Sometimes people know their books are wrong but they aren’t sure what is wrong. Other times, people have no idea there is a problem because they don’t know what they don’t know.
If you know for sure your books have problems, then use the chart below to see what kind of problem(s) you are having and what the solution is likely to be.
If you already know your books have some issues, or even if you think your books are rock solid, I still suggest printing out the reports discussed and going through the accounts to make sure. As I’ve said other places, 98% of the books we see have at least one problem, so the chances are yours do, too. Maybe not, but it doesn’t hurt to check so if you are doing clean up you can make sure you get everything at once.
If you aren’t sure what your problem is, but you think you might have one, then the best way to spot it is to go to the reports menu, select the Profit and Loss Standard report and select a time range that covers the last twelve months by month (or as long as you’ve been in business if less), and print it out.
Then print out a Balance Sheet report, with an ending date of the last day of the most recent month that has passed.
Then, in a nutshell- look for stuff that looks wrong:
On the P&L, look for:
- Negative income amounts (aside from refund or discount accounts)
- Negative expense amounts
- Amounts that are way higher or lower than you think they should be
- Accounts with contents you aren’t sure of
- Amounts that are loan payments
- Amounts that are sales tax payments
- Amounts that are credit card payments
- Amounts that are payments to the owners or investors
- Anything that says payroll that wasn’t an actual paycheck
These are all red flags that things have gone wrong.
On the Balance Sheet, check if you see:
- A bank balance that is negative or way off what it should be
- Accounts receivable balances that are more than you are actually owed
- An inventory amount that isn’t really the value of your inventory
- Asset accounts that don’t match the value of your actual assets
- Depreciation or Amortization that is MORE than the value of your assets
- Loan balances that are wrong (or missing)
- Accounts payable balances that are more than you really owe
- An opening balance equity account
- Any other number that looks wrong – you don’t know what it is, or a negative number
If you spot one or more of these, there is a very good chance you are making one or several of the mistakes outlined below. Time to get busy working through these!
Go down the list. If you are doing it correctly, you don’t need to worry about it. If there is an issue, mark it so you can come back to it. When you come back to it, make sure you understand how to correct it, and go as far back in your books as needed to fix it. It is easy to keep the books in order once they are organized, but until they are fixed, they are never going to give you usable or accurate information.
|Not Reconciling Your Accounts||Your balances don’t match reality and are way off||Get a good starting balance and then match entries to statement|
|Not Doing Sales Tax Correctly||Over or under balance owed compared to your POS report||Use built-in sales tax tracking correctly|
|Bad Chart of Accounts||Identical expenses going in different places each month||Clean up Chart of Accounts to make it easy to use right|
|Doing Loans Wrong||Only payments showing, no split for interest expense, no loan balance||Use loan accounts and reconcile with statements to split into two parts|
|Missing Credit Card Expenses||Overstated profit, payments to credit card but no detail||Set up credit card account, reconcile expenses and payments|
|Screwed up Invoicing||Customer balances not right, income overstated||Learn to receive payments and deposit funds correctly|
|Forgetting 1099s||1099s not filed because 1099 vendors not tracked||Get a W-9 from each eligible vendor and track in QB from start|
|Asset Accounts Wrong||Missing assets, missing deductions for expenses treated as assets||Understand how to use asset accounts and what goes in them|
|Equity Accounts Wrong||No equity or equity treated as expense||Understand how to use equity accounts and who they are for|
|Getting Behind, Doing it all Yourself||Books not started or way behind or way wrong||Get help, get them caught up and fixed, delegate!|
If you find problems and you can’t figure out how to fix them, or you would rather hand off the task or you just want to make sure it is done right, then give us a call– we’d be happy to give you a fixed price quote on what it will cost to get it all cleaned up for you.