Quickbooks Tips, Traps and Advice

QuickBooks is probably the #1 selling small business accounting program in the world. Well, in the US, anyway. It does a great job automating and classifying transactions, and simplifying the processing and allows small business owners to take better control of their finances. Unfortunately, it does not come with a CPA certificate or a BA degree in accounting. It will NOT turn you into an accountant overnight!

I see way too many business owners who pay a bookkeeper to maintain the accounts on Quickbooks, but where the bookkeeper actually has hardly any clue as to what they are doing. You are wasting your money if this is the case. These bookkeepers also can include outside bookkeeping services.

The #1 MISTAKE people make when using QuickBooks is in ignoring the balance sheet.

Related to this, the WORST mistake people make when using QuickBooks is in not reconciling their checkbook and other cash and credit card accounts. What makes this even worse is that the ease of cash and credit card account reconciliations is one of the best reasons to convert to QuickBooks in the first place!

With QuickBooks, the balance sheet is tied directly to the income statement, and if the balance sheet is not accurate, the income statement is not accurate! If you’re lost at this point, you’d better contact an accounting professional immediately. If you’re not lost, but feel like you could use some more guidance, contact your accounting professional.

A 5 minute QB checkup.

If you don’t know how to complete any of these simple steps, contact your accounting professional. You may be in trouble.

1. Do you reconcile your checking account using the QB “Reconcile” feature? No is the wrong answer. This question should require about 10 seconds. Either you do or you don’t. Open the “check register” file. Look at the transactions. There is a column called “Cleared.” If the item, either a check, debit card transaction, or deposit, has been cleared using the QB “reconcile” feature, there will be a check in the box. If you pay a bookkeeper to keep your books, double check this feature. Only the most recent month’s entries and the outstanding items from the prior month should be unchecked. If ALL the entries are unchecked, you need a new bookkeeper.

2. Print off an aged accounts receivable detail report. This should list all the customers who owe you money for specific invoices. Are there any entries you think are wrong or don’t recognize? This should require about two minutes. Are there any negative or credit balances? This means either you were overpaid and owe the customer the balance, or you did not prepare an invoice but did receive the cash, or you made some other mistake. This needs to be fixed. Your financial statements are wrong until you fix this.

3. Print an aged accounts payable detail report. This should list all the bills you owe. Are there any entries you think are wrong or don’t recognize? This should require two to three minutes. Are there any negative or debit balances? This means either you overpaid the invoice and are due a refund, or you made some other mistake. This needs to be fixed. Your financial statements are wrong until you fix this.

4. Print a balance sheet. Are there any accounts you don’t recognize or don’t understand? Are there any balances you think are wrong? This should require about 60 seconds. Almost all accountants focus on the balance sheet, not the income statement. There are usually MANY fewer accounts listed, and it’s usually easy to tell, almost at a glance, if the account balance is wrong or not.


If you email me your QB backup file, I will look at it for free and provide you with feedback. To be clear, I will not spend a great deal of time on this. After all, it’s free. But it might be worth it to you. Accounting is something that translates very well into a long distance service. There are now plenty of companies offering web-based accounting services and the work is actually done overseas in some cases. You never know the difference.

Intuit issues an annual QB update in addition to the normal regular updates to fix bugs. In my opinion, it’s a sleazy way to get more money from the public. One of the more popular features of the program is the ability to email invoices right from the application. I believe this feature becomes disabled after a year or so, forcing you to upgrade just to maintain the program’s basic functionality.

The other really great feature is the ability to download detailed transactions directly from your bank or credit card company directly into Quickbooks, saving hours of tedious data entry. Your ability to use this feature depends on your individual banks’s online abilities. For example, I was able to log onto my credit card account with no problem whatsoever, and download half a year’s transactions directly into Quickbooks. Wow! That was awesome. But Bank of America wants to charge me $20 a month for the same functionality. And that’s just for a personal checking account that carries a whopping fine balance in it. What a bunch of thieves! I think many credit unions have this functionality available and don’t charge extra for it. This single one issue would be more than enough reason to switch banks.

Finally, if you are processing your own payroll using QuickBooks, you need to pay particularly close attention to avoid late fees & penalties and to keep your tax tables current and functioning. I believe Intuit now charges an annual fee simply to maintain the tax tables and this is unavoidable if you intend to process your own payroll on QuickBooks.

I recommend that every small business with payroll needs use a professional payroll service. It’s one of the best values you will find. I will bet it is more reliable, cheaper and easier than doing payroll yourself on QB. In fact, I will not work for a small (under 25 employees) business that insists on doing their own payroll. It’s a clear signal that the owner does not have good judgment.

Payroll issues, including payroll tax problems, will sink a small business faster than any other single issue.


If your bookkeeper is an employee, and you pay the person $15 an hour or less, chances are the person is only marginally competent. Sure, there are exceptions, but in my opinion, this is the rule. In this case, paying a true professional a modest amount every month, or, at a minimum, once a quarter, for a detailed examination of the QB file, is money well spent. Consider this professional checkup as accounting and financial insurance and compare the cost to what you pay for other insurance. I bet the cost is a bargain.

The value in keeping up to date with your accounting extends into saving you actual cash. I see small businesses paying hundreds of dollars a year, and even into the thousands, in bounced check charges. Each one may not seem too bad, but when they’re all added up, they make a difference. One client was astounded to see how much money he was spending on lunch every month.

All of these comments apply to your personal finances. Consider your personal financial activity as your own “business.” Many many people use Quicken for this. I personally hate using Quicken. It is a crippled (listen, NO OFFENSE INTENDED! Lighten up!) version of Quickbooks in many respects. The reporting capabilities and organization is awful in my opinion. On feature, however, that Quicken has that I believe is missing in Quickbooks is the functionality of maintaining a daily accounting of your investment accounts. Again, in my opinion, if you are so obsessive regarding your investments that you need or want to download daily or even monthly cost updates, then you are welcome to your own private Idaho.

Be careful out there!



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3 Comments to “Quickbooks Tips, Traps and Advice”

  1. Dan Morris says:

    I like this post. Having just attended a local IIA meeting whose topic was Fraud Detection and Prevention, I was suprised to hear about QB and being able to change check payees after cutting a check. With the standard that QB is in the small business community, I am suprised there is no Internal Control evaluation tool, or is there?

    • Benson says:

      There are several features, like customizable log on accounts and permission settings you can use to improve the internal control environment, but most users are so small that they don’t bother. I believe you need to implement other policies and procedures outside of the software to set even a marginal level of operational and financial control over the enterprise.

  2. We Factor says:

    Thanks for sharing this Quickbook tips,traps and advice . I totally found this article helpful. This article is a must read!

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This entry was posted on August 29, 2014 and is filed under Small Business Advice. Written by: . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.