QuickBooks can be a valuable tool for managing your business finances.
It can help you track income and expenses, manage invoices, reconcile accounts, run financial reports, and organize information for tax preparation.
But simply having QuickBooks doesn’t guarantee that your financial records are accurate.
How you use the software matters.
Here are several simple QuickBooks tips that can help small business owners get more from their accounting system.
Keep Your Accounts Organized
Start with a chart of accounts that makes sense for your business.
Your income and expenses should be categorized consistently so your financial reports provide useful information.
Avoid creating a new category every time you see an expense you don’t recognize.
If you’re unsure where something belongs, ask your accountant rather than creating unnecessary categories.
Reconcile Your Accounts Regularly
Bank reconciliation is one of the most important accounting tasks you can perform.
Reconciling means comparing the transactions recorded in QuickBooks with the transactions shown by your bank or credit card company.
Regular reconciliations can help identify missing transactions, duplicate transactions, incorrect entries, and other problems.
Monthly reconciliation is a good practice for many businesses.
Keep Business and Personal Expenses Separate
Mixing personal and business expenses can make bookkeeping more difficult.
Whenever possible, use dedicated business bank accounts and credit cards for business activity.
If a personal transaction does appear in a business account, make sure it is properly recorded.
Keeping business and personal finances separate also makes it easier to understand how your business is actually performing.
Review Your Reports
Don’t use QuickBooks only to record transactions.
Use the reports.
Some of the most useful reports for small business owners include:
- Profit and loss statement
- Balance sheet
- Accounts receivable
- Accounts payable
- Cash flow information
Reviewing these reports regularly can help you understand where your business stands financially.
Don’t Let Transactions Pile Up
It can be tempting to wait until tax season to catch up on bookkeeping.
That can make accounting much more difficult.
When transactions are entered and categorized regularly, it is easier to identify problems and make decisions based on current information.
Keeping your books up to date also gives your accountant better information when tax planning or preparing your tax return.
Be Careful With Automatic Categorization
QuickBooks can make suggestions about how transactions should be categorized.
Automation can save time, but you should still review the results.
A transaction that appears to belong in one category may actually belong somewhere else.
Incorrect categorization can affect your financial statements and potentially your tax reporting.
Keep Your Software and Access Secure
Use strong passwords and appropriate user permissions.
Not every employee needs access to every financial function.
Review who has access to your QuickBooks account and remove access when someone leaves the business.
Also make sure your accounting information is backed up and protected appropriately.
Don’t Be Afraid to Ask for Help
QuickBooks is designed to make accounting easier, but it doesn’t replace accounting knowledge.
If your reports don’t look right, your accounts won’t reconcile, or you’re unsure how something should be recorded, getting professional help can save time and prevent larger problems later.
A QuickBooks ProAdvisor or accounting professional can also help you set up your system correctly and develop consistent bookkeeping processes.
QuickBooks Is a Tool
The goal isn’t simply to have QuickBooks.
The goal is to have accurate financial information that helps you understand and manage your business.
When your accounting software is properly configured and your records are maintained consistently, QuickBooks can become a valuable resource for financial reporting, tax preparation, and business planning.
Transactions, LLC provides accounting and software support for businesses in Mount Airy and throughout Northwest North Carolina.
If you’re struggling to keep your QuickBooks records organized or simply want to make sure you’re getting useful information from your accounting system, we’re here to help.
Contact Transactions, LLC to discuss your QuickBooks and accounting needs.