As we say here at my firm: Garbage in = Garbage out… so proper setup is crucial. Here is 1 QuickBooks setup error that we see the most AND how to fix it.
Chart of accounts
Account list not appropriate to reporting needs: If you are unsure if your chart of accounts is appropriate for you and your business, do a Google search. Chances are you aren’t too far off base or not as far off as you thought you were.
Redundant or duplicate accounts: You don’t want a bloated Chart of Accounts, you want a lean mean account machine so LESS is MORE! And let’s be honest here, you don’t REALLY need two or three accounts for, let’s say, telephone expenses.
Here are a few alternatives for you:
Since it is most likely that your telephone expenses are paid to different vendors, if you want to know how much you paid in cell phone expense versus what you paid in office phone expenses – you can either run a Vendor Transaction Report or run a General Ledger Report for the account in question and sort it by the vendor paid.
If you must separate them, make them sub-accounts of a main account – for instance, Cell Phone Expense & Office Phone Expense would be sub-accounts of Telephone Expenses.
If you find that you have duplicate accounts, you can merge them.
Unused accounts: During the setup process, QuickBooks can (and will) generate a Chart of Accounts for you. Sometimes, it creates accounts that just don’t make any sense for you and your business. No big deal. Here’s what you do. If you notice that there are accounts that you have never used and you will never use, you can do one of two things:
(1) if you are unsure and just want it to “disappear” for now, make the account inactive but if you are absolutely positive that you will never use the account, you can
(2) delete it
As I’ve heard it said, standing in a garage, doesn’t make you a car… knowing a bit about QuickBooks and being able to navigate it, does not make you an accounting expert. Don’t be afraid to look ask for some help.
