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Common QuickBooks errors and how to avoid them.

 

 

Using QuickBooks for your accounting needs is incredibly beneficial; however, it’s easy to make mistakes. Here are some common QuickBooks errors and how to avoid them to ensure your financial records are accurate and up-to-date.

1. Not Backing Up Your QuickBooks Desktop File

Start creating backups on a regular basis. QuickBooks can automate this process, but make sure it’s set up. If something happens to your computer or your QuickBooks file gets corrupted, having recent backups will be crucial. You may need to enter some missing information, but it won’t be years’ worth of data or, worse, starting from scratch.

2. Not Reconciling Your Accounts

I cannot stress how important this is. Reconcile all your accounts: checking, savings, credit cards, loans, and lines of credit. This is the only way to ensure everything is recorded in QuickBooks. It helps identify duplicate or fraudulent charges, unused subscriptions, and provides a clear picture of your financial status. It also simplifies tax time. Just because your bank is connected to QuickBooks does not mean it’s reconciled—YOU need to do that manually.

3. Not Closing and Locking Previous Years

After filing your taxes, lock your QuickBooks file for the year and password protect it. This prevents accidental changes or deletions to past transactions. Do not share your password with your office. Only you and your bookkeeper/accountant should have access, and even then, changes should be rare.

4. Improper Set Up of Items, Products, and Services

Incorrectly setting up things such as your chart of accounts or products and service items has tax implications, so it’s important to recognize the errors and fix them as soon as possible. If you are using products incorrectly, you might have noticed your inventory numbers are way off.

Most of the time, it’s as easy as going back into the product, service, or account and classifying them properly. If you are not tracking inventory in QuickBooks but want the item to show on your invoices, make sure you choose “non-inventory” as a product type. Take note to document all your changes in a separate document if you are changing a lot of items at once. This will give you reminders of what you did in case you run into trouble or forget where you left off.

5. Misclassifying Expenses or Contractor and Employee Payments

Just like everything else, it’s important to recognize that the error has been made. From there, determine what transactions are affected. Then, once you have a list of transactions, find them in your check register or vendor center and reclassify the error to the correct category.

Key Points to Consider:

    • If you are recording employee payments as contractor payments, make sure they are really freelance contractors and not employees.
    • Employees should be recorded through payroll. If you are manually doing payroll, make sure the payment is classified in QuickBooks as employee wages.
    • Contractors should send invoices for you to pay from. Those checks should be recorded to the bill payment or a category such as contractor payments, subcontractor, or outsourced professional fees. It is very important that these two are recorded separately in your reports.

In conclusion, avoiding these common QuickBooks errors can help you maintain accurate financial records and make tax time much easier. If you need further assistance, join our newsletter for more QuickBooks tips and insights to keep your business finances in top shape.

 

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