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You can personalize QuickBooks in several ways, to help you work the way you want to work. You can choose to use (or not use) the Icon Bar, the Open Windows List, the Home page, and you can set personal preferences for several different areas in QuickBooks. In this article, we’re going to show you how to hide or view various tools, how to customize the Home page, and how to set several of the available personal preferences. We’re not going to show you absolutely everything you can do with each tool, but we will cover the major actions you can take.

The Icon Bar

After you work in Windows programs for awhile, you get used to buttons up at the top of the screen just below the menus—buttons that act as shortcuts to commands you use regularly. In QuickBooks, these buttons appear on the Icon Bar.

You can display or hide the Icon Bar by opening the View menu and clicking Icon Bar. If you saw a check to the left of the command when you clicked it, then clicking the command hid the Icon Bar. If you didn’t see a check to the left of the command, then clicking the command displayed the Icon Bar.

You can add buttons to the Icon Bar, remove buttons you don’t use from the Icon Bar, change the picture or text for a button, move a button to a new position on the Icon Bar, and group buttons by adding separator lines between buttons. Open the View menu and click Customize Icon Bar to display the Customize Icon Bar dialog box shown in Figure 1.

Figure 1. Customize the buttons that appear on the Icon Bar from this box.

When you click the Add button, QuickBooks displays the Add Icon Bar Item dialog box you see in Figure 2. Select the item you want to add, and, if you want, change either the label or the description.

Figure 2. Add a button to the Icon Bar.

You also can add a button to the Icon Bar to open any window in QuickBooks. Suppose, for example, that you have more than one checking account and want different buttons to open the registers of each of your checking accounts. While viewing the register for the appropriate account, open the View menu and click Add to Icon Bar. In the Add Window to Icon Bar dialog box that appears, you can again, change the label or description of the button.

The Open Windows List

OK, suppose you’re not a “button bar” type of person. Suppose, instead, that you often work with lots of open windows and need to navigate between them—and you find opening the Window menu and clicking the appropriate window really cumbersome. The Open Window List is for you. Open the View menu and click Open Window List. QuickBooks displays the bar you see on the left side of Figure 3, which displays a list of all open QuickBooks windows. In Figure 3, all of the listed windows are minimized at the bottom of the screen.

Figure 3. The Open Windows List.

From this window, you have “one-click” access to all open QuickBooks windows; you can click any listed open window to switch immediately to that window.

Setting Personal Preferences

QuickBooks contains a large number of personal preferences that you can set in the Preferences dialog box. Open the Edit menu and click Preferences. For each category listed on the left, you’ll find two tabs: My Preferences and Company Preferences. You may not find options on each tab for each category, but, if you poke around, you’ll find a large variety of settings that you can change.

For example, when you click Checking on the left, you’ll find that you can use the My Preferences tab to define the bank account you want to use by default whenever you open the Write Checks, Pay Bills, Pay Sales Tax, or Make Deposits windows (see Figure 4).

Figure 4. Select the bank account you want to use whenever you open specified windows.

On the Company Preferences tab, you can, for example, choose to print account names on vouchers and change the check date when you print checks to the date you print the checks rather than the date you entered the transaction in QuickBooks.

You can set so many options to control the behavior of QuickBooks that we can’t properly cover them here. We urge you to click each category and review the choices on each tab. If you are unsure about the function of an option, click the Help button in the Preferences dialog box. QuickBooks help provides specific information on almost every option.

Working with the Home Page

QuickBooks 2006 contains the new Home page, shown in Figure 5, which tries to help you see how your business tasks fit together by organizing tasks for customers, vendors, employees, banking, and overall company activities. Within each group of tasks on the Home page, you’ll see arrows pointing between tasks; the arrows intend to indicate the order in which you may perform tasks. To display a task’s window, you can click its button on the Home page. As you point at any button on the Home page, QuickBooks displays a ToolTip describing the function.

Figure 5. The new Home page in QuickBooks 2006.

You can open the Vendor Center, Customer Center, or Employee Center by clicking a button at the left edge of the Home page for the appropriate task group or by clicking the appropriate button on the Navigation Bar.

Tip: You can hide and display the new Navigation Bar that appears to the left of the Icon Bar like you hide or display the Icon Bar. Open the View menu and click Navigation Bar. The Navigation Bar also contains buttons to display the Customer Center, the Vendor Center, the Employee Center, and the Report Center. And, you can drag the Navigation Bar below the Icon Bar to make more room for the icons on the Icon Bar.

From the Account Balances list displayed on the Home page, you can see balances for bank and credit card accounts; QuickBooks updates these balances automatically as you work. To open the register for any listed account, double-click anywhere in the row of the account you want to view. And if you want to hide these balances for privacy, you can click the minus button beside Account Balances. You also can set user security so that the Account Balances list does not appear on a user’s Home page.

You can customize the tasks that appear on the Home page. Click the Customize Home page and set preferences link below the Account Balances list. QuickBooks opens the Preferences dialog box, displaying the Company Preferences tab of the Desktop View category (see Figure 6).

Figure 6. You can add or review features from the Home page.

Remove the check beside any listed feature to remove it from the Home page. You can remove the grayed out features from the Home page if you first disable their related features. For example, to remove the Enter and Pay Bills feature, you must first disable Inventory; click the Inventory link at the bottom of the page to switch to the Company Preferences tab of the Purchases & Vendors category. Then, remove the check from the Inventory and purchase orders are active box. When you click the Desktop View category to switch back, QuickBooks will prompt you to save the change to your settings. After you save the change, the Company Preferences tab of the Desktop View category will reappear and you will be able to remove the check from the Enter and Pay Bills feature.

If you like to have something like the Home page available but don’t want to look at it all the time, you can change your preferences so that QuickBooks does not display the Home page each time you open your company.

From the My Preferences tab of the Desktop View category, remove the check from the Show Home page when opening a company file checkbox and click OK. The next time you open your company, the Home page will not appear.

Processing 1099s

Printing 1099s involves more than simply printing the forms; you should make sure that you have correctly set up your preferences to accurately track payments to 1099 vendors, review vendor name, address and tax ID information, review 1099 payments you made to 1099 vendors, and print 1099s.

You can use the 1099 and 1096 Wizard to help you with these tasks; if you prefer, you can use our technique, which gives you a little more help when verifying the accuracy of 1099 payments.

In this article, we’ll show you how to start the 1099 and 1096 Wizard, and then we’ll walk you through our technique.

The 1099 and 1096 Wizard

The 1099 and 1096 Wizard walks you though running two reports to verify vendor name, address, and tax ID information and payments to 1099 vendors. It also help you check your 1099 preferences and then print 1099s and the 1096 Summary form.

To start the 1099 and 1096 Wizard, click File, point to Print Forms, and click 1099s/1096. The window shown in Figure 1 appears.

Figure 1. The 1099 and 1096 Wizard.

Click each of the buttons in this window to print reports that verify 1099 information, verify 1099 setup, and print 1099s.

We prefer our method because we feel that it helps you verify the accuracy of 1099 payments in more detail. Much of our method is covered in the 1099 and 1096 Wizard, so we’ll show you the appropriate dialog boxes and reports as we walk you through our method.

Setting up Preferences

To be able to process 1099s in QuickBooks, you must turn on the feature. Follow these steps:

1. Open the Edit menu and click Preferences.

2. In the Preferences box, click the Tax:1099 icon on the left.

3. Click the Company Preferences tab (see Figure 2). Click the Yes option button at the top to enable 1099 printing.

4. In Box 7, identify the QuickBooks account you use to track payments to 1099 vendors. If necessary, change the dollar amounts in the Threshold column.

Figure 2. Set up to process 1099s.

Contact the IRS to identify current thresholds; if you subscribe to the Tax Table Update Service, thresholds will automatically be updated for you.

Designating a 1099 vendor

QuickBooks will print 1099s for vendors that you correctly identify as 1099 vendors. Start by customizing a Vendor Contact List report to include the vendor’s name and address information and then filter the report to include only 1099 vendors. Print the Vendor Contact List report from the Vendor List window (click the Reports button). Once the report appears on-screen, click the Modify Report button and make the following changes:

· On the Display tab, make sure that checks appear in the Columns box next to the following fields: Vendor, Address, Tax ID and Eligible for 1099.

· On the Filters tab, Click the Eligible for 1099 filter and then click the Yes option button (see Figure 3).

Figure 3. Filter the report to show information for only those vendors set up as 1099 vendors.

Review the resulting report (see Figure 4), making sure that all 1099 vendors appear on it and that their information is complete, including a zip code and a Tax ID (a Federal Employer Identification number or Social Security number).

Figure 4. A report of information for all vendors set up as 1099 vendors.

If a 1099 vendor doesn’t appear on the report, you need to place a check in the Vendor Eligible for 1099 check box on the Additional Info tab of the Edit Vendor box for that vendor (see Figure 5).

If the Tax ID information is missing for any vendor, you need to add it on the Additional Info tab of the Edit Vendor box for that vendor (refer to Figure 4).

Figure 5. Make sure that you identify eligible 1099 vendors and supply their Tax ID information.

If any address or zip code information is incorrect or missing, supply if by clicking the Address Details button on the Address Info tab of the Edit Vendor box.

Verifying 1099 information

Before your print your 1099s, use two reports in QuickBooks to verify that the information will be correct. Use the 1099 Summary Report to verify vendors and amounts. Use the 1099 Detail Report to verify accounts against which you posted payments to 1099 vendors.

In Figure 6, you see the 1099 Summary Report. By default, it shows only those vendors who meet all of the following criteria:

· The vendors are set up as 1099 vendors

· You have made payments to the vendors that you posted against designated 1099 accounts.

· The payments have exceeded the 1099 threshold requirement.

Figure 6. The 1099 Report.

To verify the amounts on the default report, double click any amount that seems too low; QuickBooks displays the detail of the transactions that comprise the amount for the vendor. If a transaction is missing, you probably posted it to an account other than the designated 1099 account.

To verify that you have correctly identified all 1099 vendors, open the 1099 Options box on the report and change Only 1099 Vendors to All Vendors and then compare that version of the report with the default version. If additional vendors appear on the second report, you have posted payments against the 1099 account for a vendor that you didn’t set up as a 1099 vendor. Correct the vendor information and reprint the report.

To verify accounts, change the 1099 Options to All Accounts and compare the default version with the modified version of the report. QuickBooks displays an Uncategorized column on the report. Non-zero amounts in this column indicate that you have paid a 1099 vendor using an account that you didn’t designate as a 1099 account in the Preferences box. While you payment might be correctly applied to a non-1099 account, you should double-check the transaction. It is possible that you may need to change the accounts listed in your 1099 preferences.

You can double-click any amount on the 1099 Summary report that you want to explore in greater detail to display the 1099 Detail report, which shows the transactions that comprise the amount and the accounts to which the transactions were applied.

Aligning 1099s

Before you actually print 1099s in QuickBooks, you should test the alignment of the 1099 form in your printer. You check the alignment by printing a sample 1099; follow these steps:

1. Load blank paper into your printer.

2. Open the File menu and click Printer Setup.

3. In the Printer Setup box (see Figure 7), select 1099s/1096 as the Form Name.

Figure 7. Select the 1099s/1096 form.

4. Click the Preview button.

5. When the preview appears on-screen, click the Print button.

QuickBooks prints a sample and redisplays the Printer Setup dialog box. Take the 1099 that printed onto blank paper and place it in front of a 1099 form. Then, hold the pair of pages up to light to see if everything aligned properly.

If things don’t line up nicely, click the Align button in the Printer Setup box. QuickBooks displays the Fine Alignment box shown in Figure 8. Enter the amount of vertical or horizontal adjustments you want to make in 1/100 inch increments. Use negative numbers to move information down or to the left; use positive numbers to move information up or to the right. Click the Print Sample button, and QuickBooks prints a sample that contains the word “Sample” in a grid. You can compare the preprinted form with the sample and use the position of the word “Sample” in the grid to judge how much further to adjust alignment.

Click OK when you finish aligning to redisplay the Printer Setup box. Click OK again to close the box.

Figure 8. Enter alignment adjustment amounts.

Printing 1099s

To print 1099s, open the File menu, point to Print Forms, and click 1099s/1096. In the 1099 and 1096 Wizard window, click Print 1099s. QuickBooks displays the Printing 1099-MISC and 1096 Forms box in which you specify a date range for the 1099s you want to print. After you click OK, QuickBooks displays the Select 1099s to Print window shown in Figure 9.

Figure 9. Select vendors for whom you want to print 1099s.

QuickBooks doesn’t require that you preview 1099s the way that you must preview W-2s. When you click Print 1099, QuickBooks displays the Print 1099s box, where you can set up printer information. Click Print to print 1099s.

Summary

With the information presented in this article, you can verify that the information that will appear on 1099s that you print will be accurate.

Tip: When you want to see the Home page, click the Home button on the Navigation Bar.

Summary

QuickBooks is flexible enough to provide you with a variety of options, to customize the way you work to suit your work style.

Printing W2s and W3s in QuickBooks 2005

Sometime in early 2006, you will need to produce W-2s for every employee who worked for you at any time during the 2005 calendar year. In this article, we’ll describe the process using QuickBooks 2005. In QuickBooks, you review W2’s and W3’s as you print them.

Editor’s Note: The process for preparing Form W-2 and W-3 has changed somewhat for QuickBooks 2006; since QuickBooks 2006 only became available at the beginning of December, we have chosen to assume that most of our readers are still using QuickBooks 2005 to prepare Forms W-2 and W-3.

Note: Users of QuickBooks Payroll Tax Service don’t need to print these forms because the service prepares them for you. If you use other outside payroll services, you may not need to prepare these forms; check with your service.

Reviewing and printing W-2s

You must review W-2 information on-screen in QuickBooks before you can print the information. When you review W-2s on-screen, you can edit the information and make changes, as necessary.

Before you review W-2s, we suggest that you produce a Payroll Summary report for the year to use when reviewing W-2’s. We suggest that you customize the report to make it easier to use. Follow these steps:

1. Open the Reports menu, point to Employees & Payroll, and click Payroll Summary.

2. Change the Dates field to the previous year.

3. Click Modify Report and, on the Display tab, remove the check from the Hours box and the Rates box (see Figure 1).

Figure 1. Customize the Payroll Summary report so that you can use it to compare to W-2’s as they appear on-screen.

To review W-2s, follow these steps:

1. Open the Employees menu and click Process Payroll Forms.

2. In the Select Form Type box that appears, click Federal form and click OK.

3. In the Select Payroll Form box, click Annual Form W-2 – Wage and Tax Statement and click OK. A message appears, explaining that QuickBooks is using current data to compute the calculated values on W-2s. Click OK.

4. In the Process W-2s box that appears, select the employees for whom you wish to review W-2s and click Review W-2 (see Figure 2).

Figure 2. The Process W-2s dialog box.

W-2s appear in the Employee W-2 window, which looks like the one you see in Figure 3. Compare the numbers you see on the W-2 to the values that appear on your Payroll Summary report to determine if you need to make any changes.

Tip: Between January 1 and April 30, QuickBooks displays W-2 information for the prior year; between May 1 and December 31, QuickBooks displays W-2 information for the current year.

Figure 3. Review your W-2s before printing them.

You can make changes in all numbered boxes; if a magnifying glass mouse pointer appears as you move the mouse over a box, double-click to make a change. In the Adjustment box that appears (see Figure 4), you can enter an adjustment description and the adjustment amount. Use negative numbers to reduce amounts. Click OK to redisplay the Employee W-2 window you saw in Figure 3.

Figure 4. Make changes to any of Boxes 1-11 on Form W-2 by double-clicking to display an adjustment box.

In the Employee W-2 window, click Next to continue to review W-2s; when you finish, click OK.

The Process W-2s dialog box reappears, showing that you’ve reviewed W-2s; you’re ready now to print W-2s. But before you print the forms, you should check the form alignment on your printer. Click Done to close the Process W-2s box; we’ll return to it later.

Aligning forms

Before you actually print W-2s in QuickBooks, you should test the alignment of the W-2 form in your printer. You check the alignment by printing a sample W-2; follow these steps:

1. Load blank paper into your printer.

2. Open the File menu and click Printer Setup.

3. In the Printer Setup box (see Figure 5), select W-2 Pre-Printed Form as the Form Name.

Figure 5. Select the W-2 form.

4. Click the Preview button.

5. When the preview appears on-screen, click the Print button.

QuickBooks prints a sample and redisplays the Printer Setup dialog box. Take the W-2 that printed onto blank paper and place it in front of a W-2 form. Then, hold the pair of pages up to light to see if everything aligned properly.

If things don’t line up nicely, click the Align button in the Printer Setup box. QuickBooks displays the Fine Alignment box shown in Figure 6. Enter the amount of vertical or horizontal adjustments you want to make in 1/100 inch increments. Use negative numbers to move information down or to the left; use positive numbers to move information up or to the right. Click the Print Sample button, and QuickBooks prints a sample that contains the word “Sample” in a grid. You can compare the preprinted form with the sample and use the position of the word “Sample” in the grid to judge how much further to adjust alignment.

Click OK when you finish aligning to redisplay the Printer Setup box. Click OK again to close the box.

Figure 6. Enter alignment adjustment amounts.

A word about W-3s

You align W-3s the same way you align W-2s. You don’t need to review W-3s on-screen before you print them, but you cannot print W-3s until you have reviewed all W-2s. You should verify W-3’s by printing 941 reports for all four quarters of the year and making sure that the totals match the totals reported on the W-3’s.

Printing W-2s & W-3s

Now you’re ready to print W-2s and W-3s. Follow these steps:

1. Open the Employees menu and click Process Payroll Forms.

2. In the Select Form Type box, click Federal form and click OK.

3. In the Select Payroll Form box, click Annual Form W-2 – Wage and Tax Statement and click OK. Click OK again when QuickBooks displays the message about using actual numbers without adjustments.

4. In the Process W-2s box that appears, place checks next to the names of the employees for whom you wish to print W-2s.

5. Click Print W-2s. QuickBooks displays the Print Form W-2 box, in which you can select Blank Paper if you are a Payroll Service subscriber; otherwise, select Pre-printed form. Click OK.

6. QuickBooks displays the Print W-2s box, in which you can select a printer.

7. Click Print.

When QuickBooks finishes printing W-2s, the Process W-2s dialog box reappears, showing the status of each employee. You’ll see checks in the Reviewed and Printed columns for all those W-2s that you have printed.

Once you have printed W-2s for all employees, you can click the Print W-3 button and QuickBooks will print a W-3 for you. The steps and process for printing W-3s is the same as the preceding steps to print W-2s, where you can choose the form and a printer.

Summary

Now you know how to review and print W-2s with confidence.

Handling Bonuses and Fringe Benefits

Many companies pay employees bonuses at the end of the year. Also, at the end of the year, many companies include, in a paycheck, the income and payroll taxes associated with non-cash fringe benefits, such as the value of personal use of a company-furnished car. In this article, we’ll show you how to handle these “payroll extras.”

Paying Bonuses

Bonus pay is taxable and therefore bonus paychecks should be created using the payroll features in QuickBooks. The method you use to create a bonus paycheck depends on the payroll service to which you subscribe.

Users of QuickBooks 2005 or later who also subscribe to the Enhanced Payroll Service can use a new feature to create a bonus check. You can supply the net amount of the bonus and let QuickBooks calculate gross pay and all the taxes for you. The process is often referred to as “grossing up” a check.

If you intend to create a bonus check by grossing up, you must create a separate bonus check because QuickBooks does not permit you to include any payroll items in the Earnings section other than the bonus.

If you do not subscribe to the Enhanced Payroll Service, QuickBooks cannot gross up a bonus check for you. So, you can include bonus pay on a regular paycheck or write a separate check. In this article, we’ll include bonus pay on a regular paycheck.

Reporting Non-Cash Fringe Benefits

When you permit an employee to use a company-owned car, you aren’t giving the employee cash, but you must include the value of non-cash fringe benefits in the employee’s gross income and withhold payroll taxes accordingly. You should include fringe benefits on a regular paycheck so that you’ll have regular cash earnings from which to withhold taxes.

The amount of taxes you need to withhold is calculated from an IRS table that uses the original cost, the fair market value, or lease value of the car and the percentage of personal use the employee makes of the employer-owned vehicle. If the employee doesn’t report percentage of personal vs. business use to you, you must assume that 100% of the car was used personally and calculate taxes due based on 100% of the value of the car. If the employee reports the percentage of personal vs. business use, the fringe benefit amount is calculated by multiplying the value by percentage of personal use. Ask your accountant to make the calculation for you.

Setting Up Payroll Items

To report a non-cash fringe benefit such as the personal use of a company car, you need a payroll item. And, regardless of whether you subscribe to the Enhanced Payroll Service (and therefore intend to gross up checks), you also need a Bonus payroll item.

Open the Lists menu and click Payroll Item list. Then, click the Payroll Item button at the bottom of the window and click New. The Add New Payroll Item wizard begins. On the first screen of the wizard, click Custom Setup and click Next. You see the window shown in Figure 1.

Figure 1. Select the type of payroll item you want to create.

To set up the non-cash fringe benefit for personal use of a company car, click Company Contribution and click Next. Supply a name for the payroll item—we called ours “Company Car”—and click Next. On the Agency for company-paid liability screen (see Figure 2), select your payroll expense account for both the liability and the expense account; then click Next. QuickBooks will display a warning message about using the same account; click Yes.

Figure 2. Select the same account for both the payroll liability and the payroll expense.

A non-cash fringe benefit should have no affect on your company’s books, so selecting the same account here makes QuickBooks debit and credit the same account, negating the effect of the transaction on the company’s books.

On the Tax Tracking Type screen, select Fringe Benefits from the list and click Next through the rest of the wizard until you reach the last screen, where you click Finish. When you select Fringe Benefits, QuickBooks suggests that all taxes apply to the payroll item and QuickBooks automatically displays the amount for the payroll item in Box 14 on the W2. If your company car should be included in gross wages to calculate some but not all taxes, change the settings for taxes before you click Finish. As of this writing, the company car non-cash benefit is subject to FIT, Social Security, and Medicare.

Check your Circular E or with your accountant to identify the taxes affected by the benefits you offer.

Typically, bonuses are treated like regular wages. To create the Bonus payroll item, press Ctrl+N to start the wizard again. Use the Custom Setup option again and on the Payroll item type screen (refer back to Figure 1), click Wage and then click Next. On the Wages screen (see Figure 3), click Bonus and then click Next. Supply a name for the payroll item—we called ours “Annual Bonus”—and click Next. On the last screen of the wizard, QuickBooks suggests you use your payroll expenses account to track this payroll expense; click Finish.

Figure 3. Select Bonus as the type of wage payroll item you want to create.

Bonus Checks and the Enhanced Payroll Service

To create a grossed-up bonus paycheck when you subscribe to the Enhanced Payroll Service, remember to create a separate check for the bonus and follow these steps:

1. Open the Employees menu and click Pay Employees. QuickBooks displays the Select Employees to Pay window.

2. Click the Enter Hours and preview check before creating option button.

3. Select the employee(s) for whom you want to write grossed-up bonus checks.

4. Click Enter Hours and Preview Check Before Creating.

5. Click Create. QuickBooks displays the Preview Paycheck window (see Figure 4).

6. Remove all payroll items from the Earnings section and from the Other Payroll Items section.

7. Add the Bonus payroll item to the Earnings section.

Figure 4. Set up the paycheck so that only the Bonus payroll item appears in the Earnings section and no payroll items appear in the Other Payroll Items section.

8. In the lower right corner of the window, check the Enter net/Calculate gross check box.

9. Type the net amount of the bonus check in the Check Amount box. QuickBooks calculates taxes and gross pay (see Figure 5).

Figure 5. When you enter the amount of the bonus, QuickBooks calculates gross wages and taxes.

Producing Yearend Paychecks without the Enhanced Payroll Service

If you are not using the Enhanced Payroll Service, you can include bonus pay and a non-cash fringe benefit on a regular paycheck. Open the Employees menu and click Pay Employees to open the Select Employees To Pay window. Set up the window as you usually would, but at the top of the window, click the Enter Hours and preview check before creating option button. Select the employees to pay and click the Create button.

When QuickBooks presents the Preview Paycheck window, click in the Item Name column of the Earnings section. Open the list box and choose the Bonus payroll item and supply the bonus amount in the Rate column (see Figure 6). QuickBooks adds the bonus to the Employee Summary on the right and recalculates the amount of the paycheck.

Figure 6. Add the Bonus to the paycheck.

To include the Company Car fringe benefit to the employee’s paycheck, click in the Item Name column of the Other Payroll Items section. Open the list box and choose the Company Car payroll item and supply the amount in the Rate column (see Figure 7). QuickBooks uses the amount you enter to adjust the taxes on the paycheck and recalculate the amount of the paycheck.

Summary

In this article, we’ve shown you how to set up payroll items for bonuses and fringe benefits and how to include them on paychecks, whether you are using the Enhanced Payroll Service or the Standard Payroll Service. As the end of the year approaches, you will be ready to prepare year-end paychecks.

Backing up Your Company to CD or USB Drive

Think of a back up as a digital insurance policy—you hope you’ll never need it, but you really can’t afford not to have it because it allows you to recover from problems caused by both hardware and software. Backups of your QuickBooks data are particularly important since all data is stored in one large data file. If any portion of the file becomes corrupted, you could lose everything.

One of our readers, Jack Logan, wrote to the Q&A column asking if it would be possible to back up his QuickBooks data to CD. Since CD burners have become so popular and inexpensive, Jack’s question prompted us to test a number of back up scenarios that we thought would benefit many of our readers. In addition, we thought we’d introduce backing up to a USB drive, a highly portable device that is easy and inexpensive to use.

Backing Up to CD

First, you can use two different methods when you back up to CD, and the method you choose depends on the type of CD you use.

The Terminology

Before we get into the “how” of things, let’s define the terms we’ll be using in this article.

A CD burner is a drive that can both read and write CD’s. You can use two different types of CD’s in a CD burner:

· A CD-RW disk is a disk that you can use many times

· A CD-R disk is a disk to which you can write only once

While you can write to a CD-RW disk many times, CD-RW disks are more expensive than CD-R disks; while shopping on-line, we found CD-R disks for about $.25 per disk and CD-RW disks for about $.75 per disk.

The type of disk you choose determines the method you’ll use to back up your QuickBooks data to CD.

There is some risk to backing up to CD’s; it is possible that the CD on which you store your backup can only be read by the computer that wrote the backup file to the CD. Under these conditions, you may find it impossible to restore a CD backup made on one computer to another computer.

Backing up Using CD-RW Disks

While using CD-RW disks to back up is more expensive than using CD-R disks, using CD-RW disks also is an easier process than using CD-R disks. If you choose to use CD-RW disks, you first format them using special software that typically comes with your CD burner, so you don’t need to buy anything extra.

Once you format a CD-RW disk, it can only be read by a CD burner drive; a regular CD-ROM drive can’t read a CD-RW disk.

Using a formatted CD-RW disk, you can back up your QuickBooks data files using the QuickBooks backup routine, very similarly to the way you back up to diskettes.

1. Open the File menu and click Back Up. The Back Up Company File tab of the QuickBooks Backup box appears (see Figure 1).

Figure 1. You have some new options for backing up in QuickBooks.

2. Click the Disk option and then click Browse. QuickBooks displays the Back Up Company to dialog box.

3. Navigate to your CD burner drive, which is the F drive in Figure 2.

Figure 2. Backing up to a CD-RW disk.

4. Click Save. QuickBooks redisplays the QuickBooks Backup dialog box.

5. Place a check in the Verify data integrity box. This option verifies your data before QuickBooks backs it up. While checking this box will increase the time QuickBooks takes to make a backup, you’ll have the added peace of mind knowing that the data you backed up is valid and will restore if you need it. Since you’re backing up so that you can restore if a problem arises, knowing that you’ve got a good backup only makes sense.

6. Click the Set Defaults button. QuickBooks displays the Set Defaults box shown in Figure 3. In this dialog box, you can set the following options:

Figure 3. Use this box to set defaults for your backups.

· You can check the Remind me to back up when closing the data file every X times box and supply a number to have QuickBooks remind you to back up after a specified number of times that you close your company.

· You can set a default location to store backups you initiate if you type the location in the Default Backup Location box or click the Browse button to navigate to it.

· You can tell QuickBooks to add the date and time to the name of the backup file so that you’ll know when a particular backup was made. This technique also enables you to store more than one backup in the same location without overwriting prior backups.

Tip: Uncheck the Use Windows CD Writing Wizard box to bypass the Windows CD Writing Wizard—a Windows XP only feature—and write your backup directly to your CD.

7. Click OK to close the box.

To restore, open the File menu and choose Restore. In the Restore Company Backup dialog box, click the Browse button in the top portion of the dialog box. In the Restore From box that appears, open the Look in list, navigate to your CD burner drive, and you’ll see the backup file for your company (see Figure 4). Click the file and then click the Open button. QuickBooks will restore your data file the same way it would if you had used diskettes.