Making FreshBooks and an Accounting Package (like QuickBooks) Work Together Part 2: Workflow #1 – Using General Account Entries

2^nd part of a three part series on making FreshBooks work with a double entry accounting program. Check out Part 1: Overview and Rules. The second workflow can be found in Part 3: Workflow #2 – Entering in Each Transaction

This is the first workflow of two. This workflow is ideal if your time is a major consideration and you do not mind pulling reports from two places – FreshBooks and an accounting package. The reports you run from FreshBooks are likely ones you want to see everyday anyway so you can follow up with clients and forecast receivables.

As reminder, you may not need an Accounting package in addition to FreshBooks. You should read these two posts when deciding: Do I really need an Accounting Package and Part 1: Overview and Rules

This workflow is based on entering in month or quarterly totals for both new receivables and paid invoices. FreshBooks is your primary data source and all you will have in your accounting program will be your total income – copied over from FreshBooks.

Reports you may need from FreshBooks:

Workflow Details of Suggested Workflow 1 (Total Journal Entry Based):
QuickBooks 2008 will be used as an example of an Accounting package throughout the workflow

1. In QuickBooks, setup a FreshBooks Income “Client” in your accounting program– where all your FreshBooks related income is to be attributed to
2. In FreshBooks, pull your revenue by client report – “Total billed” from FreshBooks (good for monthly reconciliations)
   • You can also do this by pulling your “Invoice details” report from FreshBooks for a specific time period using “Invoice Date”
   • Scroll to the bottom to get “Invoice Totals” (billed) under “Invoice Report Summary”

   
   

3. In QuickBooks, select make Journal Entry (usually under “Company”)
4. Select Accounts Receivable under Account  – Enter in Total Invoiced (Billed) for Time Period under Debit – attribute to “FreshBooks Income Client”
   • Sales taxes will be entered in later.
5. Select Income under Account – Enter in Total Revenue for time period under Credit – attribute to “FreshBooks Income Client”

1. Save Journal Entry
2. Pull your revenue by client report – “Total Collected” from FreshBooks (good for monthly reconciliation)
   • You can also do this by the “Payments Collected” report for individual payments throughout your time period (good for other time periods)
   • Scroll to bottom for Total Payments Received

1. Select make Journal Entry (usually under “Company”)
2. Select Accounts Receivable under Account  – Enter in Total Collected for Time Period under Credit – attribute to “FreshBooks Income Client”
3. Select Cash under Account – Enter in Total Revenue for time period under Debit – attribute to “FreshBooks Income Client”

1. Save Journal Entry
2. Repeat steps 2-11 on the time interval you choose – remember this is an on-going balance so your collected amounts will be attribute to invoices from pervious time periods. This means the numbers will never directly match to your FreshBooks account.

Sales Taxes:

The final part of this workflow is recording Sales Taxes in your accounting program from FreshBooks as they are included in the total billed from your FreshBooks invoices. You essentially need to remove the sales taxes from your top line which needs to be reconciled with your accounting program.

1. In FreshBooks, pull your “Tax Summary” report based on the time period you are entering it for and as “Billed (Accrual)”

1. Select make Journal Entry
2. Debit your revenue by the total for the time period
3. Credit your “sales tax payable” and attribute the appropriate vendor to it

Summarized entries:

Invoice/Total Income = Revenue/Income (credit, right) – A/R (debit, left)

Paid Invoice / Total Collected = A/R (credit, right) – Cash (debit, left)

In the next workflow, we’ll will cover how to transfer more specific information over into your accounting program.