Tips for avoiding some newbie mistakes

Editor’s note: Our friends over at QuickBooks for Windows wrote this piece for Windows users. Seeing a great idea, we ripped it off and Mac-ified it for you. Here’s a shout out to the awesome Jonathan Brubaker who created the original article for Windows.

If you’re new to QuickBooks, now is the time to get off on the right foot. We’ve seen some common newbie mistakes and listed them here so you know what to avoid. Don’t forget, you’ve got places to go for answers if you have questions:

Don’t use the sample files as your actual company file

QuickBooks provides sample files you can use as examples for setting up your own QuickBooks company data file. These files are examples, not templates. They contain only a limited set of items and services typically performed by particular types of businesses. Use them to see how a file might be set up and to learn how QuickBooks works. Do not try to use these files for your live information; they won’t work for that purpose. You must create your own company file to store your accounting data. (Choose File > New Company and follow the screens.)

Don’t write a check and forget to apply the payment to the bill

QuickBooks gives you options for paying your bills, depending on how closely you want to track bills and payments. Once you’ve chosen a method for a particular bill, you need to stick with it — otherwise you might end up paying your bills twice.

Here’s what to do:

  1. If you enter a bill in the Enter Bills window, always use Pay Bills to pay it. (If you use Enter Bills and Pay Bills, you can still pay by check or credit card.)
  2. If you’re sure you don’t need to track your bills and bill payments, you can use the Write Checks or Enter Credit Card Charges window instead of using Enter Bills and then Pay Bills.
  3. Don’t use Pay Bills if you’ve already used the Write Checks or Enter Credit Card Charges window to record your bill payment.

When you enter invoices and then make a deposit, be sure to use Receive Payments

If you are entering invoices in QuickBooks to record your sales, be sure to use Receive Payments to apply the payment against the invoice. Sometimes people make the mistake of skipping that step. But if you go right to the Make Deposits screen, the invoice won’t show as paid, and your sale might end up being counted twice.

Don’t accidentally record your customer payments twice

When you receive a payment for an invoice and enter it in the Receive Payments window, QuickBooks automatically selects “Group with other undeposited funds.” Sometimes people do this but then also make a separate deposit for the same amount, and that makes a mess of their records. Instead, when you choose Banking > Make Deposits, be sure to select the payment on the Payments to Deposit window. This will move it from undeposited funds to the bank account you select.

Don’t choose your bank account in the Expense Account field when writing a check

When they’re using the Write Checks window, sometimes users don’t realize that the check is already affecting their bank account, so they select their checking account as the expense account. This causes the money to go out and immediately back into your checking account instead of reducing the checking balance. Typically, you want to specify one of the expense accounts you’ve set up, such as Utilities, not the bank account the check is drawn on.

Don’t rename or delete the critical accounts that QuickBooks automatically creates

To simplify the job of setting up your company file, QuickBooks creates critical accounts like Retained Earnings and Sales Tax Payable for you. Changing the names or account types it assigns, or moving these accounts, can seriously impair QuickBooks’ ability to work for you.

QuickBooks automatically sets up other accounts as well: Accounts Receivable, Cost of Goods Sold, Estimates, Inventory Assets, Payroll Liabilities, Payroll Expenses, Purchase Orders, Retained Earnings, Sales Tax Payable, and Undeposited Funds. Moving or editing these accounts can easily introduce errors to your financial records. Worst case: You might have to dedicate hours (or days!) recreating these accounts and correcting all the errors, and we bet you’ve got better things to do!

Don’t assign items to the wrong kind of account

In QuickBooks, if you buy it or sell it then it’s an item. Items can also be shipping and handling charges, discounts, and sales tax, if applicable. Think of the line items on an invoice. For your records to be accurate, you need to associate every item you create with an account and account type that make sense. For example, any item you sell must be assigned to the right income account. (Generally, Balance Sheet accounts – such as Bank, Accounts Receivable, Accounts Payable, Credit Card, etc. – would not be assigned to items.)

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About Shelly King

Shelly King works for Intuit as a member of the QuickBooks for Mac team. She’s the Managing Editor for Little Square and its main contributor. Shelly grew up in the South until 1994 when the Internet called her to Silicon Valley. She’s done a lot on the web ever since. Little Square was her idea. Yep, it’s all her fault. See all of Shelly’s articles

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