7 Common QuickBooks Mistakes and How to Avoid Them

06 May

QuickBooks is a vital  component to the success of many small businesses. This software helps  effectively manage inventory, sales, and payroll, while also offering  other important financial record-related items.


While this tool helps millions of businesses succeed, there are some  common mistakes many business owners make, which costs their company  time and money.


But luckily, these mistakes can easily be fixed! Learn  more about some of the most common QuickBooks mistakes below, as well as ways to avoid and/or fix them.

Common QuickBooks Errors Made by Business Owners

1. You Don’t Reconcile All of Your Accounts

This first mistake is huge, as the integrity of all of your accounts  depends on it. From paying bills, making deposits, and payments against  your customer invoices, every transaction your business makes needs to  be checked and matched to bank records.


That process is called  reconciling. Reconciling all of your accounts (checking and savings,  loans, taxes, etc.) ensures that the business account register is  correct.


Be sure to reconcile not only your checking and savings, but also  your loans and state/federal taxes. Even asset accounts like a mortgage  escrow account can be reconciled! To do this, click the Gear menu and then Reconcile. Choose the Account you’re reconciling, and hit Reconcile Now. QuickBooks will ask for your Statement Ending Date, as well as your Ending Balance.


After each item in the Checks and Payments column is checked off, the bottom right corner should (hopefully) read zero. If not, that’s a red flag to check your work.

2. You Don’t Review the Profit and Loss (P&L) Statement

Your P&L statement is valuable for many reasons. First, it  provides insight to the overall health of your business, as it provides a summary of your revenue minus expenses for a specific period of time.  


Second, it’s a great tool to help you find mistakes in your QuickBooks  file. The P&L allows you to compare previous periods, to make sure  your expenses and income align with the norm. If your expenses seem  unusually high, you know it is something to look into further.

To add or edit the accounts and categories showing in your P&L on QuickBooks, click on the Gear, then Chart of Accounts, highlight the account, and click Edit.

3. You Don’t Keep Your Items List Organized

If not closely monitored, your products, or “items” list can become  overwhelming and outdated. QuickBooks gives you the ability to organize  and print your lists, as well as export list items to a word processing  program (if needed). Some general housekeeping tips for your items list  include:

  • Deactivate items you no longer sell
  • Make sure each item is correctly labeled
  • Check that your stock numbers are correct
  • Update the cost of each item

When it comes to organizing your lists on QuickBooks, you need to first make you are in single-user mode.

  • To move an item and all its sub-items:Click the diamond (next to the item) and then drag the item up or down to a new location.
  • To make a sub-item its own item:Click the diamond beside the item and drag to the left.
  • To make an item a sub-item:Move the item so that  it’s directly beneath the item you want it to fall under. Click the  diamond beside the item and drag to the right.
  • To alphabetize a list:Click the Name button, which can be found at the top of the list window. QuickBooks  alphabetizes your list of customers, vendors, accounts, etc. both “A to  Z” and reverse “Z to A.”

4. You Use the Write Checks Window to Pay Payroll Taxes

All versions of QuickBase allow you to have payroll for up to 10  employees. As payroll is processed in QuickBooks, it keeps track of how  much payroll tax your business owes. It then records that in the Payroll Liabilities account. If payroll taxes are paid using the Write Checks window, it will not be properly deducted from the Payroll Liabilities window.

To avoid this, remember to pay payroll taxes directly from the Pay Liability window. This will ensure that everything is being properly tracked!

5. You Create Too Many Accounts and Sub-Accounts

While creating accounts and further organizing them into sub-accounts can help organize your finances, think carefully about the logical  ordering of your account information. Do you really need to break down  your office supplies expense account with 10+ sub-expenses for paper,  pens, ink, etc? For most small businesses, one blanket parent account  suffices. The sub-expenses will just complicate the system.

To avoid this, think about what information you need to know about  these income accounts. Sometimes, keeping things simple produces more  meaningful reports. This can help save you time and confusion when  you’re reviewing these reports later down the line.

6. You Don’t Back Up the Company File Everyday

Life is unexpected. No one ever wants to have their computer crash,  but if it does, you’re going to wish you backed up all your files.  QuickBooks is no different. Get into the habit of backing up QuickBooks  daily. Hopefully you won’t ever need it, but if you do, you’ll be glad  you did!

To manually back up your data files, you must first be in single user mode. From the file menu, select Backup Company and then Create Local Backup. In this window, select Local Backup and then click on the Options button. This will allow you to choose a location to save your backup copy.

It’s a good idea to save backups somewhere other than your main local drive in case of a system failure. Good places to save your files  include Dropbox, a flash drive, or an external hard drive.

7. You Don’t Enter a Bill Before You Write a Check

You don’t want to take any shortcuts when it comes to your finances.  You want to make sure you follow protocol to inputting information so  that you can use QuickBooks to properly manage your cash flow and plan  for future expenses.

When a bill arrives, it’s important that your first step is to enter the bill in the Enter Bills window. Some business owners’ first step is to use the Write Check feature to pay the bill, but that does not create an accounts payable  for that vendor. After you enter your bill, you can go to the Pay Bills window and indicate the bill you wish to pay. This small step can save you much time and trouble in the future!

While some of these mistakes seem minor, they can severely impact  your financial results. Being aware of these common mistakes can help  you maintain a cleaner, more accurate file on QuickBooks!

* The email will not be published on the website.
This site was built using