2.1 Setting Up a New Client Company, Company Settings & Custom Preferences

Client Onboarding, Subscription Management & Company Preferences

Properly onboarding a new client and configuring QuickBooks Online (QBO) company settings is the foundational competency tested in the Getting Started course and its matching exam section. Establishing the correct subscription tier, billing structure, tax entity mapping, and operational preferences prevents catastrophic accounting errors, broken audit trails, and tedious manual workarounds later in the client lifecycle.

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1. Creating a New Client in QuickBooks Online Accountant (QBOA)

Accounting professionals manage client accounts from the QuickBooks Online Accountant (QBOA) dashboard rather than standard client logins. Adding a client establishes the organizational link between the firm's practice and the client's general ledger.

The Add Client Workflow

To initiate onboarding, the ProAdvisor navigates to the left navigation menu in QBOA and selects Clients > Add client. The configuration window requires specific business details and billing choices:

1. Business Details vs. Individual Details:
   • Business: Used for corporations, LLCs, partnerships, and sole proprietors operating under a trade name. Requires a business name, legal entity name, and contact details.
   • Individual: Used for personal finances or sole proprietors doing business exclusively under their personal legal name.
2. Subscription Selection:
   • QuickBooks Ledger: An accountant-only subscription designed for year-end tax prep, write-up clients, and holding companies that only require bank feeds, reconciliations, and financial reporting without customer invoicing or accounts payable.
   • Simple Start: 1 user, basic income/expense tracking, sales tax, estimates, and invoicing.
   • Essentials: Up to 3 users, adds bill management (Accounts Payable), multi-currency, and time tracking.
   • Plus: Up to 5 users, adds inventory tracking (FIFO), purchase orders, class tracking, location tracking, and project profitability.
   • Advanced: Up to 25 users, adds custom user roles, workflow automation, enhanced custom fields, batch transaction entry, and dedicated support.

Subscription Billing Models

Intuit provides three primary commercial arrangements for QBO subscriptions provisioned through QBOA:

Exam Tip: If a firm removes a client from ProAdvisor Discount consolidated billing, the client does not lose their data. Removal takes effect at the end of the current monthly billing period; the client is then billed directly at the then-current list price and is prompted to enter a credit card.

Lead Accountant Assignment & Team Access

During the Add Client workflow, QBOA prompts the user to assign a Lead Accountant. The Lead Accountant serves as the primary administrative point of contact within the firm for that client and receives automated system notifications. ProAdvisors can also specify which team members have access to the new client's books (Basic, Custom, or Full firm access).

Connecting Existing Companies

If a client has already purchased their own QBO subscription independently, the firm should not create a duplicate company via Add Client. Instead:

• The client invites the firm via Gear Icon > Manage Users > Accounting Firms > enter the ProAdvisor's email.
• Alternatively, the ProAdvisor can send a connection request directly from QBOA.

2. Deep-Dive: Account and Settings Configuration

Once inside the client's company file, clicking the Gear Icon > Account and Settings (formerly Company Settings) accesses the central configuration engine. Preferences are divided into five tabs: Company, Billing & Subscription, Sales, Expenses, and Advanced.

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Company Tab: Entity Identity and Tax Classification

The Company tab defines the business's legal identity, customer branding, and tax return structure.

• Company Name vs. Legal Name:
  • Company Name: The public, customer-facing business name. Displays on invoice headers, sales receipts, estimates, customer portals, and outgoing email templates.
  • Legal Name: The official registered legal entity name (e.g., Acme Holdings, LLC dba Acme Consulting). Used exclusively on official tax filings, payroll tax documents, and federal information returns including Forms 1099-MISC and 1099-NEC.
• Tax Identification Number: Enter the 9-digit federal Employer Identification Number (EIN) or the proprietor's Social Security Number (SSN).
• Company Type & Tax Form Mapping: Selecting the entity tax form is a critical initial setup task. QBO offers the following entity structures:

• Company Address vs. Customer-Facing Address vs. Legal Address:
  • Company Address: Physical operating location.
  • Customer-Facing Address: Remit-to address printed on invoices and sales receipts (can be a P.O. Box).
  • Legal Address: Legal address registered with the IRS and state taxing authorities.
• Contact Info: Company email (receives Intuit billing and system notices) vs. Customer-facing email (where customers reply when receiving invoices).

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Sales Tab: Sales Form Architecture & Customer Workflows

The Sales tab controls how revenue transactions, estimates, and customer receivables are handled.

• Customize Look and Feel: Launches Custom Form Styles. Enables uploading company logos, changing color palettes, selecting fonts, and configuring invoice layouts (Standard, Airy, Modern, Fresh).
• Sales Form Content:
  • Preferred Invoice Terms: Configures default payment terms applied to new invoices (e.g., Due on Receipt, Net 15, Net 30, Net 60, or custom discount terms such as 2/10 Net 30).
  • Preferred Delivery Method: Sets default delivery option: Print later, Send later, or None.
  • Shipping: Adds dedicated shipping fields (ship date, carrier, tracking number, ship-to address) and a dedicated shipping fee line item that automatically maps to a designated shipping income account.
  • Custom Fields: Standard custom fields allow up to 3 custom fields on sales forms in Essentials and Plus. In QBO Advanced, Enhanced Custom Fields support up to 48 custom fields with distinct data types (Text, Number, Date, Dropdown list) and selective placement (internal view vs. customer-facing printing).
  • Discount Field: Adds a discrete discount percentage or fixed-dollar field to invoices. Automatically credits the customer invoice and debits a selected Discounts Given contra-revenue or expense account.
  • Deposit Field: Adds a deposit field to the invoice footer. Allows recording an upfront cash deposit received at the time of invoicing, reducing the total balance due without requiring a separate payment transaction.
• Products and Services Settings:
  • Show Product/Service column on sales forms: Enables itemized product/service selections on customer forms.
  • Show SKU column: Adds inventory SKU tracking numbers to sales forms.
  • Track quantity and price/rate: Allows entering quantities and rates; disabling this forces forms to accept only flat dollar amounts.
  • Track inventory quantity on hand: Enables perpetual inventory tracking (requires QBO Plus or Advanced).
• Progress Invoicing:
  • A toggle that enables billing customers in increments, milestones, or percentages from an initial accepted Estimate. Supported across all standard QBO editions (Simple Start, Essentials, Plus, Advanced).

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Expenses Tab: Purchasing, Billable Costs & Vendor Preferences

The Expenses tab configures procurement workflows, expense tracking, and contractor/vendor controls.

• Bills and Expenses:
  • Show Items table on expense and purchase forms: When toggled ON, checks, expenses, and bills display two distinct line-item tables: Category details (posting directly to Chart of Accounts expense accounts) and Item details (posting purchases of specific Products and Services). This toggle is mandatory for inventory purchases and job costing.
  • Track expenses and items by customer: Adds a 'Customer' column to expense vouchers, checks, bills, and credit card charges, enabling the assignment of operational costs to specific customer records for profitability tracking.
  • Make expenses and items billable: Activates a 'Billable' checkbox on expense lines. When checked, the cost flows directly into the client's unbilled activity drawer and can be imported onto customer invoices with a single click.
  • Markup with a default rate: When billable expenses are active, allows setting a default markup percentage (e.g., 20%) and selecting a default Billable Expense Income account.
  • Track billable expenses and items as income: Determines whether reimbursed expenses are reported as income (In a single account or In multiple accounts) or credited directly against the original expense account (contra-expense).
• Purchase Orders (POs):
  • Available in QBO Plus and Advanced. Enables sending non-posting procurement requests to vendors. Includes custom PO terms and vendor email messaging.

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Advanced Tab: General Ledger Engine & System Controls

The Advanced tab contains the most critical compliance and accounting integrity switches in QBO.

Account and Settings > Advanced
├── Accounting
│   ├── First month of fiscal year (e.g., January, July, October)
│   ├── First month of income tax year (Same as fiscal year or custom)
│   ├── Accounting method (Accrual vs. Cash default basis)
│   └── Close the books (Closing date toggle + Password protection)
├── Company Type (Tax return entity alignment)
├── Chart of Accounts
│   ├── Enable account numbers (Toggle)
│   └── Show account numbers (Display toggle)
├── Categories
│   ├── Track classes (One to entire transaction vs. One to each row)
│   └── Track locations (Up to 1 location per transaction)
├── Automation (Pre-fill forms, auto-apply credits, auto-apply payments)
└── Currency (Multicurrency toggle — permanent and irreversible)

1. Accounting Settings

• First Month of Fiscal Year: Determines the start of the 12-month accounting cycle. Critical for nonprofit and governmental clients whose fiscal years begin July 1 or October 1.
• Accounting Method: Sets the default reporting basis for standard reports (Accrual recognizes income when earned and expenses when billed; Cash recognizes income when received and expenses when paid). This is a default display setting; reports can still be toggled dynamically.
• Close the Books (Closing Date Lock):
  • A crucial internal control. Restricts users from adding, modifying, or deleting transactions in periods prior to a specified closing date (e.g., after the annual tax return has been filed or monthly financials are published).
  • Warning vs. Password Protection:
    • Allow changes after viewing a warning: Displays a non-blocking confirmation dialog when a user attempts to alter closed-period data. Any user with edit rights can click past it (though the edit is recorded in the Audit Log).
    • Allow changes after viewing a warning and entering a password: Imposes an absolute security barrier. Users cannot save alterations to transactions dated on or prior to the closing date without entering the authorized closing password.

2. Chart of Accounts & Categories Tracking

• Account Numbers: Toggling Enable account numbers allows entering account numbers on the Chart of Accounts; toggling Show account numbers displays those numbers on reports, register screens, and transaction forms.
• Class Tracking: Used to track income and expenses across business segments, product lines, departments, or funds. Configurable as One to entire transaction or One to each row in transaction (row-level tracking allows splitting a single vendor bill across multiple classes). An optional setting prompts: Warn me when a transaction isn't assigned a class.
• Location Tracking: Segregates entire transactions by physical store, geographic region, branch, or division. Unlike classes, QBO permits only one location per transaction (it cannot be split across line items).

3. Automation Preferences

• Pre-fill forms with previously entered content: Automatically populates the line items, descriptions, and accounts from the last saved transaction for that specific vendor or customer when creating a new bill, expense, or check.
• Automatically apply credits: Automatically applies existing customer credit memos to the next created invoice.
• Automatically apply bill payments: Automatically applies open vendor credits to newly entered bills.

4. Multicurrency

• Allows transacting in non-home currencies. Once toggled ON, Multicurrency cannot be turned off or disabled under any circumstances. It permanently alters the general ledger to track unrealized and realized foreign exchange gains and losses.