Basic Accounting for Firearm Instructors – QuickBooks – Part 1

Basic Accounting for Firearm Instructors – QuickBooks – Part 1

QuickBooks for Firearm Instructors

In this post, we will investigate the many aspects a beginning firearm instructors needs to examine as they set up their business. Our posts will be based on QuickBooks 2019;  which is the latest version of  the software that is protected as a private entity.

QuickBooks 2020 and beyond requires us to use their web based version. In other words, Intuit, the makers of QuickBooks wants you to trust that they will protect your financial information on their servers. Perhaps I’m a little paranoid but my financial information is not going to be stored in the cloud. I’m sure they have good security and all but, there’s still the possibility Intuit could get hacked.

Setting Up the Company File

First of all, you need to open a “new” Company File. The wizard will ask you to fill in some basic information. For the Industry, we chose General Service-based Business.

We suggest a LLC however, you can choose another tax profile. Accounting is accounting. The business identity type and structure is up to you and your accountant to determine. LLC’s tend to have less restrictions. If you choose S-Corp or C-Corp; that’s up to you as well. For the purposes of this document, we are choosing a Multi-Member LLC.

If you don’t have an Employer Identification Number, simply enter your social security number for now – you can change this at anytime.

Displays Quick Books Set Up Wizard.

When you are done, select the Create Company Button.

Display’s Quick Books Completion Page.

After you’ve explored a bit, go to the start screen shown below. You can find a shortcut called “Home” under the “My Shortcuts” to the left.

Displays Quick Books Main Page

Using the Chart of Accounts

Now it’s time to work with some data. Go to the top menu bar, choose Lists>Chart of Accounts.This is where you’ll spend some time getting QuickBooks set up.

How to open Quick Books Chart of Accounts

First order of business – set up your bank account. To do this, scroll to the bottom menu bar and select Account>New

QuickBooks is pretty good at providing helpful wizards. On the form that appears, choose the type of account you are creating. In our example we are creating a bank account for QuickBooks to reference when you receive payments and when you write a check. Select the Continue Button.

Next up is a form where we provide the details of our bank account. There’s quite a bit of information that you will need to provide. Two things to watch our for: The Tax-Line Mapping and the Enter Opening Balance button. For the Tax-line Mapping we changed it to <Unassigned>. The reasoning is your bank account is not related to your taxes. If you have an existing account, choose Enter Opening Balance button and provide the last statement ending date and the amount you have in that account. When completed, select the Save & Close button.

On-line Banking

You will receive an option to connect through your your banks on-line service. It’s pretty cool because you can sync to your account and have most of your data entry is performed automatically. Just follow the prompts – we did not connect because this is a QuickBooks account that’s not being used in real time. Your Chart of Accounts screen will look like the screen shot below. Note that the new Bank Account appears in the screen shot. To begin working with your bank account, simply “double-click” on the account name. Alternatively, you can go to the top menu bar and select Banking>Use register.

Setting up “Classes”

The next step is to set up a “Class” or two. “Classes” are used to help refine searches and for reports. Don’t get two hung up on the concept. Think of “Classes” as a substitute word for classifications.

The first “Class” you want to create in an over-all catch-all called “Operations“.

  1. Go to the Edit menu, then select Preferences.
  2. Select Accounting, then go to the Company Preferences tab.
  3. Select the Use class tracking for transactions checkbox.
  4. If you want a reminder when you haven’t assigned a class, select the Prompt to assign classes checkbox.
  5. Select OK.

Once you turn on class tracking, you’ll need to set them up. Go to Lists in the upper menu bar and choose Class List from the drop down option.

The screen will look very blank, but if you look down in the left-hand corner, you will see a menu bar. Select Class>New.

Enter Operations for the name; then choose OK. Since this a Primary Class, you don’t want to press the “Subclass of” button.

In the screen shot below, we created a few additional classes with subclass listings. Now, since you are selling, literally, classes, you might want to create a top-level class called “Classes” and create sub-classes, such as AR-15, CCW, Women Only and so forth.  Now if you want to filter reports based on CCW classes taught, you can use the “CCW Class” as an additional filter.

Let’s Write Our First Check

OK, you’re all excited and you’re ready to use QuickBooks. Let’s assume you’ve spent some money on local business licenses. I’m going to use the Secretary of State for Idaho since that’s where we are based.

I’ll go to the upper menu bar and choose Banking>Write Checks. A check opens up for me and I enter the “Secretary of State – Idaho” as the payee. When I “Tab” to the next field, I receive the following warning: Name Not Found.

To “Quick Add”, “Set Up”, or “Cancel”

We have a few options here. “Quick Add” will enter the “Secretary of State – Idaho” on our “Vendors” list with no contact information. “Set Up” will open a form where we can enter related contact information, account number, so forth. “Cancel” is exactly what it sounds like; the transaction will be canceled.

This is where using your own good judgement makes sense. You’re accountant will scream “Enter Every Vendor“, “Common Sense” states “I cannot enter every fast food restaurant I visit“. Right? In Boise alone, there are at least 6 McDonald’s we visit – Opening and creating an account for each of them would be an insane nightmare; not to mention I would have to choose the correct location. Further, they are all “Independently Owned” . I would have to “Ferret-out” the individual owners. Not reasonable.

So my initial response would be a “Quick Add” for these types of providers.

For “Unique” accounts, or for those we will be working with extensively, we would choose “Set Up“.

So here we are…the State of Idaho…is NOT a “Quick Add” for so many reasons.

Choose “Set Up” and add them as a vendor

Here is what the “New Vendor” window will look like. Simply fill in the information requested.

Press OK. and this is how it looks. Pretty good – no? Not. We have to assign the SOS-Idaho an account for tax purposes at the end of the year. First, let’s show you the screen shot.

Notice the “Account” field at the bottom of the check. QuickBooks is asking for an account to register this check or deduction too. When you click on the arrow, there’s no option for “Business Licenses”.

Add A New Deduction Line

There’s no options presented that make sense. We could choose the “Ask My Accountant” option and simply ask them when we meet. However, we know licenses are tax deductible which warrants a special location on our Profit and Loss statement.  In this instance, we scroll to the top of our options and choose <Add New>.

Imagine that! A new wizard appears. Since we know business licenses are tax deductible, we choose “New Expense”.

From there, we choose the “Continue” button. We are presented with our old friend, the “Add New Account” wizard. Since there are many state licenses, we may want to separate them out for future reporting purposes. In the screenshot below, I create a “Top” container called “Business Licenses”and choose “Save and Close”.

This is how it looks at this point –

Most folks would be comfortable with a generic deduction account. I, however, want to know more in the future. For example, what exactly did it cost me in business license fees to operate in the State of Idaho? So in my case, I want to break this down event further. I select the “Account Arrow” and choose <Add New> once again. I enter “Idaho” and select the checkbox “Subaccount of”. There, I select “Business Licenses”. Save & Close.

If you look at the screen, I just created a category for “Business Licenses” > “Idaho”. But I’m still not happy with that selection. I want to dig deeper. So I add another category called “SOS – Idaho”. Now I know exactly where my money is going when it comes to teaching in the State of Idaho. Look at the Account field: Business Licenses – Idaho – Idaho SOS. COOL! I can now drill down to the costs involved with teaching in Idaho.

Referencing a “Class”

Do you remember earlier I had you set-up a generic, catch-all account called “Operations“? Well here is where our operations class comes into play. A business license is a business license. We have to have them. They are nothing special except they are required for us to conduct business. Since they are “generic” in nature, we use the category or classification “Operations” to complete the process.

At this point, our COA (Chart of Accounts) looks like this –

I can now “Drill-Down” to the smallest details by state.

Conclusion

We have shown you one of the the many details required to run a Firearms Training Business using QuickBooks.

There’s much more to teach. If you enjoyed this post, please let us know. If not, we’ll stop posting. Our goal is to support fellow instructors across the United States and outlying islands. This post took over 5 days to complete. If we are not benefiting anyone, we will stop posting. We want everyone to benefit.

With Kindest personal regards.

David Streb
Managing Partner
Level 1 Firearms Training, LLC
dave@level1firearms.com

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