Does your QuickBooks need a Gut Renovation?

Hi all,

It’s been a while since my ‘Jonathan’s Corner’ article — partly due to tremendous growth that started in 2016 and continuing thru today. Over the past year, more than 20 businesses have engaged me/One 8 Solutions to help them with their QuickBooks/Accounting/Bookkeeping.

Talk about growth — currently I have four bookkeepers/Accountants and another two are going through intensive training by me.

The largest segment of growth has been in the construction/trades/home improvement area.

This leads me to think how fixing someone’s QuickBooks is like a renovation of house. A good friend who is a general contractor/architect once told me that you don’t know how the job is going to go until you pull the wall down. The same can be said about fixing QuickBooks: while I almost always start with a general assessment for a new client, it is only once you get to the foundations that you see the spider web of issues. Like peeling an onion, it gets messier as you peel back the layers.

When it comes to deciding whether to fix your current QuickBooks setup or start over with a new data set, here are somethings to consider:

  • Are the bank account(s) and credit cards reconciling?
    • If not, how far back to do need to redo them?
  • What customer history do you want to keep?
    • Did you invoice correctly?
    • Apply payments?
    • Deposit payments?
    • Setup items correctly?
  • Is Accounts Receivable accurate?
  • Is Accounts Payable accurate?

The most important place is to start is with the bank reconciliation. If you can’t look at the balance and trust it, your books have no value, they are make believe.

  • Has it been reconciled… recently?
  • Has the beginning balance change?
  • Does it have old items unreconciled items?
  • Duplicate transactions-especially related to bank transfers/credit card payment/payments coming in from PayPal/Square/Strip?

Other areas to look at:

  • When you make a deposit in QB, do you have lots of items to choose from and are they old?
  • Online Banking issues.
    • Deposits not matching up.
    • Credit card/loan payments going to Uncategorized.

In the past year, I have done both. I started a new QB file for a client and made massive changes/corrections to how they are using their QuickBooks and now they have a set of books that accurately reflects the activities of the business. I am currently fixing an existing set of books by unreconciling the bank and credit card accounts and re-entering missed transactions and isolating the transactions that are not on the statements but in their QuickBooks. I will then work with the CPA to figure out whether they need to amend the tax returns.

In the end, both processes are painful and can be costly. But at some point, you must come to the realization your books are creative fantasy, and they need to become nonfiction.

That’s all for Jonathan’s Corner this time.

Thanks for reading, and stay tuned to One 8 News for regular updates and industry news.

Jonathan Bello

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