10 Common Mistakes When Using QuickBooks for Contractors

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QuickBooks is an accounting program package that is designed to manage the needs of every kind of small to medium-sized business such as managing payrolls, bills, inventory, sales etc. It offers software solutions for both on-premises and cloud based accounting applications. The package develops solutions according to the need for the industry and includes tools for marketing, services, product and supplies for merchants as well as training solutions.

A contractor version of the software is available. It is built to meet the need of every kind of contractor, therefore, the do-it-yourself accounting is not as easy and many users fall prey to a lot of mistakes.

1.  Incorrect Payroll

Managing payroll is a difficult task and any business can benefit from outsourcing this time-consuming process to a payroll firm. As the local, federal and state laws are changing regularly, managing a payroll can become a complicated task and businesses can be negatively affected by errors that result in tax penalties.

2.  Not Reconciling Accounts

It is necessary to reconcile all of your accounts.  You not only need to reconcile your savings and checking accounts, but also taxes, loans, and mortgage escrow accounts. Otherwise, you will not know if the money in the business account register is correct. 

 3.  Using Too Many Accounts & Sub Accounts 

While one advantage that QuickBooks offers is the ability to create further sub-accounts of accounts, this can also complicate the system and be very time-consuming. It is advisable that this be avoided, if possible, especially in the case of small companies where one parent account is adequate. 

4.  Not Backing Up The Company Data

In order to prepare for the unpredictable, it is necessary to back up the Business QuickBooks files every day. This will prove to be immensely helpful in case of a computer crash.

 5.  Not Reviewing

The balance sheet and P&L statements have valuable insights regarding the health of the business. Reviewing these statements can help catch mistakes before they cause any financial repercussions. Thus, they should be reviewed on a regular basis.

6. Not Setting Sales Tax Preferences

You can set up your sales tax preferences if your business makes sales that are subject to sales tax. To do this, go to Edit → Preferences → Sales Tax icon → Company Preferences → Owe Sales Tax and then choose from As of Invoice Date or Upon Receipt of payment.

  7.  Booking Loans Improperly 

It is necessary to keep a record of any loans taken by the business. This means that each payment’s principal and interest breakdown is monitored and reconciled with the monthly loan balance.

8.  Not Creating User Permissions and Passwords

If your QuickBooks file is being accessed by multiple users, it necessary to give each of them separate roles, permissions and logins.  This ensures that everything happening in your books is controlled smoothly.

  9.  Deleting Transactions

In QuickBooks, a lot of transactions are interconnected and deleting one transaction can affect other transactions linked to the deleted transaction. An alternative choice is to void a transaction rather than deleting. But, that too can cause problems in the case that the deleted transaction is for a closed period. Refer to your accountant and get the transaction reversed through the current period.

10.  Paying Payroll Taxes using the Write Checks Window

QuickBooks keeps track and records the amount of payroll tax a business owes as the payroll is managed in the Payroll Liabilities account. Accidentally paying the payroll taxes through the Write Checks window will result in the paid amount not getting properly deducted from the Payroll Liabilities. Therefore, in order to ensure that the payroll liability balance is properly deducted, it is necessary to pay the payroll taxes from the Payroll Liabilities window.

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