IAPQ member and CPA Veronica Wasec recently wrote about 10 common mistakes that small business owners make with their accounting and QuickBooks®. As a Certified QuickBooks® ProAdvisor, she’s worked with lots of small business owners, including quilters, for more than 20 years. Here are five of the mistakes she often sees business owners make:
1. QuickBooks® is not set up properly for the business. This causes small business owners to spend a lot of time getting information out of QuickBooks® or tracking information manually outside of QuickBooks®. After you understand how information is accumulated in QuickBooks® primarily by the use of projects, items and the chart of accounts, you can set up QuickBooks® specifically for your company and your needs. Once it is set up properly, you can use reports that show you how much money you made by customer, by project or job, and by inventory or service items.
2. QuickBooks® is only used as a bookkeeping tool rather than as a way to manage business finances. Many small business owners use QuickBooks® only as a bookkeeping tool – to capture their daily transactions. Unfortunately, they don’t review financial reports such as the Profit & Loss, the Balance sheet, and key reports such as the accounts payable aging, accounts receivable aging and several types of profitability reports. To manage your business effectively you need to have timely and relevant financial information available to you and you need to review it on a timely basis.
3. Bookkeeping is not kept up-to-date. Keeping your bookkeeping up-to-date can be a thorn in your side, but it is a necessary function of running your business. Here are a few tips, whether or not you hire an outside bookkeeper:
· Set aside time on a weekly basis to update your books.
· Use a checklist to ensure that you record all your transactions.
· Be sure to have receipts for all of your transactions.
· Set up a filing system that is appropriate for the size of your business and file away all your receipts and documents.
4. Accounts are not reconciled. Many small business owners have messy balance sheets because they don’t reconcile their accounts. This includes reconciling bank accounts, credit card accounts, sales tax accounts and other accounts on a monthly basis to ensure that your financial data is accurate. If your financial data is not accurate then how can you rely on it to make decisions for your business?
5. QuickBooks® is out-of-date. Many small business owners use an outdated version of QuickBooks®. Why is this important? QuickBooks® does not support any versions older than three years. Also, newer versions of QuickBooks® allow for automatic downloading of bank and credit card transactions from the bank and credit card companies. Newer versions also have higher capabilities, for example QuickBooks® 2011 version allows for batch invoicing – a great time saver for companies that bill multiple customers for recurring fixed amounts (such as monthly support charges). Upgrading to a new version of QuickBooks® is very simple and generally only takes minutes.
The International Association of Professional Quilters offers resources and networking opportunities for you to create a success from your quilting business. Learn about all the benefits of IAPQ membership and join here.