facebook_pixel Three common quickbooks online accounting pitfalls for new users

Three Quickbooks Pitfalls

Accounting pitfalls Quickbooks

Quickbooks Online (QBO) is one of the leading online accounting software. Stemming from its original desktop platform, the online version is acclaimed for its ease of use, accessibility and its integration with hundreds of third-party applications. It like many other accounting software and particularly online versions, does not come without pitfalls. Below are some common pitfalls, users may experience and a basic solution for each.

1) Deposits as Income

Once transactions are downloaded, you have the options to either, add, match or transfer the transaction. If you Add the transaction instead of matching it to an invoice, the customer’s deposit will show on the Income by Customer report but not on the Sales by Customer report. It will be correctly added as a deposit to income, however it will not show in the Customer Center. This can have consequences for correct customer analysis and review.

To fix this mistake you must first undo the deposit, then, enter an invoice or sales receipt that will be reflected in the Customer Center, on sales reports, and with sales transactions. The final step is to go back to the downloaded transactions to match the deposit to the Invoice or Sales Receipt.

*Remember not to create a duplicate entry

2) Having the wrong account type

Another pitfall that is commonly faced is setting up accounts as the incorrect type. This will result with an error message when trying to add a transaction of “You need to select a different type of account for this transaction.” Even though you are selecting the account name of choice.

A common account for this to occur on is on a credit card being set up as an Other Current Liabilities account type instead of a credit card account.

This is an easy fix, as editing the account type for the account will allow the transaction to be added.

3) Not Using the Transfer Transaction Option

A transfer is considered money moving from one balance sheet account to another. An example is making a business credit card payment with the business checking account. It is important to note that it does not involve customers or vendors. In this case, funds are being moved from an asset to a liability account. Another example is transferring money between accounts, moving money from an asset account to a different asset account. A common mistake is to enter these transactions as either a check, bill, or expense, throwing out reports and account balances. These entry types should be used for recording vendor activity only.

A correcting entry allows these misapplied transactions to be rectified and the correct transfer entry to be recorded. The specific correcting entry needed will depend on the original transaction type entered.

 

Hopefully these three common pitfalls and solutions will help your clients. It is important to be mindful of correct allocation and account setup when processing transactions or reviewing the final accounts for errors. Correct accounting entry and quick identification will always make for a happy client.

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