QuickBooks Mistakes & How to Avoid Them
Using DIY accounting methods like QuickBooks as a start up or small business owner is expected. No matter how diligent you were in recording your finances, chances are some things fall through the cracks.
Messy Chart of Accounts
Your chart of accounts should be clean and easy to understand. If it's too complicated, it’s inevitable that items will get coded wrong. Don’t create a million hyper-specific accounts. And remember to group similar accounts together. Basing your chart of accounts on Schedule C (Form 1040) is a good place to start.
This happens a lot, even to the best of us. Having the same entries in two places will cause your books to be unbalanced and you will waste time fixing the error or pay your CPA to look for and solve the issue. Create a system to track your entries. For example, have two folders, "not entered" and "entered". Once you have entered your transactions into QuickBooks, move them over to the "entered" folder.
Using Accrual Instead of Cash-based Accounting
QuickBooks defaults to the accrual method, but it's better to use the cash-based method. It's effortless, tells you exactly when the transaction took place, and it's easier to see how much cash you have at any given time.
Many of us fall behind on our records and catching up is a major hassle. To stay current on your records, make a habit of regularly recording your transactions and not waiting till the last minute. Transaction Thursdays is a perfect day!
Missing or Incorrect Adjustments
Let's say you charge $50 for a service, and the credit card company takes 2%, your revenue is actually $49. Make sure you have corrected your adjustments at the end of the month, quarter or year.
Losing Old Records
If you have changed accounting software or (for some reason) shut your business down along with your QuickBooks, remember that you only have a read-only access to your QuickBooks files. Make sure to backup regularly.
Not Getting Help
Feeling overwhelmed or stressed? Especially with the tax deadline approaching? It might be time to sign up with OneSelfClub. OneSelfClub is the perfect accounting solution for start-ups and small business owners like you. It's affordable, interactive, reliable and a lot less stressful than paying a CPA to clean up your mess nearing tax season.