QuickBooks: Setting up Recurring Transactions

Recurring transactions are always an afterthought for me. I know how helpful recurring transactions are once they are setup, but the setup has been the intimidating part. I used some time playing around with the options, and now I feel much more confident.

Here are the types of recurring transactions and how they are used. The video shows you how to set them up:

  • Scheduled: Automatically creates a transaction on the schedule you set. This is only for transactions that are the same every time because the transaction is actually created and posted. This works well for rents, contracts, debt payments, certain utilities.
  • Reminder: Creates a notification for a transaction on the schedule you set. The transaction isn’t created until you click on the notification. This works well for utilities where the amount changes each month, regular contracted services, regular deposits (e.g. the Sunday offering), and journal entries for monthly investment activity.
  • Unscheduled: This is really just a template you can use to create transactions on demand. I would use these for complicated transactions. The example I give is stock gifts.

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QuickBooks: Bills vs Checks vs Expenses

The other day I was helping a treasurer with a bookkeeping issue in QuickBooks, and I noticed they entered all their expenses through Checks. I had always used Bills and never Checks so I didn’t know what was up with that. Who was doing it correct? Was it possible we were both doing it correct? And what about Expenses? When is it good to use that?

Here’s what I found out. The video shows the differences:

  • Bills: This is for those that are doing accrual accounting because you can post the expense (Bill Date) separately from the payment (Check Date). This also makes it easier to enter a batch of invoices and then not pay them until the due date gets closer. Bills also works with QuickBooks electronic payment services as well as checks.
  • Expenses: Works best for cash basis accounting (expense is posted the date the payment is made). I would only use this for electronic payments the vendor initiates.
  • Checks: If I didn’t print checks but instead hand wrote them, I’d use checks. Again, it also works for cash basis accounting. I also use it when I need to cut a check with a special note in the memo.

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QuickBooks: Understanding Check Memos

I’m spending this summer learning about QuickBooks. There are a number of little things that bug me about how I’m currently using QuickBooks Online, and I want to see what can be done. The first one is the check memo. I almost always print my checks through QuickBooks, but I never knew how to print anything on the check memo. My hand writing isn’t pretty so, when I have to write something in the check memo, it looks unprofessional…almost childish.

There’s two ways that I found to print something in the check memo:

  1. Vendor Details: In the vendor details, there’s an Account No. field. The Account No. always shows up in the check memo when you pay a bill. This is fine for utilities, and other regular bills, but not so great for those unusual ones.
  2. Check: Instead of entering a bill, enter a check. The Memo field in the check actually prints on the check. You can also customize what prints on the check stub by what you enter in the Description.

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How do pay your pastor in QuickBooks

Being a church treasurer is not a job for wimps. The church is working in the world of faith, but try cutting a check that is backed by faith instead of dollars. Try telling the IRS that the mistake on the tax forms is okay because of faith. Treasurers are the ones in middle trying to advance the work of faith without getting in trouble with the law.

Getting the pastor setup correctly in payroll is a big victory. Most payroll software wasn’t designed with pastors in mind. They were an afterthought so that’s why it’s sometimes tricky. Here’s the big things that often cause issues:

  • What to do with the Housing Exclusion? The housing exclusion is the part of the pastor’s salary that is designated for housing to reduce taxable income. You usually need to break this out.
    • Example: Salary of $45,000 with $5,000 housing exclusion: Enter $40,000 for salary and $5,000 Clergy Housing (Cash)
  • What to do with Tax Withholding? Pastors are employees for IRS purposes but self-employed for Social Security purposes. That means you SHALL NOT withhold for Social Security and Medicare. It’s optional to withhold for income tax.
    • There is usually a check box or button to make the pastor exempt from Social Security and Medicare. Find that and click it.
    • Ask the pastor if they want income tax withheld and how much they want withheld per paycheck. They should fill out the W-4 to confirm this by writing “EXEMPT” in Step 1.c…even though that’s not an option. Then enter the amount to withhold per paycheck in Step 4.c.

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Families First Tax Credit for Lay Employees

Disclaimer: This is general tax advice so don’t sue me. I had almost forgotten about the Families First Coronavirus Response Act (FFCRA) until I got a call from Bismarck McCabe UMC. They were on top of things and knew more than I did. The only question we still have is if clergy are covered.

Long story short, FFCRA gave employees an extra 80 hours of sick leave (or proportional if part-time) if they or a member of their family was directly affected by COVID. This is different than being affected by the shutdowns. You can see more about this in the links below. To help pay for this sick leave, you can claim a payroll tax credit! This is good news for churches that already file a quarterly Form 941.

Here’s what makes this credit so good:

  • Dollar for Dollar: You get reimbursed 100% for this sick leave in most cases. This includes health insurance costs.
  • Includes Health Insurance Costs: While few lay employees receive health benefits from the church, that portion can also be applied to the credit.
  • Refundable: This credit is refundable. A lot of our churches don’t pay in much for payroll taxes so it’s nice to know that, when the credit is larger than the taxes, you’ll get a check back.

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Merging Accounts in QuickBooks

One of my pet peeves: old accounts cluttering up my financial reports. As the ministry or business operations evolve, this is naturally reflected in the chart of accounts. The problem is when you don’t know how to clean it up. I walk you through cleaning up old accounts through merging them.


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Merging Vendors in QuickBooks Online

I just ran across one of my pet peeves…the duplicate vendor. Whenever I run across one, it makes me feel like I’m being careless and sloppy. How could this happen. Just accept it that duplicate vendors happen and now let’s fix it.

I’m sure other church software systems have their own way of fixing this. Some you are forced to to just inactivate the vendor you don’t want. With QuickBooks, the fix is not at all intuitive…which is kind of ironic. You have to name the duplicates the exact same thing.

Check out the video below:


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