The Stress Free Bookkeeping Blog
brought to you by Dawn Klevesahl - The Stress-Free Bookkeeper™
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I would like to take a moment to thank Dawn for her expertise and let everyone out there know that she is the best! She responds to questions immediately and has had the patience of a saint trying to teach me quickbooks for my company! No words can express how grateful I am for her help because quickbooks and accounting are not my thing! Call Dawn today and save yourself from a lot of unnecessary stress! She will not disappoint! Thank you Dawn!!
Imagine you are a busy shop owner. You purchased a franchise and are just learning the how to run the business. You know that the franchise will calculate its fees based on the gross income that your shop takes in. You have given them access to your QuickBooks Online account so that they can view your sales reports and are confident that everything is working out correctly. After all, the sales data transfers directly from the cash register into the QuickBooks Online file nightly so what could go wrong?
This is a common situation that business owner's find themselves in when their accounting software, be it QuickBooks Online or another company, promises that will "do it all". The truth is these programs are awesome, saving time and money when used correctly.
Where problems arise...
Once the software has done its job of bringing you all of your data quickly and easily you have a very important job to do. Now you must safely and accurately record the data into your QuickBooks Online file. This job is commonly overlooked or, in the case of our business owner from our example above, done incorrectly. In this particular case the sales numbers were correctly transmitting into the QuickBooks Online file but in addition to those entries the funds deposited from the day's sales were showing up in the banking transactions section of QuickBooks Online. From there the business owner clicked the "add" button to add those transactions to the company file. This simple step paired with the automatic data transfer of sales information into the company file created duplicate sales entries.
How to avoid mistakes...
Consulting with a professional bookkeeper with you set up your account to link with external software is key when using QuickBooks Online or other software programs. A professional can suggest having all transactions importing into your company file directed to the Undeposited Funds account. That is a holding account you can use to match up the sales data with the banking information.
Learning when you should and should not accept QuickBook Online's help with adding transactions to your company file is important too. For the most part expenses can be added directly in the bank transactions window. Checks and deposits should be added separately and then "matched" to the current bank transactions.
The real solution...
Before training the shop owner to avoid making mistakes we had to know that they were being made in the first place. The real solution came with reconciling the QuickBooks Online file to the bank statement for each account. When things didn't match up it was a big sign that something had gone wrong. From there we were able to trace the mistakes back to the duplicate entries and, more importantly, fix the data so that they were not paying twice the amount of franchise fees. Even if you don't have franchise fees to pay there are other mays that you may be costing yourself in fees and taxes if you do not reconcile the data in your company file to your bank account each and every month.
In accounting, Reconciliation is the process of ensuring that two sets of records (usually the balances of two accounts) are in agreement. Reconciliation is used to ensure that the money leaving an account matches the actual money spent.Reconciliation (accounting) - Wikipediahttps://en.wikipedia.org/wiki/Reconciliation_(accounting)
Whether you are new in business or have been around a while reconciling your accounts saves you money. If you are to the point where even thinking about your accounting is overwhelming for you we can give you a break. You get your time back and gain confidence knowing that your books are being taken care of by a professional. Let's talk about it over coffee!
Best of luck!
Dawn Klevesahl is a Certified Professional Bookkeeper, QuickBooks ProAdvisor and a natural problem solver. She uses this talent to help small business owners implement accounting systems that increase their businesses sustainability while crossing bookkeeping off of their to-do lists.