Lester Bahr CPA, LLC
Enlightened solutions within your grasp
QuickBooks Online - Fixing Common Setup Mistakes
As a QuickBooks Advanced ProAdvisor– I can help you with your QuickBooks Online setup process by logging in to your company and reviewing what you have accomplished so far. Or if you’ve not yet started the setup process, I can create your QuickBooks Online company file for you and get you started out with a correct setup process.
As a QuickBooks advisor who isadvanced certifiedin QuickBooks Online, desktop, and Enterprise Solutions, I’ve been part of the Intuit network of QuickBooks advisors since 1999. Since that time, I’ve helped countless numbers of business owners get setup and running on QuickBooks and resolved for them probably many of the very same issues and questions that you have right now.
Also, as a Certified Public Accountant, I bring over 30 years of “best practices” experience in accounting and tax to your situation to make sure that everything is done correctly.
Here are some of the most common situations I see where corrections are often needed in the QuickBooks Online setup process. Also, check out my articles onwhy you should use QuickBooks Online andhow to setup an accounting bookkeepingsystemfor some additional information and tips.
Chart of Accounts List– This is your core foundation in your company accounting system. Get this most fundamental piece of the setup process wrong, and many of your reports which draw data from your accounts list organizational structure such as your trial balance report, profit and loss report and balance sheet report will be wrong too.
During the initial setup process QuickBooks will help you to decide what chart of accounts structure is most suited for you based upon the type of business you are setting up. However, keep in mind, this is really just a starting place. While there are certainly common characteristics that can be found within the chart of accounts structure for all businesses within a certain industry, no two businesses are ever exactly alike, even within the same industry.
The other variable that impacts the chart of accounts to some extent is the type of entity in which the business operates. For example, an LLC or an S corporation will require a few specific accounts that would not be needed for example in a sole proprietorship business structure.
Many times it’s just a matter of my tweaking some account names and descriptions to more accurately define what that account is used for in terms of the transactions to be posted to it. But, accurate and organized account names are very important. This is because those same names will become the descriptive line items on your financial reports. Therefore, in order to generate reports such as a balance sheet or a profit and loss statement that look polished and professional in their presentation, it is important to get the account titling process correct upon which these financial reports are drawing the descriptive line items for those reports.
This much I can tell you: In all of my years that I have reviewed and cleaned up QuickBooks companies for clients, I will always find that improvements can be made to the existing chart of accounts structure.
Account types– are another part of the setup process which is important to get correct. Otherwise, your accounts will not organize and print correctly on financial reports. For example, you may have what should be a balance sheet account that is appearing on the profit and loss statement, or vice versa. This will happen when the wrong account type was assigned during the creation of the new account.
The concept to understand when assigning account types, is that you must first and foremost have a basic knowledge of how accounting structure is supposed to work so that you can recognize what should be an account that is balance sheet related versus an account that is profit and loss related.
For example, if in the process of setting up a new account title that you want to appear on your profit and loss statement, you do not choose an appropriate account type and instead choose a balance sheet type for that account, then both your profit and loss as well as your balance sheet reports will be wrong.
This is probably one of the most common mistakes I find when reviewing a client’s QuickBooks Online setup structure. Typically, what happens is that as time goes by, some new type of transaction is entered for the first time and there is not already an appropriate account to post the transactions to. So, the client adds a new account to their chart of accounts but in the process does not notice that the account type they have chosen was not the appropriate choice based upon the type of transaction they wish to account for.
The other issue I commonly see is that when a new account is setup, the client does not bother to change whatever the default “detail type” of the account is. So, for example, I might find a number of new expense accounts that were added, all for different purposes, but the detail type for all the accounts is listed as Advertising/Promotional simply because that was the default that came up when creating the new account.
Again, account types and detail types are one of those areas that whenever I review a new QuickBooks Online company setup for a client, I go down through their setup of accounts structure and make all the necessary corrections to those setup mistakes – and typically it involves many accounts which are wrongly assigned an incorrect account type and/or detail type.
Account numbering– of the accounts in the chart of accounts list is an optional feature that can be turned on from within the QuickBooks Online “Account and Settings” found under the gear icon. By default, this option will not be selected. Thus, almost universally I find that when a client sets up their QuickBooks Online company, they rarely ever select that option, not realizing what its benefit is.
Personally though, I prefer to use this optional account numbering preference. In the accounting profession, practitioners are well aware of the function and purpose of numbering the chart of accounts under a prescribed organized format that groups categories of accounts into certain number ranges depending upon what the account grouping represents. For example, assets, liabilities and equity for balance sheet accounts. Or income, cost of sales, expenses, other income and other expenses for the profit and loss statement accounts.
In the absence of account numbers being assigned, QuickBooks will simply organize the accounts in your chart alphabetically, within the various account type ranges. However, for various reasons, this may not always be the best way to present the accounts on the various financial statements. By assigning a number though to the accounts with the chart structure it is then easier to organize your accounts presentation of the reports exactly as you want to see them appear, and more probably within the presentation structure typically seen for that type of financial statement for your type of business industry.
So basically, turning on the account numbering feature, followed by the proper assigning of numbers to your accounts will give you much more exacting control over the presentation on your reports. Again, this is area I typically will setup and modify for a company QuickBooks Online setup as necessary to conform to my typical chart of accounts numbers sequence structure that I like to use.
Incorrect opening balances– are another problem area I see on a frequent basis with new QuickBooks Online company setups. This is especially problematic when clients are converting over to QBO from some other existing system, or a manual based system.
But what is important to understand about the mechanics of how accounting procedure works, is that no year of transaction information exists in isolation. There are always going to be certain accounts which need to have a roll-forward balance and unless that balance is properly reflected as an opening balance in QBO, then the current year balance, as well as all successive year balances will never actually be correct, and will never actually be reconcilable with the past years tax returns.
Typically, the most common accounts I see this happening in are bank accounts which came into QBO with an already established balance, or credit cards that have a prior balance due to as of yet unpaid charges from a previous time period. But other accounts too such as notes and loans payable often do not reflect the correct opening balance and have not been reconciled to the amortization schedules that tracks the remaining note payable principal.
Yet another common set of accounts which are often neglected in the setup process, or if present do not reflect the correct balances are accounts related to fixed assets. Most often this is the case because the fixed assets have only been tracked on a depreciation schedule for tax return reporting purposes and the small business owner does not know how to interpret and translate the data from the fixed asset depreciation schedule into what should be the correct opening balances in QuickBooks for the fixed asset cost and related accumulated depreciation.
The result of all these inaccurate opening balances is that the QuickBooks balance sheet reports will be incorrect, as will any accrual basis profit and loss statements. (and possible cash basis profit and loss statements as well, it just depends on the particular circumstances)
Set up bank feeds– for checking and savings accounts used in the business so that you are connecting the integration of transactions as they clear in your bank account with transactions to be posted in your QuickBooks Online company. This procedure works very well once it has been correctly setup. But again, this is often an area where I see clients having difficulty with QuickBooks Online when they are new to this process.
More often than not, this will be the first time they have ever had their online bank accounts connected directly with their accounting software. For example, even though with the QuickBooks desktop software it was also possible to link your bank accounts, I’ve often found that many times clients didn’t use that functionality.
The thing with using bank feeds in QBO though is that you need to make sure you are keeping up with the process and especially if you are doing a conversion at some point mid year, the bank feed data will only be available for 90 days. Some of the common issues I see are transactions that have been duplicate posted in QuickBooks Online when the client had already entered the transaction in QBO, but then accepts that transaction again as if it were a transaction not yet accounted for in QBO when it comes from the bank feed. So the key concepts to understand about the use of bank feeds is (1) when to accept a transaction from the bank into QBO that has not yet been recorded versus (2) simply “matching” a bank transaction with an already existing transaction that was already posted into QBO. This is probably the biggest area of confusion for new users of bank feeds and it does take a little getting used to as to how the process needs to work.
Another limitation I see frequently is that when bank feed transactions are pulled into QuickBooks, the user is only letting the information populate from the bank transaction record which is almost always not the complete information and so I’ll find vendor names and other descriptive information about the transaction that has not been entered by the user. The problem this limitation creates though is that in reviewing the account transaction reports there is often insufficient information to provide a full explanation of what the transaction was for. But again, it’s usually just a matter or my providing the explanation to the client as to what they need to do as part of bringing the bank feed transactions into their QuickBooks Online company and then possibly adding the additional information needed in the fields which contain no data.
The other problems that develop is during the process of importing the bank feed transactions they are not assigning those transactions to the correct combinations of general ledger accounts. So, it’s usually a matter of my going through all of the accounts and finding those mistakes and re-assigning the posting to the correct accounts. Over time though this process does become more efficient because QuickBooks “learns” how to properly suggest and post future transactions based upon how you posted those similar transactions in the past. There are also detailed rules based logic which can be setup to help facilitate this process.
Finally, on the topic of bank accounts and bank feeds, it is important to reconcile the bank statements on a monthly basis using the built-in account reconciliation process that is part of QuickBooks Online. Many times when I’ve reviewed the QuickBooks company setup for a new client that has been using QuickBooks for a while, I find that they have never used the bank reconciliation process. That’s a definite deficiency in terms of “best practices” because all the bank accounts should be reconciled monthly. Again though, once the bank feeds have been linked to QuickBooks and the process used correctly, usually the bank reconciliation process will be a very quick and efficient task to complete going forward
Bank feeds for credit card accounts– work in much the same way as the feeds for bank accounts. Once you have linked QuickBooks Online to your credit card accounts, the transaction purchases, credits and payments as posted to the credit card can also be directly imported into QuickBooks Online. Then, just as a with the bank statements, you should also be reconciling your credit card statements every month using the reconciliation function that is built into QuickBooks Online.
If there is one common mistake I’ve seen over and over again when clients are using the bank feed for credit cards is that sometimes the payments against the credit card balance get pulled into QuickBooks twice, duplicating the result and obviously distorting the affected account balances. This happens when the payments made on the credit card is getting pulled into QuickBooks both from the bank account feed and the credit card feed. The result is that some duplicate accounts get created with offsetting transfers, scattered across the accounts. However, this is a fixable situation once I’ve been able to log on to your company and correct these past posting errors, and make the necessary changes so that this situation does not recur in the future.
From the File menu, select Utilities, then choose Clean Up Company Data. Put a check mark on the Compress data box and select OK after the warning message. (Optional) In the Non-history documents window, select the list you want to remove from your file then select Next.How do I resolve errors in QuickBooks? ›
- Step 1: Download and install the QuickBooks Tool Hub. The QuickBooks Tool Hub helps fix common errors. ...
- Step 2: From the Tool Hub, run the Quick Fix my Program. ...
- Step 3: Run the QuickBooks Install Diagnostic tool from the Tool Hub.
- Go to My Apps, then select QuickBooks Online.
- Go to Payouts.
- From the Select a ledger account ▼ dropdown menu, select the expense account.
- Select Save changes.
- Go to Logs, then select Retry in the error message.
- Open the QuickBooks Tool Hub, then select Installation Issues.
- Select QuickBooks Install Diagnostic Tool. ...
- When the tool finishes, restart your computer and start QuickBooks Desktop, then open your data file.
- Check for data entry errors. You need to record every business transaction. ...
- Reconcile your accounts. ...
- Make adjusting entries. ...
- Look for duplicates. ...
- Upgrade the way you manage your books. ...
- Consult an accounting professional.
Learn how to delete your data in QuickBooks Online and start over with new books. Sometimes you need to start fresh with a new QuickBooks Online company. If you're a new customer, you can purge your data and start over. If you've used QuickBooks for a while, you need to create a new company.What is the most common error for accounts? ›
Most accounting errors can be classified as data entry errors, errors of commission, errors of omission and errors in principle. Of the four, errors in principle are the most technical type of error and can cause the resultant financial data to be noncompliant with Generally Accepted Accounting Principles (GAAP).What are the three types of accounting error? ›
- Errors of Omission.
- Errors of Commission.
- Compensating Errors.
What does service discontinuation mean? Your access to QuickBooks Desktop Payroll Services, Live Support, Online Backup, Online Banking, and other services through QuickBooks Desktop 2020 software will be discontinued after May 31, 2023. This also means you won't receive critical security updates starting June 1, 2023.How do I fix rebuild errors in QuickBooks? ›
- Go to the File menu, then hover over Utilities and select Rebuild Data.
- On the QuickBooks Information window, select OK. ...
- Let the tool repair your file. ...
- When the tool finishes, select OK.
- Go to the File menu. ...
- Let the tool check your file for data issues.
- Select Settings ⚙️ and then Chart of accounts.
- Find the account you created the journal entry for. Then select View register.
- Find the journal entry in the account register. ...
- Select the journal entry to expand the view. ...
- Select Reverse.
- Select Save.
' The answer is no. Uninstalling QuickBooks does not delete your company files from your PC. It will only remove the QuickBooks application. However, as a precaution, it's always a good idea to create a local backup.Why is my QuickBooks not installing? ›
The problem may be with reports and other windows within the file. The installation error may also occur if you employ any improper version of QuickBooks to open the company file, folder, compressed or encrypted file. Improper file name and extension, or data corruption may also trigger this issue.How do I do a clean install of QuickBooks? ›
- Open the Windows Start menu. ...
- Select Programs and Features or Uninstall a Program.
- From the list of programs, select your version of QuickBooks Desktop you want to remove.
- Select Uninstall/Change and then Remove.
If you make a mistake on a client's books or payroll and the business loses money, you may be at high risk of getting sued. The outcome may be the same if you overstate profits, which could lead to a firm paying too much in taxes.What happens poor bookkeeping? ›
Consequences of Sloppy Books. If you are not accurately tracking your expenses and accounts payable, you will experience problems with cash flow. You may be unable to make payments on time, incur late or overdraft fees, and have other cash flow issues that hinder business growth.Will bookkeepers become obsolete? ›
The role of bookkeeping is changing, and the role as we know it today is becoming obsolete. Without a doubt, companies who embrace technology are going to have a competitive advantage over those that don't.How do I restart QuickBooks Online and start over? ›
To reset your company data:
- Sign in to your QuickBooks Online account.
- Click Yes to confirm the action.
- On the next page, select Wipe data.
Step 1. First, log into your QuickBooks Online account and edit the URL in the browser window to /purgecompany i.e., change from qbo.intuit.com/app/homepage to qbo.intuit.com/app/purgecompany. Step 2. In the next window or screen, you will have to provide the summary or list of items that need to be deleted.How much is a QuickBooks cleanup? ›
The month-1 cleanup fee is customized based on signup month, tax filing status, and business start date. The price of each subsequent month is determined by your average monthly business expenses and starts at $200/month. QuickBooks Online not included. See important pricing details below for more information.
Accountants must make correcting entries when they find errors. There are two ways to make correcting entries: reverse the incorrect entry and then use a second journal entry to record the transaction correctly, or make a single journal entry that, when combined with the original but incorrect entry, fixes the error.What are the 4 types of errors? ›
- Errors of principle, and.
- Clerical Errors. Errors of Omission. Errors of Commission.
- Compensating Errors.
A common error is to shut down the air inlets too soon, before the stove has had a chance to heat up properly. It has been a common error to view prisoners as a homogeneous group with a set of common values. By the time they realized their common error, preliminary notices of the competition were in the public domain.What are the three most common credit errors? ›
- 3 Most Common Credit Report Errors. You may be surprised at how often credit reports contain errors. ...
- Incorrect Accounts. One of the top mistakes seen on credit reports is incorrect accounts. ...
- Account Reporting Mistakes. ...
- Inaccurate Personal Information.
Common sources of error include instrumental, environmental, procedural, and human. All of these errors can be either random or systematic depending on how they affect the results. Instrumental error happens when the instruments being used are inaccurate, such as a balance that does not work (SF Fig. 1.4).What are the two main types of errors? ›
- (1) Systematic errors. With this type of error, the measured value is biased due to a specific cause. ...
- (2) Random errors. This type of error is caused by random circumstances during the measurement process.
- (3) Negligent errors.
When you compare Intuit's two most popular products, QuickBooks Online vs. Desktop, both have strong accounting features, but there is a key difference — QuickBooks Online is a cloud-based software with monthly pricing, and QuickBooks Desktop is locally-installed with an annual license pricing model.Why QuickBooks is shutting down? ›
Damaged or missing QuickBooks components, incomplete or improper installation, and damaged program files can cause QuickBooks 2022 shuts down randomly.Will QuickBooks still work after subscription expires? ›
You can still access the file even if you'll not restore your subscription. But you'll be unable to continue receiving the security updates and online services, such as the following: QuickBooks Desktop Payroll Services. Live Support.How long does a QuickBooks rebuild take? ›
Rebuilding a QuickBooks File. The rebuild immediately starts as soon as the backup completes. It takes a few minutes for a small file, but it can take several hours if it is big or badly damaged. You mustn't do anything while this is processing, or you could do irreversible damage to the file.
Some common rebuild errors include: Dangling Dimensions or Relations. Dimensions or relations to an entity that no longer exists. Features that cannot be rebuilt, such as a fillet that is too large.Why do I have to keep rebuilding my QuickBooks file? ›
The most common reasons for using the Verify and Rebuild utilities are when severe errors appear while you use QuickBooks desktop and any discrepancies found on reports such as the bills or invoices being a post with negative values.How do I correct entries in QuickBooks? ›
- Sign in to QuickBooks Online Accountant.
- Select the Go to QuickBooks dropdown and select your client's company.
- Select + New.
- Select Journal entry.
- Select the Is Adjusting Journal Entry? checkbox.
- Follow the steps to record the journal entry.
- Select Save and close.
- Choose the. ...
- Select the entry that you want to reverse, and then choose the Reverse Transaction action.
- On the Reverse Transaction Entries page, choose the Reverse action.
- Choose Yes to confirm the reversal.
This will scan your file for signs of data corruption and instability. By running this process frequently (Intuit recommends every week or two), problems can be detected before they impact your productivity. If there are any issues with your file, you will be prompted to rebuild your data file.How many years of data can QuickBooks hold? ›
Why is there a 2 year limit on the data that QBO can pull in the Search function? Select the Accounting menu and choose Chart of Accounts.How many times can you download QuickBooks? ›
The standard QuickBooks Pro license lets you install the product on up to 3 computers. It also has a multi-company feature. Note that one license is required for each user. A server does not count as a user if no one will be accessing the QuickBooks on the server itself.Do I need to uninstall QuickBooks before installing in a new computer? ›
Intuit Data Protect: you'll need to uninstall it on the old computer, sign in again on the new computer and go through the setup process. All previous backups will still be available. Older Company Files: Any company files you haven't recently opened won't be copied.Why is QuickBooks not syncing between computers? ›
To sync files between two computers, you must connect both to the same network and make sure you've set the correct installation options for each computer. The best way to do this is to uninstall QuickBooks on both PCs and then reinstall with the correct options.Does clean install remove everything? ›
With a clean install, the hard disk contains only the new OS. Any existing OS and user files are removed during installation because the hard disk is formatted and completely erased.
- Reconcile all of your cash accounts so they agree with your bank statements.
- Verify that your retained earnings agree with your tax returns.
- State all of your asset accounts appropriately to reflect your present value and inventory levels.
- Reconcile your credit cards.
- Don't delete QuickBooks historical data. ...
- Make a list of known issues. ...
- Review (and consider revising) your Quickbooks chart of accounts. ...
- Find a long-term bookkeeping team.
- Clean up your disk. ...
- Clear your Temp folder. ...
- Remove programs you don't use. ...
- Clean up your photos and documents. ...
- Refresh your install file.
Select Privacy & Security. Select Manage Data under Cookies and Site Data. Type “intuit” in the search bar and select Enter to find Intuit cookies. Select Remove All Shown.What is QuickBooks cleanup? ›
Below are the QuickBooks cleanup services we offer:
Reclassifying transactions. Resolving error messages. Correcting unapplied customer and vendor payments. Cleaning out undeposited funds account. Correcting payroll liability balances.
The cleansing process involves analysing the 'mixed fund' accounts and separating the capital, income, and gains. The analysis can be time consuming and complex as old bank account statements and financial records will be required to identify the source of the funds in each account.What is the most important list in QuickBooks? ›
The Chart of Accounts is your most important list because every transaction recorded in QuickBooks affects an account from your chart of accounts. The Chart of Accounts are the foundation of your financial reporting. It is used to create important reports like the Profit & Loss and Balance Sheet report.How do you avoid negative inventory in QuickBooks Online? ›
Go to “Edit/ Preferences/ Items and Inventory” on the menu bar. Check the “Warn if not enough inventory to sell” check-box. Choose “Don't allow negative quantities”How big is too big for QuickBooks file? ›
There is a limit to how much information can be stored within a QuickBooks company file. This is what Intuit says about company file size limits. Pro & Premiere: Company file limit of 250MB. Enterprise: Company file limit of 1.5GB.How do I clear up internal space? ›
- Close apps that don't respond. Android manages the memory that apps use. ...
- Uninstall apps that you don't use. If you uninstall an app and need it later, you can download it again. ...
- Clear the app's cache and data. You can usually clear an app's cache and data through your phone's Settings app.
- In your account, go to the File menu, select Utilities, then Condense Data.
- Select the best option on how you want to condense your file, then click Next.
- Choose what transactions you want to remove, then click Next.
- Click Begin Condense.