As much as we want bookkeeping to be quick and easy, inevitably there are times when the bank account balance is off or a transaction gets categorized incorrectly.
Here are three common bookkeeping errors I see in Quickbooks Online for online service providers and info product businesses…
PayPal is a great way to collect payments from customers because it makes it easy across currencies. BUT from a bookkeeping standpoint, it is often a headache. The good news is, the issues with PayPal tend to repeat themselves. If you have PayPal on bank feeds, here are two common issues:
a) ‘General currency conversions’ – Scroll to the bottom of your monthly PayPal statement. Check whether you received any payments in another currency. If you did, find the transaction in the USD transaction list and make sure the number in QBO is the same as the USD amount.
b) PayPal fee refunds – When you refund a payment to a customer, sometimes the PayPal fee shows in QBO as another expense rather than a deposit back into your account. Check the fee refund and if it’s an expense, delete that transaction and add it as a deposit into your PayPal account.
When reconciling your accounts remember…the dates on transactions in QBO may differ slightly from the dates on transactions on your bank statements. If your balance is slightly off when reconciling, check the transactions at the beginning and end of the statement period to see if there are any transactions (one or multiple) for that amount. Sometimes they show in QBO on the 1st, for example, but in the bank account they show on the 31st.
Sometimes transactions get categorized incorrectly. An easy way to check this is to review your Profit & Loss report. You can click into the numbers on the right side of the report and see what transactions make up that total number. Scroll through the list – is everything in the right place?
This is also a great way to review your expenses and make sure you’re seeing a return on investment in time, money, or emotion.
In my new course Automatic Bookkeeping I’ll be compiling an exhaustive list of the most common bookkeeping mistakes and how to fix them. You can get on the waitlist here.