QuickBooks dominates the market for small business do-it-yourself accounting software, and it’s a great tool. You can simplify and standardize many business tasks, such as generating invoices. Their technology aims to automate and report the information you need to effectively manage your small business. However, without a strong understanding of business accounting practices, user mistakes can turn that information into garbage. Unless you have an accounting background, the do-it-yourself approach won’t be the solution to your problems. After jumping in and trying to make QuickBooks work on their own, many businesses find themselves looking for QuickBooks help near them. Read on for examples of common mistakes, and decide if partnering with a small business accounting firm is better for you.
QuickBooks Setup Mistakes
Getting the initial configuration of QuickBooks right is one area that can leave small businesses looking for QuickBooks help near them. Without a strong understanding of accounting concepts and practices, many small businesses organize their data incorrectly.
Chart of Accounts
The Chart of Accounts is the architecture behind your books. It establishes how the Balance Sheet, Profit and Loss Statement, and Cash Flow Statement will be built. A mistake as simple as setting up an Expense account that should be a Liability account can screw up everything. And how many accounts is enough, or too much? QuickBooks will let you set up hundreds of accounts and sub-accounts, but is that right? If your reports are pages and pages of miniscule numbers and percentages, are you actually doing yourself more harm and missing the big picture of what’s happening in your small business?
Is your business on the cash or accrual method? It’s an important designation not all small business owners know or pay attention to (If you need a refresher, read this). You need to know this when filing returns and reviewing reports. An accrual basis taxpayer running reports on cash basis for tax planning purposes could be in for a shock come tax time.
Classes, Locations & Projects
QuickBooks allows for a great deal of customization, which is why companies of 1 to 1,000 find value in it. Classes, Locations, and Projects are a great example of that. You can track your income and expenses at each of these levels to get a better picture of business performance. Did you know that, and do you need it? Adding these features may sound great, but they may also add unnecessary complexity to your DIY accounting operation.
QuickBooks User Errors
After your QuickBooks is set up, it is easy to find yourself making mistakes in how it is being used. Finding QuickBooks help near you can allow you to learn more about how to get more from the tool and avoid issues like these.
How do you know if all activity has been recorded in QuickBooks? Answer: Bank and Credit Card Reconciliations. Trusting imports without running reconciliations could lead to incomplete records. QuickBooks has great reconciliation tools. Are you using them correctly?
How do you know if that check you wrote from QuickBooks wasn’t duplicated in the latest bank import? How about that journal entry you made? Duplicating entries is easy to do. Unless you know how to check for them, you could have wildly inaccurate financial statements, leading to financing and tax problems down the road.
Journal entries are essentially overrides. You may know how to make journal entries, but do you know the proper debits and credits for every business situation? Do you know how to record fixed asset purchases, deferred revenue, or the allocations between net paychecks, gross wages, payroll tax expenses, and payroll tax liabilities from a lump sum deposit or withdrawal? Overriding the books is a recipe for disaster if you don’t know what you’re doing.
Did you know QuickBooks can help you track your business mileage? How about the fact accountants invited to your QBO account get special tools to help you, such as Batch Reclassify? QuickBooks is filled with features, but if you don’t know how to use them they do you no good.
Lack of Maintenance, Monitoring, and Report Review
The last mistake is also the most sad: business owners pay for QuickBooks, but then fail to maintain it or review the reports. They use it for a few necessary functions, such as generating invoices and tracking accounts receivable, but fail to build a true accounting system with a proper chart of accounts and accurate financial statements. Their business is flying blind.
Working with Haworth & Company, Ltd.
If you’ve run into these issues or others, consider an engagement with Haworth & Company, Ltd. for QuickBooks help near you. We have QuickBooks certified professionals located throughout the Twin Cities metro and Rochester to answer your questions and offer solutions. If you’ve been trying the do-it-yourself approach simply because you didn’t know what other options were out there, check out our accounting page and contact us. Our monthly small business program allows you to delegate your accounting to the pros, receive expert insights, and get back to what you love. We work with clients on many different platforms, including QuickBooks Desktop and QuickBooks Online, and would love to work with you too!