Accounting Software Best Practices & Common Mistakes using QuickBooks

What’s one thing all profitable businesses have in common??Excellent bookkeeping.?Whether handled by a full-time bookkeeper or a diligent business owner, financial records must be accurate, organized, and compliant to ensure smooth operations. Luckily, financial entries are rarely hand-recorded in large, dusty ledgers.

Today, electronic accounting software, such as?QuickBooks Desktop?and QuickBooks Online, streamline bookkeeping through automation and artificial intelligence (AI), making financial management more efficient than ever. However, mistakes can still happen.

In this guide, we highlight accounting software best practices and common QuickBooks mistakes to help you maintain accurate, organized financial records. These accounting principles also apply to other software, such as Xero, as the core fundamentals remain the same despite differences in interface.?

A IS FOR “APPLYING CUSTOMER PAYMENTS TO INVOICES CORRECTLY”

Accurately matching customer payments to the correct invoices is one of the most important tasks in QuickBooks. Without this crucial step, your?Accounts Receivable (A/R) reports?may be misleading, making it difficult to track cash flow and outstanding balances.

Properly managing?Accounts Receivable?ensures that you have a clear picture of what customers owe, helping you make informed financial decisions, improve collections, and maintain the stability of your business. By following the correct process in QuickBooks, you can take full advantage of key financial reports that provide insight into your business’s health, including:

• Open Invoice Report
• Customer Balance Summary & Detail
• Accounts Receivable Aging Summary & Detail
• Profit & Loss?and?Balance Sheet?(Accrual Basis)

Managing?Accounts Receivable?correctly is essential because it directly affects your cash flow. It allows you to stay on top of customer payments, maintain financial stability, and make strategic decisions for your business’s growth. With the right bookkeeping practices, you can ensure that your financial records are accurate, up to date, and working for you—not against you.

B IS FOR “BANK RECONCILIATION”?

At its core, Bank Reconciliation is the process of comparing the cash balance on your company’s books (Balance Sheet/General Ledger) with the cash balance shown on the bank statement. The goal is to identify and resolve any discrepancies between the two. This process helps ensure that your company’s records match up with the actual bank account, providing a clear picture of your finances.?

HOW OFTEN SHOULD YOU COMPLETE A BANK RECONCILIATION

Ideally, bank reconciliation should be done monthly, shortly after you receive your bank statement.??For business with a high volume of transactions, more frequent reconciliations might be necessary to maintain tight control over finances.?

C IS FOR “CHART OF ACCOUNTS”?

A?Chart of Accounts?is a categorized list of all the accounts in your accounting system. Think of it as the?table of contents?for your financial transactions, helping you understand where money is coming from and where it’s going.

Typically, a Chart of Accounts includes:

• Assets?(e.g., Cash, Accounts Receivable, Inventory)
• Liabilities?(e.g., Loans, Accounts Payable)
• Equity?(e.g., Retained Earnings, Owner’s Capital)
• Revenue?(e.g., Sales, Service Income)
• Expenses?(e.g., Rent, Payroll, Marketing)

Each account is assigned a unique code or number to make record-keeping easier.

D IS FOR “DOUBLE DOWNLOADS”?

Duplicate transactions in QuickBooks?can distort cash flow, inflate account balances, and lead to time-consuming corrections. These errors often happen when transactions are imported multiple times. Learn how else double entries happen and how to avoid them.

By following these QuickBooks best practices, you can improve financial accuracy, streamline bookkeeping, and ensure long-term business success.