One of QuickBooks’ best assets is that it’s user-friendly and intuitive. It’s so user-friendly that people without bookkeeping experience can keep track of a business’s finances without constantly hitting a wall. But unless that person does everything to the letter, mistakes and bad habits always creep in. Some of these mistakes translate directly into dollars, like paying more taxes than you should.
Everyone who uses QuickBooks gets into a routine and doesn’t think twice about it. That’s understandable. But QuickBooks won’t give you an error message for every misstep that will cause a problem down the road.
In this post today, we’ll discuss 5 of the most common errors that you can easily avoid.
Not Backing Up a Data File
It’s easy to let this routine maintenance slide, but it’s a task than can save you a lot of headaches down the road.
- If you need to send a file to your QuickBooks professional for clean-up or review, the back-up is your insurance policy. It ensures you’ll never have to build your QuickBooks file from scratch.
- Never overwrite a previous back-up file.
- Back up in QuickBooks even if your system is backed up. Back it up to two separate locations, such as a hard drive and an external drive.
Not Completing a Bank Reconciliation
Bank reconciliation is perhaps the most important use of QuickBooks, and many people get lazy with the last step, completing the process.
- It’s not enough to have all the transactions checked off and accounted for. If the balance isn’t at zero, you’ll never uncover mistakes in your accounting.
- All QuickBooks does is note the discrepancy in the reconciliation discrepancy account, and move on. This is the only way to ensure your books are accurate.
- You could end up thinking you have more cash than you do. Or less, and pass up a crucial investment because you thought you couldn’t afford it.
Confusing Asset and Expense Accounts
You may well have asset and expense accounts with the same name. It’s easy to enter one as the other.
- Make sure assets are entered as assets, and expenses as expenses. Asset accounts show up on Balance statements with value and depreciation. Expenses show up on a Profit & Loss statements. There’s a big difference.
- If you enter an Expense as an Asset, it won’t be counted as an expense or reflected in your P&L. Your P&L statement will show more profit than you actually have, and you’ll pay taxes on that nonexistent amount.
- A loan is listed as an Asset, not as a Billing/Accounts Receivables.
Overlooking Memorized Transactions
Memorized Transactions is an under-used QuickBooks tool. This function saves transactions with fixed information so you don’t have to enter it from scratch every time. Using Memorized Transactions saves you time and keeps primary parts of your business running smoothly. By getting in the habit of using Memorized Transactions, you can:
- Collect money faster
- Track receivables more accurately
- Manage cash flow better
Using Only Part of the Accounting Cycle
QuickBooks can handle all parts of the accounting cycle, from transactions to journal entries to receivables. But it only works if you use all of these functions.
- Partial use results in messy bookkeeping.
- Messy bookkeeping leads to a huge headache at tax time, and possibly costly errors.
- The all-or-nothing rule applies with QuickBooks.
So, the next time you get stuck while using Quickbooks, refer to these quick-fixes above for simple solutions. It always helps to have some tricks handy since it saves a lot of time and energy in trouble shooting issues with daily accounting work.