Is Your QuickBooks File Actually Accurate? 10 Things to Check

QuickBooks Online makes bookkeeping easier.

But it doesn't automatically make your bookkeeping correct.

That's an important distinction.

QuickBooks is a tool. The quality of the information going into that tool determines the quality of the information coming out.

So how can you tell whether your QuickBooks file is actually in good shape?

Here are ten things to check.

1. Have your bank accounts been reconciled?

Every business bank account should be reconciled regularly.

If you can't remember the last time yours was reconciled, that's a good place to start.

2. Have your credit cards been reconciled?

Don't forget credit cards.

Credit card transactions are often overlooked, and an unreconciled credit card account can throw off your financial statements.

3. Are there old unreconciled transactions?

Sometimes a transaction sits in QuickBooks for months because it was entered incorrectly or never cleared the bank.

Old unreconciled transactions should be investigated rather than simply ignored.

Why? Because they may be increasing your income, and taxes, unnecessarily!

4. Is your income being recorded correctly?

Make sure customer payments aren't accidentally being recorded as income a second time when they should be applied against an invoice.

This is especially important if you use more than one system for invoicing and collecting payments.

This is a very common problem that I run into a lot when doing cleanups!

5. Are expenses categorized appropriately?

Your expense categories should give you useful information about how your business spends money.

If everything is going into broad categories like "Miscellaneous," you're losing valuable information.

6. Are personal transactions being kept separate?

Business and personal expenses should be kept separate whenever possible.

If a personal transaction does appear in your business account, it needs to be handled correctly in the books.

7. Are loans recorded correctly?

Loan proceeds, interest, and principal payments are not all treated the same way in your accounting records.

If your business has loans, make sure they're being recorded properly.

8. Does your Balance Sheet make sense?

Don't only look at the P&L.

Review your Balance Sheet, too.

Look at cash, accounts receivable, credit cards, loans, and other balance sheet accounts.

Do the balances make sense?

9. Are there old items sitting in accounts?

Old transactions in Accounts Receivable, Accounts Payable, Undeposited Funds, or other accounts may indicate that something needs to be cleaned up.

10. Does your Profit & Loss tell a believable story?

Finally, look at the big picture.

Does your revenue make sense?

Do your expenses look reasonable?

Does your profit seem realistic?

Your financial statements should reflect what you know is happening in your business.

What if you don't know how to answer these questions?

That's okay.

You're a business owner - not a bookkeeper.

You don't need to know every accounting rule or understand every QuickBooks report.

But you do need reliable financial information.

If you're unsure whether your QuickBooks Online file is accurate, a FREE bookkeeping review or cleanup can be a great place to start.

At Functional Business Solutions, I help small business owners get their QuickBooks files organized, accurate, and useful again.

Because you shouldn't have to wonder whether you can trust your numbers.