Want (or NEED) to know how to use QuickBooks for your film production accounting?
Like many other activities in QuickBooks, film production accounting can be done in a few different ways while achieving the same effect, but the step by step overview below will give you a general idea of how to set-up QuickBooks to work with your budget and provide cost-to-date actuals as well as variance reports.
- The steps described below will explain how QuickBooks can be customized to work in conjunction with film &/or video production budgeting software (EP, Movie-Magic, AICP, PointZero etc.).
- Once you become familiar with setting it up, it’s easy to quickly reproduce for new projects.
- This article was based on QUICKBOOKS PREMIERE ACCOUNTANT VERSION, but these same steps work with QUICKBOOKS PRO, QUICKBOOKS MAC, or QUICKBOOKS ONLINE though there may be slight differences, or loss in functionality if not using QUICKBOOKS PREMIERE.
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*If you’re not feeling comfortable enough with QuickBooks or accounting to handle this on your own, or if you need more guidance,please feel free to CONTACT ME or BOOK A 15 MIN PHONE CALL for more individualized (&/or expedited) help.
Ready to get started?
STEP 1: QUICKBOOKS “CHART OF ACCOUNTS”
FOR FEATURES: Create a complete Quickbooks Chart of Accounts – Set-up g/l accounts in QuickBooks to correspond to your budget line nos. and descriptions. All budget lines should be set-up as “expense” type accounts in Quickbooks. You’ll also need to create QuickBooks bank & credit-card accounts for actual bank &/or credit card account(s) that will be used for payments. You will need to set-up Petty Cash accounts as well. I usually set-up a header and sub-accounts for each person P.C is issued to; this way you can see how much is outstanding at any given time. (FYI – “Petty Cash” is considered a “Bank” type of account for QuickBooks purposes.)
-TIP: Once you have your budget’s line items set up in QuickBooks to coordinate with your budgeting software, the same lists can be used again and again – just export the “Inventory item list” and “Chart-of-accounts” from the current QB company file, save it on your hard drive, and both lists can be imported into another QuickBooks company file whenever you want to set-up/track a new project.
IMPORTANT: IF YOU ARE NOT WORKING ON A SINGLE FEATURE AND DISSOLVING YOUR PRODUCTION COMPANY, ie if you create documentaries, content or do work-for-hire, YOU PROBABLY WANT TO USE QUICKBOOKS “ITEM LIST” in conjunction with the QuickBooks JOB COSTING MODULE, Estimates, Purchase Orders etc. and use standard G&A expense accounts for your office overhead and fixed costs. Run your production costs through QB job costing by setting up items that correspond to your budget (check the box “service performed by subcontractor or partner”) and reference the same “Items” on your PO’s, Estimates & transactions. (QuickBooks is a flexible program and there are many ways to use it, I explain one option here but please feel free to contact me to discuss other options, and I can help you find the best solution for your situation.)
STEP 2: QUICKBOOKS “ITEM LIST”
Set up your Quickbooks Inventory Item List by line number/description (select the “Service type” inventory item when prompted) to correspond to your budgeted categories/sub-categories.
–TIP: Getting your Chart of Accounts and Inventory items set-up within Quickbooks can can be sped up tremendously, by importing the line item numbers/descriptions into QuickBooks from your budgeting software via Excel. Each list will need to be formatted slightly differently within Excel before it can be imported to Quickbooks, but both lists are basically mirroring the lines on your budget:
- Setting-up “Service type Inventory Items” allows creation of Estimates and Purchase orders. Both Estimates and Purchase Orders are “non-posting” transactions in QuickBooks but they enable Quickbooks variance reporting functionality.
- When setting up your QB items, click the box that says “Service performed by a subcontractor or partner” to enable income vs expense tracking and create estimated to actual reports.
STEP 3: BUDGET(s)
For tracking multiple budgets within one QB company file, you may enter your project’s budget using an Estimate.
Getting used to using these QuickBooks Items can be frustrating at times in the beginning but it quickly becomes habit once you understand how it works.
STEP 4: PURCHASE ORDERS
Enter your Purchase Orders. (Also may be imported if you are recreating your show in QuickBooks after the fact and have a lot of data to enter.) In Quickbooks, purchase order lines must be set-up for each payment on a separate line of the PO. You should enter the weekly or other payments to be made line by line. This way, each line payment is checked off when it’s been paid so Quickbooks can calculate the amount of the purchase order that’s been paid vs the amount still owed.
STEP 5: VENDOR/CONTRACTOR “BILLS”
Enter Vendor/Crew/Location/etc Invoices (as “Bills”) against their P.O.’s. Selecting the proper P.O. Number and P.O. Line for each Bill you enter will close out the appropriate lines on the Purchase Orders that you entered previously (in step 3 above), but remaining (“unpaid”) P.O. lines will remain “open”.
If you are using QuickBooks in real-time to track/pay production expenses, at this point you may use Quickbooks to Pay the Bills that you entered in the previous step. If you happen to be recording these transactions after-the-fact, manually enter payments made against the bills you entered via check, wire, debit or however the expense was paid (see below for credit card activity). If you have not yet set-up any bank and/or credit card accounts to record vendor/crew/pc payments, you will need to set them up in your chart-of accounts prior to entering any payments.
TIP: If you want to use QuickBooks to manage your production in real-time, plan in advance by ordering QuickBooks check stock, so you can print your checks and simultaneously post them straight into your QuickBooks actuals with the least effort. (I prefer using the Voucher-style check stock, with one check per page.) Pre-printed, numbered duplicate/triplicate P.O. forms are also available for printing directly from Quickbooks.
STEP 6: CREDIT CARDS
Be sure to enter any bills paid with credit cards that you track on your books as “Credit Card Charge(s)” and NOT as “Bills”, because in QuickBooks credit card payments are entered differently than payments by check/bank account. When you pay a vendor with a credit card, it’s recorded as a “Credit Card Charge” because you are increasing the balance on your credit card account to pay that particular vendor. When you write a check to pay down the credit card balance, you are paying the card down — so the charge was recorded when it was made. It’s extremely important that the credit card account be reconciled for each credit card statement, as this is the only way to insure all activity has been recorded correctly during the statement period and verify that the QuickBooks balance is accurate. Everyone makes keystroke errors from time to time, especially when recording transactions after-the-fact…Merchant processing and vendors make mistakes and errors too; that is why credit card accounts (just like bank accounts) must be reconciled against statements to insure they are BOTH correct.
STEP 7: PETTY CASH
When distributing Petty Cash, in Quickbooks this is recorded as a check or journal entry. Whether you distribute cash or write a check to the recipients of P.C., charge it to the Petty Cash “bank” account you set-up in QuickBooks (in step #1). Record Petty Cash Envelopes/Expenses/Charges as Journal Entries within QuickBooks. Use the envelope number for the journal entry number. You can enter simple transactions directly into the register, or open up a journal entry for distributing expenses against many lines. Vendor names can be inserted in the name column for tracking if needed. The net effect of your PC journal entries should typically increase line item expenses and decrease amount of available petty-cash on hand in QuickBooks. Media Services also offers Petty Cash toold for free that work on PC or Mac, if you need help managing expenses and figuring out envelope totals before entering into QB.
STEP 8: PAYROLL
Most production payroll companies offer uploading of your payroll data to any software, including QuickBooks. When you supply them with your QuickBooks accounts and coded time-cards they will provide a digital file which you can upload into Quickbooks to record your various payroll line items for each payroll run.
You may have reached “THE END” of this article, but there are a few things you need to make sure you DO NOT overlook, including Bank & Credit Card statement Reconciliations: All bank, credit card & loan/liability QuickBooks g/l accounts need to be reconciled as soon as possible every time the bank/financial institution issues a new statement.
VERY IMPORTANT: QuickBooks won’t ever work exactly like Movie Magic or Pointzero, QB is made to manage the whole business; it contains tools to generate financial statements as well as to help manage and monitor your business finances — it’s to the business owner(s) advantage to learn how it works and become familiar making/sending Estimates/Invoices and making QuickBooks deposits, as well as entering/paying bills and writing/printing checks. This activity will match up with downloaded bank transactions and your reconciliations will become effortless ;)
I hope I have given you a decent overview above – I wanted to illustrate that Quickbooks may not be designed perfectly for film/video production accounting, but it can do a decent job of tracking everything from budget/costs/commitments/1099 data (and more)…
And your accountant/CPA/tax person will be able to do his job better with QuickBooks financial statements.
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Need Help, Have Questions, or Want to Know More about Using QuickBooks for Tracking and Actualizing your Film, Video or Event Project Budgets?
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