“A very high percentage of small business owners get inaccurate reports from their QuickBooks”, says QuickBooks guru Doug Sleeter.
Why? Is everyone making data entry mistakes?
No, the reason goes back to the first day we set QuickBooks up, when we didn’t know how to use it yet, and we set it up wrong. From that moment on the reports that have come out of QuickBooks® have been wrong too.
How can we know if we’ve set up QuickBooks wrong? Is there a test that we can we run to find out if our QuickBooks reports are right? What should we be looking for?
I run a test on my client’s QuickBooks, and here is what I look for:
1. Current transactions hiding in Opening Balance Equity
2. Accounts Receivable on cash basis reports
3. Outdated Undeposited Funds from customer payments
4. Negative liabilities on the Balance Sheet
5. Income hidden in expense accounts
What do you do if you find you have problems with your QuickBooks? First, don’t despair! Some problems look huge, but an experienced QuickBooks troubleshooter can fix them in a just a few mintues. Others are harder to fix, but not impossible. The most important thing for us small business owners is to know for certain that we can trust the numbers we are getting out of our QuickBooks, so try to look on the briight side, knowing that your hard work will pay off.
If, for instance, you find that you’ve been accidentally entering transactions in the dreaded “Opening Balance Equity” account, you can track them down and change them so they go in the right account and show up correctly on your financial reports. You may find that you really have a lot more equity (value) in your business once you’ve cleaned up this account, so in the end your business will look a lot more stable to an outside agency, like a bank or other lender.
If you’ve never figured out how the whole “Undeposited Funds” thing works in QuickBooks then there’s a good chance you’ve been doubleing the income on your Profit and Loss report. Once you fix that, you should have some money coming back to you for business taxes you’ve paid on that income, and you’ll save money on taxes in the future.
What if your Balance Sheet shows a negative number for one or more of your liabilities? That could mean a lot of things, both good and bad, for the way your business looks on paper, but fix it up and regardless of how it looks, you’re going to feel a whole lot better knowing that you can trust those numbers!
Speaking of trust, get yourself a QuickBooks expert who will come to your office, get it fixed, and show you how to use it. You will feel a lot better knowing you’ve someone to call when you need QuickBooks help.