Like Kleenex and tissues, QuickBooks has become virtually synonymous with accounting software and has been used for decades across a multitude of industries.
While QuickBooks is the predominant software among businesses to organize and track all of their accounting needs, when it comes to the world of production, QuickBooks can prove exceptionally effective.
Production accountants have found smart ways to customize the platform to fit their needs, and in doing so, have made tracking and wrapping entertainment projects much simpler.
So for this post, we’re unpacking some of those customizations to unlock the tips and tricks to take full advantage of the software, to set up projects in more efficient and repeatable ways.
We sat down with a seasoned finance director who has managed numerous entities, producing everything from commercials to films to episodics, to get deeper insight into their setup and management process.
*Note, if you are still brushing up on general accounting 101 like setting up bank accounts or understanding different kinds of expenses, we encourage you to learn those basics first before continuing with the following information.
Let’s dig in.
In order to use QuickBooks for production accounting, you first have to select which version of the software works best for your particular requirements.
Below, most sections have images for each action, however, this video may prove useful as you move through the post.
QuickBooks is a catch-all term for the software’s different versions—QuickBooks Online and QuickBooks Desktop. Like anything else, there are pros and cons to each of them. We won’t get into a major comparison here but just for good measure…
QuickBooks Online is a cloud-based system that allows you to access your files at any time from multiple devices, including your computer, tablet, or even smartphone.
While QuickBooks Online does not have the capability to sync with QuickBooks Desktop, this version makes collaboration much more seamless. Using a tiered system—Simple Start, Essentials, Plus, and Advanced—each comes with a different monthly subscription cost, and accordingly different accounting bells and whistles, which makes this version of the software highly flexible according to a user’s budget.
Note: Only Plus and Advanced allow for class tracking and location tracking, which we’ll be getting into in just a moment, so we recommend strong consideration of those two specific programs if and when possible.
QuickBooks Desktop may not be as cloud-friendly, and will take more creativity when collaborating, but it does allow more accounts per price. Like the online version, It also comes as a tiered system — Pro Plus, Premier Plus, and Enterprise—again, each with a different yearly subscription cost.
Odds are you might get hired for a project and have to use whatever type of QuickBooks they’ve already purchased. But if you have the opportunity to choose a version of this software, do the research on what features will likely be most important for your needs.
There is no wrong choice here. *But due to its integration capabilities and collaborative nature, QuickBooks Online is a popular option. So for this post, we’ll be viewing this version.
A chart of accounts essentially tells your accounting system where you want every charge to go. It’s a listing of all possible charge categories that you must choose from when entering any expense.
For production accounting, your chart of accounts can be customized for whatever kind of production project you might be working on – commercials, episodics, feature films, etc.
It can also be set up according to whatever budgeting software you may be using for your accounting needs, like Hot Budget, Point Zero, Movie Magic, or AICP budgeting.
The customization of this feature is particularly helpful because you can create your chart of accounts in whatever manner that best suits your accounting style. It’s common for accountants to set it up as either an expense account or a cost of goods sold account.
How you set up your chart of accounts is your preference, and while some might lean towards expense accounts, many production accountants opt for setting it up as a cost of goods sold—you’ll find it done this way in the video.
This is because the cost of goods sold directly translates to exactly what it costs to produce a specific project, which can ultimately make your layout a bit clearer since it separates production costs from overhead costs.
Plus, you can further categorize your chart of accounts according to expenses that take place for pre-production, production, and post-production.
Below is a Chart of Accounts example laid out in Quickbooks Online.
All that being said, it should be noted that setting up a large chart of accounts specifically through QuickBooks Online can get complicated.
Because of its differently priced subscription tiers, the more affordable QuickBooks Online versions allow for only 250 accounts in total. But if you also have QuickBooks Desktop, there is a workaround.
Pro-tip: You can set up your chart of accounts in Desktop and migrate it to Online, which will then grandfather the entirety of your data as you set it up.
Once your chart of accounts has been set up, it’s time to create your class tracking.
Class tracking is a QuickBooks feature that can be used to delineate any information that you choose. That means you can track transactions and account balances by any category that is relevant and meaningful for your job.
QuickBooks gives the example of a farmer creating a class for each crop they grow such as corn, soybeans, and wheat. Or a chain restaurant, classifying according to each location they have.
In a sense, it’s a tag feature that can be added to any expense, such as an invoice or a credit card charge – which will then be “classed” to a specific category.
While the class feature can be used for virtually any category appropriate for a production, it’s often used synonymously with the term jobs, as they are typically self-contained projects like a commercial or an episode of television for which specific transactions will take place.
You can think of class tracking as job tracking.
Using the classing feature for each type of job is a clear way to separate one production from another, as well as all the transactions that tie back to each particular production.
Costs can also be tracked according to customer or item, but there are limitations in terms of how you can manage your accounts in either manner.
It’s hard to determine which job a particular cost comes from if you’re tracking that cost by customer or item rather than by job, (especially when doing cost comparisons for a particular job’s budget and actuals).
For this reason, class tracking is often the better tracking choice.
If you have a working knowledge of production accounting, you already know the importance of tracking each and every expense. So, there’s no such thing as too much tracking…especially when it comes to your locations.
Location tracking is another tool that can further categorize any accounting transaction in a particular location. While it’s called Location tracking in QB, this feature can be used for virtually anything you want to specifically track.
As an example, you can categorize any specific aspect of a production, such as the individual episodes of a TV series using location tracking.
To keep it simple for now, though, let’s say you’re on a television show that shoots in both Los Angeles and New York City. You can use the location tracking feature to identify which expenses for each episode occurred in each city.
You can further categorize for pre-production, production, and post-production with either class tracking or location tracking.
If you’re using QuickBooks for production accounting, it’s worth taking advantage of all the tools it offers.
So, pro-tip? Turn on the transaction warnings feature.
When turned on, you and any other member of your accounting team will receive a warning before closing out a transaction that has no class assignment.
This warning forces you to make a class choice like overhead expense or job expense, which, again, helps in the categorization of every accounting transaction as well as the elimination of any ambiguity regarding the origin of the transaction.
If your company manages multiple productions simultaneously, the warning feature is particularly important because it forces your accounting team to choose whether the job is an overhead cost – and potentially doesn’t need a class – or if it’s a job expense and the specific job (aka class) to which it belongs.
This particular step will have variances according to the type of project you’re working on, so the specific actions that follow pertain to what you would do specifically on a commercial production.
First, enter the budget for a job using the totals for each line number in the awarded bid. Note that as the job progresses, the actual costs are then posted to the line number and classed to the job.
Second, when inputting transactions, always assign an account (aka line number), a class (aka job number), and a location (if you’re using this feature to track additional job data).
Important to know: QuickBooks will not allow import into a budget from Excel; hence, a manual import is your only option. The manual input of any information always leaves you at risk for mistakes. Just something to be mindful of in any instance where you must do so.
Running reports is a customary part of a production accountant’s job.
What’s nice about QuickBooks in this regard is that it allows you to run reports such as profit and loss according to various filters. You can look at your P&L based on your jobs, but you can further customize it by various locations, quarters, you name it.
You can also run Budget vs. Actual reports within QuickBooks and then export them to Excel for further customization, i.e. adding a column for Producers Actual.
In this way, QuickBooks allows you to get a clear snapshot of each aspect of your production.
Like we mentioned, any manual input for production accounting means the possibility of making a mistake. And then there’s the inevitable backtracking to find out when and where you made that mistake. (Here’s hoping it’s only once!)
Not only do accounting mistakes mean budgeting and expense tracking confusion, but also considerable time costs to correct it.
If you’re already using Wrapbook for your payroll, this process is a cinch. With one button, you can export your payroll log into Quickbooks Online. Wrapbook’s integration with Quickbooks removes the stress of manual input, eliminating risk of mistakes, and associated time and energy drains.
As a production payroll provider, we recognize producers may use other budgeting tools like Hot Budget or Point Zero. For production companies, chasing down expenses (especially if they live in a million different places) can be painful. So to prevent that, if you’re using Wrapbook, you can also directly export your actuals into your preferred budgeting tool.
But whichever payroll company you choose, make sure it has an integration feature with QuickBooks.
QuickBooks was once thought of as accounting software for corporate and non-creative industries, but its continual evolution has made it a great choice for production accountants.
Familiarizing yourself with the myriad of ways that QuickBooks features can be utilized for production accounting can only make your work experience easier and more enjoyable.
Production company GhostRobot thought so too—turning to Wrapbook’s QB and Hot Budget integrations to wrap faster and avoid having to make updates in more than one place. Read more about their journey here.
For more specific integration questions, get in touch with one of our experts.
At Wrapbook, we pride ourselves on providing outstanding free resources to producers and their crews, but this post is for informational purposes only as of the date above. The content on our website is not intended to provide and should not be relied on for legal, accounting, or tax advice. You should consult with your own legal, accounting, or tax advisors to determine how this general information may apply to your specific circumstances.
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