Organized Bookkeeping

QuickBooks and the Pursuit of Perfection

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QuickBooks and the Pursuit of Perfection


What does a ‘perfect’ set of books look like?  Is it neat and tidy?  Does it have more than 100 general ledger accounts?  Could it be mistaken for a Fortune 500 Companies filing with the SEC?

Somewhere between the shoeboxes and the Fortune Companies there lies the perfect set of books for any small company.  Sometimes people are nervous about showing them to outsiders or their CPA.

This is what I look for:

  • Is the information easy to read?  If it’s for a car wash; is there a line item for soap and other car washing supplies?  Are there multiple locations?  Is the location information segmented?  Are the operating expenses organized in a logical fashion?  For QuickBooks; that usually means alphabetically.  You can also rearrange them by function or department.
  • Payroll Information has been entered correctly.  By correctly, are there amounts shown for the payroll taxes due to the IRS and State Payroll Departments?  Is the salary expense broken out from the payroll taxes:  QuickBooks does no favors on this issue because it auto-sets up incorrectly in most cases.
  • Bank Reconciliations:  Have they been completed?  It’s common to find that people have not completed them for months and months.  A culprit is a mistake they cannot resolve and then procrastination.
  • Fixed Assets:   Where are they located on the financial statements?  They should be on the Balance Sheet, with an appropriate amount of Accumulated Depreciation.
  • Ask My Accountant or other Misc Accounts are equal to Zero: I know, I know, you need help with this part. 🙂
  • Undeposited Funds is small or not present:  This is the most common issue with QuickBooks! People do not finish the bank deposit process.  I think most newbies make this mistake because the process is a bit convoluted.  In the first step, you apply the payments to the AR invoices or other deposit issues.  This is where most people stop.  The second step is grouping all those payments into a bank deposit list and posting that amount to the checking account.

This is a partial list of what I look for, but it’s a good starting place.  Once you start looking in these areas, your accounting books will start to be squeaky clean. When the financial statements tell your business’s story, they are much more useful in getting loans, management decisions resolved, and completing tax returns.