QuickBooks has become the go-to accounting solution for millions of small businesses. But, just because it’s become extremely popular doesn’t mean it’s intuitive. Many small business owners expect a TurboTax-like experience, one in which they simply need to fill in the blanks, and are sometimes surprised to find a system that requires a little more finesse.
Rather than take the time to learn Quickbooks inside and out, most of us opt to learn as we go through trial and error. And when we come up against an issue we can’t figure out, there’s always YouTube.
When it comes to QuickBooks, a lot of the same mistakes happen over and over (and over) again. QuickBooks can be really powerful and helpful when it’s used correctly. So go ahead, get ahead of the curve, and get to know the most common QuickBooks mistakes before you make them.
The Chart of Accounts is a nightmare
Group similar accounts together by business type or client, but keep everything in one main folder, breaking off from that point. Too many accounts can lead to confusion. When you enter data, enter it in the lowest account rather than the original parent account.
Not Reconciling Credit Cards
Whenever you’re dealing with credit cards, make sure you’re in Reconcile Mode. The same goes for loans and other balance sheet accounts. This solidifies financial statements, providing a better picture of your business health.
A Messy Items List
The products or services you’re selling are considered “items.” When you introduce something new or discontinue something else, you may be tempted to cut corners and not adjust your items list to reflect what you are actually selling. This can have a domino effect down the road when you’re looking back on what you’ve sold. Here’s how to clean it up:
- Deactivate anything you’re currently not selling
- Double check amounts in stock with the correct costs
- Make sure everything is labeled correctly with revenue and cost accounts
Put your accounting on autopilot
Schedule a free consultation today.
Not Using the Purchase Order System
This one is a biggie. Many small businesses don’t utilize the power of this feature.
By using the purchase order system, you can create PO’s when you buy from a vendor, but also receive products against a PO. This keeps all of your records nice and organized. Plus, you can monitor the time and make sure you don’t have entries over a year old.
Forgetting to Reconcile Your Bank Account
You need to keep an eye on this one, as it’s critical for the life of the business. It’s not about manually entering transactions but about monitoring transaction amounts and categorizations to make sure everything is correct. Here’s what to do:
- Open reconciliations
- Go through your monthly transactions
- Check the amount, when it hit, and if it cleared
- Make sure nothing was double-booked or missed
Financial Reports Look Funny
Do your reporting numbers look off, but you’re not quite sure what’s going wrong? Double check that your settings reflect your accounting method of choice. Do you use cash or accrual basis accounting? If your account is set to the wrong method, your financial data will get confusing.
Changes Made Without Your Knowledge
If multiple people need to access your QuickBooks account, remember that they do not all need the same level of access. In Settings, you can adjust the access level for each user, depending on their needs. The worst case scenario is logging into your account to see that someone else has made changes without informing you. Innocent mistakes can end up costing you hours of time, so be stingy with who has access to your books. And avoid using a shared email login at all costs.
Got any specific QuickBooks questions? We’d love to help answer them. For more information about accounting best practices, check out our blog.