're gonna Do it my own self. I'll do it my own self and then I'm gonna get rid of the purchases And then other income. I'm gonna get rid of these depreciation Home office Vehicle All right, let's make those inactive. So now we've got something That's much more trimmed down. So we've got accounts receivable We might not use it But we have to have an accounts receivable because if we use it then it's there for us if we have invoices Inventory, I'll keep that if you don't have inventory you could delete inventory Payments to deposit That's a again that an account that quick books uses for a certain function So they probably won't let us delete it anything that says uncategorized That's a dumping ground for quick books if we try to enter something that's not in balanced Quick books will just throw the other side in there so that our double entry accounting system will still work So buildings so we can't delete it building I'll keep even though if you don't have a building you could delete it But land I'll keep even though if you don't have land you can delete it Accounts payable will keep that because if you enter bills Then you would need the sub ledger of accounts receivable so quick books probably won't let us delete it sales tax payable I'll keep it in case we deal with sales tax opening balance equity Draws investments. These are all the equity accounts retained earnings They probably won't let us delete that and I'll keep these three because I think they're good accounts To have and then we have the income again I don't think they'll let us delete the billable expense income possibly they would but it's going to be tied to a certain feature Within quick books making things billable refund to customers You might not need that but I'm going to keep it there just in case you might call it returns and allowances if you Wanted to rename it or something like that? Sales of product income, so we'll keep the product income service income and then again another Uncategorized which is a dumping ground for quick books to make sure we stay in balance They won't let us delete that cost a good sold You don't need it if you don't have inventory, but if you do you would need it Purchases I thought I deleted this one. I thought I deleted you I'm like a bad penny. I always they won't let me delete that one. Okay, and then Uncategorized income so that's another dumping ground so so now we have a pretty lean chart of accounts We've removed most of the expenses as we do the bank feeds Most of the bank transactions are actually going to be outflows So because we're spending hopefully smaller dollar amounts than the inflows the revenue right but but we're going to be spending To more different locations and so therefore as we do the bank feeds We can construct our expense accounts in the categories We think are best and if we really think about that and do our due diligence in the first few months Then we can create a chart of accounts that's lean mean Makes sense is customized to our business and we can automate it going forward To make art to make the process really simple if we just start willy-nilly and Just throw stuff in there in the first month of the bank feeds And we try to use QuickBooks chart of accounts and we're not really thinking about what we're doing What's going to happen is you're going to have this this giant mess because you can't automate the system You want to do the first months really well Because those are the foundational items those are the things that are going to repeat those so you want to get it Right on the first few months make it nice lean mean the way you want to see it and then you can automate the system and then and so that's when The promise of QuickBooks being kind of fast That's what they sell and to the bank feeds and more automated and automatic You can only do that after you get it set up properly. So we'll continue with that next time