QuickBooks makes it easy to record transactions and just as easy to record them wrong. Bank feeds auto-categorize badly, duplicates slip in, and personal spending ends up in business accounts. Here is a working order for fixing it.
Before you touch anything
- 1Make a backup of your company file.
- 2Collect bank, card, and loan statements for every period.
- 3Note the date through which you trust the books, and start there.
- 4Give your accountant access if they will review your work.
The cleanup checklist
- 1Reconcile every bank and credit card account, oldest unreconciled month first.
- 2Clear the Uncategorized Income, Uncategorized Expense, and Ask My Accountant balances by reviewing each transaction.
- 3Look for duplicates, often created when a bank feed and a manual entry both exist.
- 4Check Undeposited Funds. Payments sitting there for months usually mean deposits were not matched.
- 5Review owner draws, distributions, and contributions, and move personal items out of expenses.
- 6Check loans and credit lines for correct principal versus interest.
- 7Confirm sales tax payable and payroll liability balances match what you actually owe.
- 8Review accounts receivable and payable for stale items.
Sanity checks on your reports
- Profit and loss: does each major category look plausible compared with last year?
- Balance sheet: do bank balances match the statements on the report date?
- Negative balances where none should exist, such as negative inventory or negative equity.
- Trial balance: unusual accounts with no clear purpose.
- Payroll totals tie to your payroll reports and Form 941s.
Common QuickBooks mistakes that hurt tax returns
- Recording loan payments entirely as expenses.
- Treating owner contributions as income.
- Recording sales at the net deposit instead of gross sales and fees.
- Leaving 1099 contractor payments untracked.
- Not separating personal spending from business spending.
When to bring in help
If a reconciliation will not balance after a reasonable effort, if opening balances are wrong, or if the file spans years of errors, a professional cleanup is usually cheaper than continued guessing. See bookkeeping cleanup services. Starting the process early also leaves time to answer questions before filing deadlines. For year-end timing, see small business year-end tax planning.
Our bookkeeping service includes QuickBooks review and cleanup. When you are ready, discuss your bookkeeping cleanup.
