Avoid These 10 Common QuickBooks Errors
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With each New Year comes a new set of tax filing deadlines and that means businesses are working hard to update their existing QuickBooks files or setup new ones. As you work on your company’s books, watch out for these 10 most common errors users make in QuickBooks Desktop and/or QuickBooks Online.
- Your Chart of Accounts (COA) has duplicate and unused accounts
To clean things up, group similar accounts together by using sub-accounts. Keep it as simple as possible. When you enter data, enter it in the lowest level account rather than in the main account. If you view your COA and see duplicates, then merge them into one account.
- You’re not using the purchase order system for Inventory
Many business owners fail to use this helpful functionality. Using purchase orders can help you manage your inventory better and minimize data entry. Consider the following steps:
- Create a purchase order when you buy product from a vendor
- Receive products against a purchase order
- Periodically run your purchase order report to ensure there are no stale dated orders. If you encounter old orders that should not be listed, clear them out by marking them “closed.”
- Not setting sales tax preferences
If your business sells items that are subject to sales tax, setup sales tax preferences to help accurately keep track of your sales tax liability. To set sales tax preferences go to Edit → Preferences → Sales Tax icon → Company Preferences → Owe Sales Tax and then choose either As of Invoice Date or Upon Receipt of payment. Check your state sales tax law and speak with your accountant to determine the right choice.
- Using the write checks window to pay payroll taxes
As payroll is processed, QuickBooks keeps track of how much payroll tax the business owes and records that amount in the Payroll Liabilities account. However, if payroll taxes are accidentally paid using the Write Checks window, the amount paid will not be properly deducted from the Payroll Liabilities window. Instead, remember to pay payroll taxes directly from the Pay Liability window to ensure payroll liability balances are properly tracked.
- You’re deleting transactions
Many types of transactions in QuickBooks are linked together—if you delete one transaction, you could inadvertently be changing other transactions that were linked to it. In many cases, the best practice is to void a transaction rather than delete it. However, if the transaction in question is from a closed period, even voiding it can cause problems. Check with your accountant who may suggest you reverse the transaction through the current period.
- Your report settings are incorrect
Do you want cash or accrual reports? Cash Reports account for revenue and expenses when money is received or disbursed. Accrual Reports account for revenue when earned and expenses when incurred, even if money hasn’t yet been received or disbursed. You can set your default preference by going to Edit → Preferences → Reports and Graphs → Company Preferences.
- You haven’t created user roles, permissions and passwords
If there are multiple people working in your QuickBooks file, give them each individual user logins, permissions, roles and passwords. This can allow for more control and transparency as to what happens within your books.
- Forgetting to lock a closed period
When you close out a month or any period, lock it so that no one can go back and inadvertently change transactions for that period. Only the administrator should know the password to unlock the period. Set the closing password by going to Edit → Preferences → Accounting → Company Preferences → Set Date/Password.
- Not backing up the data
Plan for the unexpected. What would you do if a computer crash wiped out your QuickBooks data? Consider backing up your QuickBooks Desktop file at the end of each day. To do so, go to File → Backup Company → Create Local Backup. You may want to speak to your IT Professional about the best system to ensure your data’s safety.
- Using name types incorrectly
Learning how to use name types correctly in QuickBooks can help produce more accurate and detailed reports and help better utilize search functions. For instance, be careful not to code customers and vendors to the other names list or classify employees as customers.
Being aware of these common mistakes can help you maintain a cleaner, more accurate file. Please note, the steps to address these issues can differ depending on whether you’re a QuickBooks Desktop or Online user. Contact me or another one of Kaufman Rossin’s QuickBooks ProAdvisors for help.
