How do you know if your bookkeeping is actually in good shape?

A lot of business owners assume their books are fine because QuickBooks has numbers in it.

Unfortunately, having numbers in QuickBooks doesn't necessarily mean those numbers are correct.

Here are seven warning signs that your books may need some attention.

1. Your bank balance doesn't match QuickBooks

Your QuickBooks checking account says you have $25,000.

You log into your bank and see $18,000.

That's a problem.

There can be legitimate reasons for differences between your bank and your accounting records, but your accounts should be reconciled regularly so you know exactly why those differences exist.

If you don't know why the numbers don't match, it's time to investigate.

2. You have a huge "Uncategorized" balance

The Uncategorized Income or Uncategorized Expense accounts aren't supposed to become permanent homes for transactions.

They're holding places for items that still need to be reviewed and properly classified.

If those accounts have been growing for months—or years—you may not be getting an accurate picture of your business.

3. Your Profit & Loss doesn't make sense

Take a look at your P&L.

Do your numbers look reasonable?

If you own a construction company but suddenly have $15,000 sitting in Office Supplies, something may be wrong.

If your revenue looks unusually high or your expenses don't seem to reflect what you know you've spent, don't ignore it.

Your financial statements should tell a story that makes sense.

4. Your Balance Sheet has accounts you don't understand

What is that $8,000 sitting in Other Current Assets?

Why is there a negative balance in Accounts Payable?

Why is an old loan still showing on your books even though you paid it off?

If you don't understand what you're looking at, that doesn't necessarily mean you're doing something wrong.

It means your books may need to be reviewed.

5. You haven't reconciled your accounts recently

Bank reconciliation isn't just checking to see whether your bank balance looks right.

It's a process of comparing your accounting records to your bank statement and making sure the transactions are complete and accurate.

Regular reconciliations can help identify duplicate transactions, missing transactions, incorrect entries, and other problems.

6. You only look at your books during tax season

If the first time you look at your financial statements is when your tax professional asks for them, you're missing one of the biggest benefits of bookkeeping.

Your books can help you make decisions before the year is over.

By the time tax season arrives, it's too late to make many decisions that could have helped your business months earlier.

7. You're afraid to look at your numbers

This one might be the biggest warning sign of all.

If opening QuickBooks makes you anxious because you don't know whether the numbers are right, you're not getting the information you need from your accounting system.

You should be able to open your financial statements and understand what's happening in your business.

What should you do if you recognize several of these?

Don't panic.

Messy books are fixable.

The important thing is to stop ignoring the problem and determine what needs to be corrected.

Sometimes you simply need better monthly bookkeeping.

Sometimes you need a cleanup.

And sometimes your books are actually fine - you just need someone to explain what you're looking at.

That's where I come in.

At Functional Business Solutions, I help small business owners clean up their QuickBooks files, keep their books current, and understand what their financial statements are telling them.

You shouldn't have to be an accountant to understand your business finances.

You just need accurate information and someone who can help you make sense of it.