Quickbooks Mistakes Small Business Owners Make

QuickBooks is a great financial tool, and now that automatic bank and credit card downloads are widely available, accounting for your small business has never been easier. To a point. Accounting is complicated; there’s a reason it takes accountants years to hone their craft.  

If you are trying to manage your accounts on your own, it is a great way to become familiar with your business cash flows, but there are also risks. You may be missing key information because of relying on auto bank downloads and automated assignment of accounts.  

If you are curious about your business’s financial well-being, these tips are for you.   If you are having cash flow problems, or wondering where all the money is going, these tips are for you.  

If you are scaling up, and want to see where the pain points are, these tips are for you.  

If you are looking to increase net profits, or accelerate Q2 earnings, these tips are for you.  

Be sure you are doing these three things every month to keep your books in tip-top shape and help you make better decisions and increase profits:

1)   Reconcile your accounts. EVERY MONTH. This includes ALL of your bank accounts and credit card accounts too. QuickBooks has a reconcile feature that makes this very straightforward.

2)   Run a YTD comparative Balance Sheet report and scan it for unusual discrepancies between the years, or weird new accounts that QuickBooks may have auto-generated. A common auto-generated account is Uncategorized Assets. If you see something unusual, investigate it and take appropriate action.  

3)   Run a YTD comparative Profit & Loss report. This is by far the most important step for most small businesses because this is how you will identify where your money is actually going. However, you MUST do tips #1 and #2 first. Compare the current and prior year columns to see where things have changed and analyze large increases or decreases. Changes to your P&L directly affect how much money you take home. Spend some time getting familiar with this report so you can refer back to it regularly.  

A little bit of time each month spent on your books, means you will see the benefits of having a clearer financial picture. You will be able to identify the biggest areas to save money, change tactics, and increase profits.

Are you struggling with other areas of managing your small business? Please reach out with any questions or areas you'd like to discuss!