3 Serious QuickBooks Errors

Before using QuickBooks it is wise to understand some of the important things to practice to obtain the desired results. Here are 3 Serious QuickBooks Errors that are common and should be avoided.

Items Used Incorrectly

If you have used QuickBooks at all then you probably know the importance of using items. Items are one of the lists used in QuickBooks, and without them it is just about impossible to accomplish anything when using this software. You cannot even record sales without the use of items. But just using them is not enough. It is critical that the correct type item is used depending on the purpose. An example would be a company that sells a lot of different products. If these are relatively constant then the use of inventory items is the best way to handle this. However, if a business sells things that are not normally stocked and probably purchased for a particular customer, then the use of non-inventory items is much better. This helps avoid using the entire 14,500 limit for all lists. Of course, it is certainly possible to use both types of items, but it is important to understand the advantages and limitations of each. If the product is something that is regularly sold and stocked, then an inventory item makes sense. However, remember that inventory items maintain cost information on the average cost basis, so that is a key reason they may be unsuitable for periodic purchases. Imagine a repair shop. It is highly likely that many items are purchased for specific customers. In that case, consider using a generic non-inventory item. For example, a repair shop may purchase a large variety of pumps, depending on the item being repaired. It is logical to have a generic non-inventory item called “Pump”. Imagine that two customers need a pump replaced. In that case record the purchase of each pump at its actual cost using the same non-inventory item and assign each to the appropriate customer. The actual cost rather than an average cost will follow through to each particular customer. When the customer is billed QuickBooks will ask if you want to invoice for outstanding expenses and time for the customer. Then simply select the pump assigned to the customer, enter the price to charge, add additional description information if desired, and save the invoice or sales receipt. This is just one example of how to use items correctly.

Too Many Accounts

If you have ever tried to find something in an over-stuffed filing cabinet you know how difficult it can sometimes be to find the exact thing you want. Something similar happens when too many accounts are set-up in QuickBooks. Think. Is it really necessary to have a separate general ledger account for “Pencils”, “Paper”, “Ink”, etc. or would one account called “Office Supplies” accomplishes what is really needed? While each company is different and this level of detail may be needed, it is wise to think carefully before adding a new account. If there are too many accounts it takes longer to find the account desired, there can be confusion as to which account is the correct one to use, analysis becomes more complicated and tedious, and understanding financial statements is more challenging.

Inadequate Backups

This is a big one. No matter how good a job is done using QuickBooks, failure to create backups on a regular basis can undo everything that has been done. Here are a few things to consider when backing up QuickBooks company files.

  • Backup regular. This could be daily if enough changes
  • Rotate backup media, If an external hard drive or flash memory is used, have at least two (preferably more) and rotate these
  • Select the option to append the backup with a time and date stamp to make it easier to identify the latest backup
  • Select the option to have QuickBooks validate the backup
  • Do not use the same hard drive that the QuickBooks file resides on to store the backup. A hard drive failure could leave a company with no way to restore a file
  • Store backups off site and rotate these regularly

There are many things to consider when using QuickBooks, but these are three key ones. What other things should be considered to avoid major problems and make the most of QuickBooks? Have you or a company you help committed any of the 3 Serious QuickBooks Errors discussed above?

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