One of the best bookkeeping tools available for a business is QuickBooks. QuickBooks has a user-friendly interface, easy-to-use tools, and a robust feature set. But even with all of the ways QuickBooks makes bookkeeping easy, it can still lead to problems.
Business owners often make QuickBooks mistakes that throw off their books and, in the worst cases, cost them money.
Let’s look at some of the top QuickBooks mistakes business owners make so you can avoid them — and keep more cash in your business.
The Top QuickBooks Mistakes Business Owners Make
Are you making any of these top QuickBooks mistakes? Double-check your work to make sure you aren’t committing these errors that could cost you.
1. Entering revenue twice
One of the most expensive mistakes you can make in QuickBooks is entering revenue twice. Entering revenue more than once inflates your income and has major tax implications. If you report extra income, you will also have to pay extra taxes.
A CFO2U tax client made this mistake in QuickBooks. The company recorded income when they sent invoices and when they received payments in the bank. This error resulted in $130k in duplicate income. If our team had not caught this error at tax time, the client would have paid taxes on $130K of income they never received.
Related: 10 of the Most Common Bookkeeping Mistakes Small Businesses Make
2. Not reconciling bank statements with QuickBooks
Business owners are busy, so many of them overlook the task of reconciling their bank and credit card statements. They trust that what they enter into QuickBooks is accurate. But, this can lead to big problems.
When you don’t reconcile bank statements, you can miss income and expenses and fail to notice errors. Failing to enter income can cause big problems if you misrepresent income at tax time. And, failing to enter expenses can limit your ability to claim deductions, potentially leaving you with a higher tax bill. Reconciling QuickBooks with your bank statements ensures that you haven’t made any errors (like missing an entry or entering $2,900 instead of $9,200).
3. Using the incorrect accounting method
An important setting in QuickBooks is choosing your accounting method. When you use QuickBooks, you can set up a cash or accrual accounting method. Cash accounting records transactions when actual cash is received. Accrual accounting recognizes revenue and expenses when they are earned or incurred, regardless of when the cash is received or paid.
Switching between or using the wrong accounting method in QuickBooks can have significant implications for your financial reporting and tax obligations. It can create discrepancies in your financial reporting, lead to tax consequences, and cause major reconciliation problems.
Related: Do I Need a Bookkeeper? 10 Signs That Point to Yes
4. Not updating QuickBooks for weeks… or months
Many businesses that don’t have a dedicated bookkeeper don’t work on their books until they absolutely have to. Income isn’t entered. Receipts pile up without being recorded in the system. Then, when the business owner needs a report, they rush to enter everything. This approach is bad business. Not only does it leave business owners with a load of work when they decide to update their books, but it makes it virtually impossible to make solid business decisions in real time.
For example, a business owner could be trying to determine their potential tax liability based on what they think they made, which could be grossly different from reality. With outdated books, you are running your business blind and can’t make informed financial decisions about inventory, hiring, taxes, growth, sales, and so much more.
Related: Outsourced Bookkeeping Benefits: 7 Ways to Save Time & Money
5. Leaving everything to your internal bookkeeper
Hiring an internal bookkeeper can certainly take a big task off your plate as a business owner. But that doesn’t mean you can walk away from your books completely. Relying too heavily on an internal accountant or bookkeeper can lead to serious problems.
Without oversight, it can be easy for an internal bookkeeper to make errors and commit fraud. We saw this happen when a new client came to CFO2U. They hadn’t been checking on what their internal bookkeeper was doing — and they ended up the victim of fraud. Their internal bookkeeper embezzled over $33,000 in fraudulent expense reimbursements that were processed through payroll without owner approval. It’s essential to regularly check in on your books and work with a reputable bookkeeping partner you can trust.
Related: How to Do Bookkeeping for Small Business: The 11 Things You MUST Do
6. Not using all of the features available to you
If you are only using QuickBooks to enter income and track expenses, you are missing out. QuickBooks is jam-packed with features that can help you better organize your finances to better run your business. But you have to know about the features to get use out of them.
Some features you might not be using include:
- Account classifications
- Customer grouping
- Sales tax tracker (which connects to e-commerce tools like Amazon, eBay, and Shopify)
- 1099 tax manager for contractors
- Project profitability reports
- Inventory tracking
- Cash flow forecasting
- Employee expense tracking
- Mileage tracking
- App integrations (with tools like HubSpot, Docusign, Bill.com, Salesforce, and more)
You can save time and money by using more of the features you are already paying for in QuickBooks. Don’t overlook the features that can help you run your business with better insights and efficiency.
Avoid QuickBooks Mistakes. Work With a Pro.
When used correctly, QuickBooks is a powerful asset for business owners. It can offer insight into your business, help you make financial and operational decisions, support your efforts to get a loan, and make tax time a breeze.
But QuickBooks can’t provide all of these benefits unless you are using it properly.
If you need help optimizing and updating your QuickBooks to use it to its full potential, let’s talk.
CFO2U has QuickBooks ProAdvisors on our bookkeeping team, ready to take over your bookkeeping tasks. Schedule a free consultation to learn more or download this free guide to get ready to hire the best bookkeeping partner for your business. 
- Important Hurricane Recovery Resources for Small Businesses - October 17, 2024
- Want to Avoid a Surprise Tax Bill? Do This Right Now. - September 24, 2024
- 5 Serious Tax Problems Caused by Bad Bookkeeping - August 30, 2024
