Mistakes are likely happen in your bookkeeping, but it’s best if they don’t! We have a few common errors that can occur and how to avoid them. They’re easy to miss but also easy to fix. Sometimes it’s as easy as double-checking your entries and making sure numbers match up. When working on your books, be sure to keep your eye out for these five mistakes that can easily slip by unnoticed.
When deposits are added to QuickBooks, sometimes they will be added on multiple lines when only one deposit reaches the bank. Your deposits and your bank account should be identical.
We’ve had clients mark invoices as paid and put them in Undeposited Funds. Then they realize they had gone to the bank and made a deposit so they create another entry to record this activity. Don’t do this! Instead, make an entry moving the money from Undeposited Funds to the bank.
This usually happens when you rely on bank or credit card downloads to record your transactions. People often record two different transactions: a payment from the bank to the credit card AND a payment from the credit card to the bank. In result, the money comes out of the bank twice and the credit card is paid twice, when, in reality, it should only happen once. This transaction should only happen ONCE. We have also seen a transaction (or two) get downloaded twice. This usually happens on/about the statement’s ending date so be aware of this.
Accounts need to be reconciled on a monthly basis. This includes bank, credit card, loans, and liabilities including sales tax, payroll tax, and other payroll obligations. Why on a monthly basis? This ensures that whatever you THINK has cleared has ACTUALLY cleared. Mistakes can happen either in your books or at your bank so reconciling on a regular basis allows you to correct these mistakes. One time a client of ours wrote a check for $150 but the “1” blended in with the line of the Amount Box so the bank cashed it for $50. It took three months to get this cleared up.
When using QuickBooks Desktop, you should be backing up your data on a regular basis. We recommend at least monthly but more often is a great, too. You need to back up your data to another location. We suggest using a cloud storage system. If any unfortunate events happen (fire, computer crash, meteor strikes the Earth), you’ll be able to restore this information to another device.
If you ask yourself these five questions when doing your bookkeeping, you'll avoid any of these mistakes. It's better to double check and fix than to miss it and deal with it months later. If you keep having an issue with any of these, contact us and we can help!