QuickBooks mistakes and errors between the balance sheet and ledger balance are no new norms. Those numbers can nag you while you are creating the financial statements for the year, quarter, and even the previous day.
The haunting time is when you or your accountant has to undergo the whole procedure of calculating the past year’s numbers again due to one small error. Your life can never get worse!
QuickBooks Errors & Mistakes To Avoid
Below are some of the common QuickBooks mistakes you must avoid today!
1. Setting incorrect preferences:
The main functioning of your QuickBooks starts with the preferences in your settings. It acts as the main powerhouse to carry your accounting functions. The better your preferences are, the more organized your accounts look down the road. Setting incorrect preferences is a sin, not just an accounting mistake.
While setting the preferences, you may:
- Regulate the finance charges for late payments from customers.
- Explain the reporting options.
- Setting up the email templates.
- Assigning default accounts for cheques and bill payments.
2. Confused accounting charts:
If the accounts are not organized properly in the charts, you might curse yourself for the rest of the reporting. It looks fine in the beginning, but as you move on, it gets as chaotic as banging your head against the wall. The data will have a lot of discrepancies down the lane.
Here’s what you need to do to organize your accounting charts:
- Always group like accounts at the same place.
- Create separate accounts for different age groups like parents and children, wherever necessary.
- Use what is required in the charts. Keeping it simple will avoid any negative signs.
- Enter the data in the lowest level of accounts.
- Enter the details where they belong. Not later, but then and there!
3. Messing up the listing of items:
Anything that you sell is defined by QuickBooks as items. As you keep onboarding new clients, the items will start getting unorderly and confusing.
Create a proper listing of items by doing the following:
- Anything that you no longer sell should be deleted from the charts.
- Everything that you set up under items needs to set up in categories of inventory, sellable inventory, non-inventory, etc.
- The prices of every item should be updated regularly as the inventory renews products.
- Costs and revenue of each item have to be tagged along with each item.
4. Cutting out transactions:
Never delete the transactions! It is the most stupid mistake you are ever going to make while using QuickBooks. The transactions are interlinked with one another. When you delete one transaction, it has adverse effects on the other transactions, thus leading to non-negotiable numbers which will diminish the calculation and inventory accuracy of the whole business.
If you plan to delete any transaction, give it a hawk’s eye. Check if the particular transaction is connected to any other one and calculate the risks and effects it might have on other transactions. Never delete a transaction on a closed period unless the accountant is sure of it.
5. Incorrectly applying deposits to invoices:
One of the profound QuickBooks mistakes is to be negligible on applying for customer payments against the invoices. When you open the report of your accounts and witness the balances on the reports that you are clueless about because you did not enter the details as per the invoice, it can get extremely problematic while you are closing the accounts.
You should always enter the data on accounts from invoices to deposits in order to avoid any miscalculation which can lead to a penalty while taxation of your funds takes place.
6. Wrong usage of undeposited funds account:
QuickBooks users can get grilled while dealing with undeposited funds. Something called as deposits module in QuickBooks has to be recorded as a sole deposit for the payment you have received from the customer. If the cash is not going on the financial records, then the undeposited fund account is being used incorrectly.
These QuickBooks problems will affect your financial management in decision making for business operations in the long run. You need to avoid these mistakes for the proper managerial structure of the company.
These are some of the simple slips which you can avoid in QuickBooks for preventing any penalties while filing taxes or calculating the business expenses.