If you own a small business, you probably chose QuickBooks® as your company’s accounting software. After all, it’s the market leader in small business accounting software. While it’s intuitive in some places, there is a learning curve that everyone must go through in order to use the software properly. There are also places where you need to know some accounting in order for transactions to be booked correctly.
The good news is there are plenty of accounting professionals that know QuickBooks that can help you through the learning curve and answer questions that come up in the normal course of business. As a small business owner in these chaotic times, you must choose which learning curves to tackle and which ones to delegate or hire for. You can’t learn everything you need to know as an entrepreneur all by yourself; there’s just not enough time. It makes sense to focus on the core of your business with the limited time you have.
The worst thing you can do is to try to learn QuickBooks by yourself. If it’s used incorrectly, the mistakes multiply, and suddenly you have a year’s worth of inaccurate transactions that need to be fixed, one by one. This gets expensive. Here are 30 places where untrained QuickBooks users can get themselves in trouble.
1. Broken bank feeds
The integrated automation between your bank and QuickBooks software is called a bank feed. When these feeds break or become disconnected, they need to be restarted. If they are restarted incorrectly, transactions could double up or be missing completely. This causes the bank balance to be wrong as well as other parts of your accounts, such as expenses or sales.
2. Loan payments
Almost every loan payment consists of principal and interest. It’s common for loan payments to be coded to an expense account or the loan balance without being broken out accurately. This misstates the loan balance as well as expenses.
3. Undeposited funds
Often, untrained QuickBooks users leave a balance in the clearing account called Undeposited Funds. This understates the bank account balance. Another common occurrence is for the user to record a customer payment twice: once in Undeposited Funds and then again in the bank account when the deposit is downloaded through bank feeds. The results in overstatement of income.
4. Owner’s draws and distributions
When owners take money out of the business, it’s called a draw or distribution. This transaction needs to be properly reflected in the Equity accounts. It’s not an expense. It’s common for your QuickBooks beginning balances and your Equity accounts to be wrong if they were not set up correctly from the beginning. This requires knowledge of accounting, your type of entity, and the software.
5. Bank reconciliation
Because of the automated bank feeds, you might think that you don’t need to do a bank reconciliation any more. But that’s simply not true. Transactions can be duplicated, go missing, or be coded wrong, which all can cause an incorrect balance.
Most businesses need to write off a customer’s receivable that is no longer collectible or inventory that has lost value. This transaction requires special accounting knowledge to get it booked right in QuickBooks.
7. Chart of Accounts setup
If the Chart of Accounts in QuickBooks was not originally customized to your business, you probably don’t have the accounts you need. You may also be using some accounts incorrectly. And if there are a lot of accounts you don’t use, then they need to be removed to save you time from scrolling through them all the time.
8. Vendor setup
When you first pay a new vendor, it’s important to take the time to add them to the software completely, including asking for a W-9, sales tax exemption certificate, certificates of insurance, and other relevant documents. You may also want to track information that is not included in the standard QuickBooks setup. Setting up custom fields for vendors will help you track additional information.
9. Cash versus accrual adjustments
Your books can be reported in two different bases: cash and accrual. For tax purposes, you might need cash basis. For reporting purposes, you might prefer accrual basis. A professional can help you make adjusting entries when required, generate reports using the correct basis, and help you understand when you need each one.
10. Sales tax
If you collect and pay sales tax and rely upon your accounting system to provide you with accurate sales numbers, your invoice transactions must be booked correctly. Your sales tax rates must also be set up accurately, and you must keep up with which items are taxable and which are not.
Once you remit sales tax, it must be booked to the correct liability account, and any discrepancy must be adjusted.
11. Bill payment and check writing
Users new to QuickBooks can easily confuse the bill payment function with the check writing function. If you enter a bill, you must pay it instead of writing a check. Or you can simply write a check without entering a bill. When used incorrectly, it can double up expenses and leave a balance in Accounts Payable that should have been cleared.
12. Adjusting journal entries
It can be necessary at times to make journal entries to adjust account balances in QuickBooks. However, most of the time, a transaction function should be used instead, as when adjusting Accounts Receivable, Accounts Payable, Payroll, and many other accounts and functions. Making the right adjustment requires a good knowledge of accounting as well as the software.
13. Short cuts
Accounting professionals knowledgeable in QuickBooks can save you hours on your accounting by teaching you shortcuts, tips, and tricks that you can use when working with the software.
QuickBooks includes the capability of categorization, and you can customize this feature based on the needs of your business. An accounting professional can help you strategically think about how best to customize this feature based on their experience working with other businesses.
15. Custom reports
Do you spend a lot of time exporting data from QuickBooks into spreadsheets and then manipulating the data to a format you need? If so, you might be able to save time by getting help from a pro who can customize a report for you right in QuickBooks.
16. Job costing
Job costing is not easy to set up, but once it is set up correctly, you’ll love the information you can get from the reports. You’ll be able to see your profitability, get larger draws sooner, and manage your business better.
In QuickBooks, items are things you sell. They can be goods, services, parts, or many other things. When items are incorrectly set up or used, it can mangle your account balances as well as cost a small fortune to fix. Items differ substantially from business to business. Some businesses are trickier than others to set up: restaurants, construction, attorneys, to name a few. Do NOT get advice from another business owner when setting up your items. It’s critical to get an accounting professional with expertise in QuickBooks to help you with this part of the software.
Payroll has gotten so much more complex over the years. Especially if you are switching systems mid-year, get an accountant to help you set up payroll when you first get started.
19. Additional features you might not know about
QuickBooks software has been around since the 1990s. That makes it a very mature, robust application. There are many features you might not know about that could save you a great deal of time on your accounting chores. Learning from a professional can be very cost-effective and a good investment for your business.
20. Deleting anything
It’s a good idea to clean up unused accounts, items, vendors, customers, and other entities in your QuickBooks file, but doing so could cause huge problems. It’s best to get help if you need to delete a transaction or a master file item.
21. Coding errors
Sometimes, mistakes in coding are made. Correcting them can be harder than it looks. If you have a large number of transactions to correct, there are shortcuts you can learn to save yourself a lot of time.
22. Credit card reconciliations
Hopefully, any business credit card transactions that you have are automatically input into QuickBooks by using bank feeds. Just like the bank account, they need to be reconciled every month.
23. User permissions
It’s good practice to tighten up any user permissions so that workers see only what they need to do their job. A professional can help you customize user permissions to strengthen your internal control and reduce risk of fraud.
24. Known bugs
An expert in QuickBooks will know where some of the bugs are because they work with it all day long, every day, on multiple client accounts. They can help you save time by knowing where things might cause you trouble and alert you ahead of time to the problem and any potential fixes.
25. Unknown bugs
While an accounting professional might not know where every software bug is, they will know when you experience a bug that needs to be reported to the QuickBooks support team. They can help reduce the amount of time spent on such things and perhaps even suggest a workaround.
26. Inventory reconciliation
If you sell physical goods in your business, you probably have an inventory. Periodically, the physical inventory needs to be reconciled with the inventory in QuickBooks. Professional help is advised when making adjustments to reconcile the books.
27. Prior period transactions
Once a tax accountant has received your account balances for year-end reporting, nothing should be changed that is dated in a prior year. There is a way to lock these transactions so ending balances will still match beginning balances for next year’s reporting.
28. Software licenses
Intuit, the company that makes QuickBooks, requires that each QuickBooks user hold a software license that is paid for. A professional experienced with QuickBooks licensing can help you stay compliant based on the number of users you need to access the account.
Good password management is essential to keep hackers away from your private data. Use strong passwords that are long, contain no dictionary words, include special characters, numbers, and upper- and lower-case letters. And if you lose a password, a professional can help you recover it.
QuickBooks allows for customization, and much of this can be accomplished in the settings or preferences. These includes features such as whether you want to number your accounts, turn off classes, and activate a number of other features. These decisions should be made proactively and strategically, and are best made with the advice of an accounting professional.
QuickBooks ProAdvisor Certifications
There are two certifications that an accounting professional can achieve for QuickBooks Online:
- Certified QuickBooks Online ProAdvisor
- Advanced Certified QuickBooks Online ProAdvisor
These certifications are offered by Intuit and require the accounting professional to complete training and an exam. The Advanced exam is quite difficult.
For QuickBooks Desktop and other products, these certifications are available:
- Certified QuickBooks Desktop ProAdvisor
- Advanced Certified QuickBooks Desktop ProAdvisor
- Certified QuickBooks Point-of-Sale ProAdvisor
- Certified QuickBooks Enterprise Solutions ProAdvisor
Getting Professional Help with Your QuickBooks® Software
If you use QuickBooks Online and are ready to get professional help with your software, please contact us. We will evaluate the health of your books, make a plan to stay on track, and provide a quote for consulting or training in QuickBooks based on your specific needs.