Are you making these 8 common QuickBooks mistakes?

March 5, 2020

So you’ve decided to make the leap to cloud bookkeeping – congratulations!

Specifically, you’ve decided that QuickBooks offers the best value for money, or has the bookkeeping features that your business needs.

You’re all set, and ready to dive right in.

Before you do that though, we strongly suggest you read this article first – it could save you a huge headache further down the line!

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The 8 most common QuickBooks mistakes our bookkeepers in Melbourne deal with every day

Our small business bookkeepers in Melbourne are frequently called by prospective clients who are looking for professional help to clean up their accounts.

One of the most common things we have to fix for them? The results of a bodged DIY bookkeeping job!

We get it – you’re a small business owner. You’re used to going it alone… in fact, you may even feel uncomfortable handing such an important part of your baby off to a stranger.

The intent is pure – you just want what’s best for your business.

If you ask us however, the best thing you can do is hand your bookkeeping off to a pro – especially the QuickBooks set up process.

While cloud bookkeeping systems like QuickBooks are incredibly user-friendly and easy to wrap your head around, it’s entirely possible to make mistakes – mistakes that can dramatically affect your bookkeeping going forward.

By calling a specialist cloud bookkeeper, you’ll be able to avoid issues such as…

1) Not importing over your existing data

Many business owners threat QuickBooks as a new leaf for their bookkeeping. And it is – you will enjoy faster, easier bookkeeping!

Unfortunately, many take this thinking too far, and forget to migrate their existing data.

This is a mistake. If you want an accurate picture of your business’ finances, you need historical data. You need to know the long-term trend. You need to know how you did compared to last month/quarter/year.

And you can’t get these if you don’t bring over your old records!

This process can be time-consuming… especially if you’re moving to QuickBooks from pen-and-paper records.

Luckily, our QuickBooks bookkeepers can take care of this part of the transition to cloud bookkeeping for you!

2) Improperly (or forgetting to) reconcile your accounts

Essentially, this step is all about checking your accounts and records against bank records. In addition to ensuring your business account register is correct, protecting you against human error and confirming that you’ve entered all your information correctly.

To do this, click the menu and then under ‘tools’, ‘reconcile’. Choose the account you’re reconciling and then in the two fields enter the end date for the period you want to reconcile as well as your ending balance as listed in your bank statements.

QuickBooks will automatically list all the transactions for the period, which you can then compare to your bank statement.

Or at least, that’s how it USED to work. Nowadays, more and more of us use internet banking.

And since QuickBooks integrates with internet banking, you should see many of these transactions already ticked, meaning the information matches!

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3) Not making a proper item list

One of the first steps when moving over to QuickBooks is creating an item list. Think of this as a master list of everything that you purchase from vendors, sell to customers, or which incurs a transfer of money.

For example, say you’re a hairdresser or barber – your item list might include:

  • Entries for trims, fades and washes
  • Consumables like dye or shampoo
  • Appliances (like clippers)
  • Consultation fees
  • Salaries/wages
  • Office equipment
  • Incidental expenses

One mistake many QuickBooks first-timers make is only making items for their products, services or supplies. Many forget to add items for discounts, late fees, surcharges, shipping costs or GST, either!

Basically, anything that involves the movement of money should have its own item. When entering data, the numbers are going to be entered under these items.

Thus, it’s important that your item list is comprehensive, and that every type of transaction is accounted for.

4) Making your item list TOO complicated 

While it’s important that your item list is comprehensive, you don’t want to go too far in the opposite direction and makes yours impossible to navigate!

Think about it: do you really need items for pens, paper and printer cartridges? Why not save yourself the headache and lump them all together under a blanket item like ‘office supplies?’

It’s crucial that your item list is well-organised and that it isn’t too complex – you still need to be able to read your financial reports, after all!

Our small business bookkeepers in Melbourne suggest that you:

  • Delete items that are no longer relevant (eg. products you don’t sell)
  • Ensure that selling prices up-to-date
  • Keep your item list organised, with categories and sub-items
  • Check your stock levels regularly
  • Think about what you ACTUALLY need to know

We also suggest arranging a conversation with a cloud bookkeeper, just in case!

5) Not setting up permissions

Your POS or computer system has different accounts for each employee, each with different permissions depending on what they’re allowed to do. For example, only certain accounts may be authorised to process refunds.

Your QuickBooks setup should be no different. While several of your staff may require access to QuickBooks, you should ensure that each user is assigned appropriate:

  • Roles
  • Permissions
  • Privileges

All of this gives you more control over your finances, and helps reduce the risk of fraud.

And on a related note…

6) Forgetting to lock periods as they pass

We don’t mean to alarm you, but fraud is on the rise in Australia.

One common way fraudsters steal money from hardworking business owners like yourself is by fudging the numbers, and going back into periods past and changing the numbers to hide fraud.

You can get around this by regularly checking your previous periods… OR you could lock periods once they’re over, to stop tampering (we recommend the second option, as it’s much easier!)

7) Deleting old transactions

We get it, you want to make your bookkeeping records a little easier on the eyes by deleting old information.

Here’s why you shouldn’t!

In many cases, QuickBooks transactions are linked together. Just like how editing one cell in an Excel spreadsheet can change your calculations, changing one QuickBooks entry can affect others numbers.

Before cleaning the house, be sure that there are no other important transactions that are linked to your old transactions. Our small business bookkeepers in Melbourne are happy to dive into your accounts with you when your annual spring clean rolls round!

8) Trying to learn QuickBooks through trial-and-error

QuickBooks is simple enough that it can be learnt through trial-and-error – that said, we don’t recommend it!

While you will eventually become more confident, your bookkeeping will also suffer in the interim.

Even after you eventually wrap your head around the system, those initial mistakes can snowball if they aren’t retroactively fixed (something that’s common given how little time most small business owners have).

Long story short, your bookkeeping is too important to just “wing it!”

In addition to helping you get set up, our bookkeepers in Melbourne will also provide QuickBooks-specific training to help you get started without the awkward growing pains.

You’ve got enough on your shoulders – let us take some of it off your plate

All you need to do is call our bookkeepers in Melbourne!

Bookkeeping doesn’t have to be hard. It can be fast, easy and timeless… provided you get the right advice, that is!

Take the bother out of bookkeeping – talk to our small business bookkeepers about transitioning to QuickBooks (or MYOB Essentials, or Xero – our cloud bookkeepers don’t discriminate!)

The right cloud bookkeeping solution can:

  • Save gobs of time
  • Automate huge chunks of your bookkeeping
  • Let you check the numbers from anywhere
  • Save a bunch of money

Don’t believe us? Click here to read up on the benefits of taking your bookkeeping to the cloud and see how our innovative solutions have helped small businesses just like yours.

And once you’ve done that, give us a call on (03) 9589 0128 or click here to make an appointment online!