How do I know if my books are accurate?
The most straightforward check is bank reconciliation. Open QuickBooks and compare the balance in each bank and credit card account to your actual statements. If they match to the penny as of the same date, that’s a strong starting point. If they don’t match, or if you haven’t reconciled in months, your books almost certainly have errors.
Next, look at your balance sheet. Does the cash balance look reasonable? Are there negative numbers in accounts that shouldn’t be negative? Are there old balances sitting in accounts receivable or accounts payable that were actually paid a long time ago? A balance sheet full of stale or unexplainable numbers is one of the clearest signs that something is off.
Your profit and loss statement should reflect what you actually experience in the business. If you had a strong month but your P&L shows a loss, something is miscategorized or missing. If your expenses seem unreasonably low, transactions probably weren’t recorded. Compare your P&L to your gut feeling about how the business performed. They should roughly agree.
Watch for uncategorized or “Ask My Accountant” transactions in QuickBooks. These are transactions that were imported but never properly coded. A handful is normal in the short term. Dozens or hundreds means nobody is actually maintaining the books. The same goes for transactions dumped into generic categories like “Miscellaneous” just to clear them out.
Check whether owner contributions and draws are recorded correctly. Money you put into the business or take out for personal use should show up on the balance sheet as equity transactions, not as income or expenses. Getting this wrong throws off both your profit numbers and your tax situation.
If you pay contractors, make sure those payments are tracked with names attached. Come January you’ll need to issue 1099s, and reconstructing who got paid what from messy records is painful and error-prone.
The truth is that most business owners don’t review their books closely enough to catch problems early. Errors compound over time. A miscategorized transaction in March becomes a pattern that distorts your numbers for the rest of the year. Working with a full-service bookkeeping provider gives you someone whose job it is to catch these issues monthly before they snowball.
If you’ve been doing your own books and aren’t sure whether the numbers are reliable, that uncertainty alone is worth paying attention to. A small business bookkeeping service can review what you have, identify where things went wrong, and get your records to a place where you can actually trust what they’re telling you.
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More Questions
What are the 1099-NEC filing requirements for businesses that hire contractors?
You must file a 1099-NEC for any non-employee you paid $600 or more during the tax year for services. Forms are due to both the contractor and the IRS by January 31.
Read answerHow does the IRS distinguish between employees and independent contractors?
The IRS looks at three categories: behavioral control, financial control, and the type of relationship. The more control you have over how, when, and where work gets done, the more likely the worker is an employee.
Read answerHow do I account for returns and refunds in my books?
Returns and refunds should reduce your revenue, not show up as a separate expense. In QuickBooks, use credit memos or refund receipts for customer refunds, and vendor credits when you return a purchase. Tracking them correctly keeps your income reports accurate.
Read answerHow should a healthcare practice track revenue by provider?
Use classes in QuickBooks Online to assign each payment or charge to the provider who generated it. This gives you revenue reports broken down by provider without complicating your chart of accounts.
Read answerWhat's the process for linking bank and credit card feeds in QBO?
You connect bank and credit card accounts through the Banking tab in QuickBooks Online by signing in with your bank credentials. Once linked, transactions flow in automatically for you to review, categorize, and match.
Read answerHow should a general contractor track costs per project?
Set up every project as its own job in your accounting system, then assign every dollar of labor, materials, and subcontractor costs to that job. Break each project into phases and compare budget to actual on a weekly basis so you know your real margins before a job is done.
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