Top 10 Mistakes and How to Prevent Them

Top 10 Mistakes and How to Prevent Them

1. Selecting in the wrong Versions or Platform

· Online – Enterprise -- Pro / Premier – Plus – Hosted

· If you are never in the office, don’t need inventory or job costing, go with online ---- With full service payroll if payroll is needed – plus if costing is needed

· Enterprise Edition is good for those that have inventory

· Pro / Premier is good for most

· Hosted is good for more control over your file and the payroll process as well as those that need job costing and time tracking remotely, or add ins.

2. Your Chart of Accounts

· The list should not look like your checkout slip at the grocery store.

· Make accounts for things that happen every year – like insurance – and categories that help you manage your business – like product categories or cost drivers.

· Use subaccounts to keep it clean and tidy.

· You can merge unused accounts, just be careful about prior year data.

· Inactivate items that you no longer use.

3. Failure to Launch…I mean reconcile.

· The only way to make sure that everything is entered correctly is to reconcile the account.

· The sooner the reconciliation is done, the healthier and more up to date you will be.

· Send bank statements to your home, especially if you have someone else working in your QuickBooks file (and READ the statement!).

· That goes for credit cards and loans too

4. Cash or Accrual…. A Cruel Mistake

· Match your tax return

· Default in QuickBooks is Accrual. The default in life is Cash. Switch it NOW.

· Your accountant will charge you to re-prepare the return or adjust you numbers

· See handout

5. What is an Item? What is not? Why do we care?

· You sell it regularly, it is “standard” language

· A class of items that are regularly sold

· Not a “one off”

· Be sure that the item is linked to the correct general ledger accounts – revenue and costs

· Inactive items you no longer use / sell

· Don’t use inventory unless you want to do year end inventories

6. Using “Out of the Box” Settings

· No software can be all things to all people

· Define reporting options - Cash vs. Accrual

· Determine the finance charges for customer late payments

· Assign default bank accounts for paying bills, receiving checks etc.

· Check out the report settings and the approved apps on the QuickBooks site

7. Mismatched Socks

· Not following the full process will result in transactions that don’t match up

· Enter Costs - Invoice – Cash Receipt – Select Payments - Deposit

· PO – Enter Bills (Billable?) – Pay Bills

· Run Accounts Receivable aging and Accounts Payable aging to check for matches

8. Negative Balances

· All accounts have a natural balance…A balance that naturally occurs when things are working correctly.

· Exceptions – Accumulated Depreciation / Accumulated Amortization

· Undeposited Funds should be zero if all of your checks are in the bank

· Your Accounts Payable report should match the Balance Sheet (on the same date)

· Your Balance Sheet report should match the Balance Sheet (on the same date)

· Run the Profit and Loss and Balance Sheet each month after the reconciliations are performed.

· If you have help with your bookkeeping ask for these reports monthly.

9. Deleting Transactions

· These are linked together like links in a chain.

· A change to one transaction can affect up to 6 others.

· Entering a negative transaction and clearing both of them is a better plan.

10. Not Controlling Your File

· Set up user names and passwords as well as permissions – Owner is the Admin, not the bookkeeper

· Close periods after the taxes are prepared EACH YEAR. PS-Write down the password

· BACK UP YOUR FILE AND TAKE IT OFF SITE WITH YOU (or use QuickBooks online)