Do you ever find yourself with issues like duplicate transactions, or miscategorized transactions? Then you need to learn how to do proper bookkeeping!
My bookkeeping essentials coaching program will teach you have to navigate these issues and so many more!
It is important that you regularly do your bookkeeping so you can keep your records up to date and know how successful your business is doing! Without proper bookkeeping you will file taxes incorrectly and could be paying more in taxes than you should. You do not want to do that! Taxes are no fun as it is! We want to save as much as we can on taxes and proper bookkeeping helps us save on taxes!
If you do not do bookkeeping regularly, you could have some of the following issues.
Duplicate, missing, or miscategorized transactions
Understated or overstated income
Missed fraudulent charges or missing dues and subscriptions that are no longer being used
Comingling between business and personal funds
Missing tax payments
One of the best ways to find these issues is to use a bookkeeping program that will allow you to reconcile the books regularly. I highly suggest QuickBooks Online. Note: I do not get any money for saying this. It is the best program out there and I have used it for my client for years. I have tried several other programs and QuickBooks Online is the best, I promise, even despite their annoying updates lately. Yes, I did say annoying. I am annoyed by them all as well.
Let me go over some basics that will help you in QuickBooks Online to do proper bookkeeping. Note: This is in the newest menu options of QuickBooks Online where the two menu options are combined.
The most important step in Bookkeeping is accepting the transactions properly. In QuickBooks Online the steps to do this properly are below:
From the left side menu choose Dashboards (this lists out all the different dashboard options. I personally like Business Overview but Get Things Done is another great option. Keep in mind, with this new menu, the menu “remembers” what you choose last time so it will automatically pull up with the previous view unless you click in the submenu another option.)
Choose Business Overview either on the left submenu or the upper top left side.
On the right you should see you accounts listed. Choose the checking account for your business.
You may see transactions that say to the right of them “match” it is usually best to match these transactions. These transactions are transactions that QuickBooks recognizes as entries that are already in QuickBooks. If you don’t match these transactions, you will create another transaction and that will usually cause duplicate transactions. We want to avoid duplicate transactions.
If you see some transactions that have 2 or more matches found, you will need to click on the transaction and choose the transaction that matches the date, vendor, and amount. This often happens if you have a service or product that costs the same amount and you have several clients who purchased the same service or product.
Once, you have matched all the transactions, go through the remaining transactions. The remaining transactions aren’t already in QuickBooks Online so these need to be added. Double check the payee is the correct vendor or client. I have found lately with QuickBooks Online it is trying to be smarter but will choose the wrong vendor or client from my list in QuickBooks because it is the “best match” to QuickBooks Online. So you need to make sure your double checking the actual transaction listing from your bank to make sure you enter these transactions correctly.
Once you have accepted all the transactions in your checking account, return to step three and do the same thing for all your business accounts, including business savings, and business credit cards.
If you have accounts that are used for both personal and business, you need to quit and get separate accounts. You will want to enter those past transactions in QuickBooks by using the Owner’s Equity account to list any personal charges that did not apply to your business.
Once all your business transactions have been entered for the time period you want to get into QuickBooks Online, the next step is to reconcile the accounts.
Reconciling your accounts requires you to have your bank statements on hand. Please go to each of your bank accounts and credit cards and download these statements for the time period that you need to do your bookkeeping for.
How to reconcile your bookkeeping in QuickBooks Online:
On the left side menu, choose Transactions then in the submenu, Chart of Accounts.
In Chart of Accounts, choose your business checking account, by clicking view register in blue on the right side of the menu.
Then on the top right there is a green button that says “reconcile” click on that button.
Then make sure your account listed in the dropdown menu is your business checking account.
Make sure the beginning balance is correct from the bank statement.
List the ending balance from the bank statement.
List the ending date from the bank statement.
Choose “Start reconciling”.
Go line by line in QuickBooks Online and your bank statement to make sure all the transactions are listed in QuickBooks Online.
Once you get to the end, there may be some missing transactions or extra transactions listed in QuickBooks Online.
Delete any extra transactions that you know, are duplicates or no longer needed.
Add any transactions that are missing by clicking the “+ New” button on the top left corner.
Choose under Other, “Journal entry” to add the missing transactions.
Once you have added any missing transactions, and removed any extra transactions, you should have a $0 difference at the top right.
Once it is $0 difference, you should see a green “Finish now” button at the top right.
Choose “Finish now”.
Repeat steps 4-16 for all your business accounts.
Once you have reconciled all the accounts, next step is to review reports. The most important reports are the Profit and Loss and the Balance Sheet. The steps to review these reports are as follows:
Choose “Reports” on the left side menu.
Under Standard, there is all the reports listed. You can either search for the report or it should be listed under Favorites for most accounts.
Choose Profit and Loss.
Review Profit and Loss, make sure numbers look correct. If something looks off, you can click on the accounts and it will pull up a report for further review.
Review the Balance Sheet, make sure numbers look correct. If something looks off, you can click on the accounts and it will pull up a report for further review.
Keep in mind, negative numbers are usually not right. So double check any negative numbers. With the exception to the equity accounts on the balance sheet. Those are usually negative and that is completely normal.
This is the bare basics of bookkeeping and how to do it properly in QuickBooks Online. I have a printable for you to be able to download and have at your desk as a reminder of what you need to do to make sure your bookkeeping is accurate.
If you feel like you want to do your own bookkeeping but do not know the basics of bookkeeping and why you need to do the steps listed above, I highly suggest my online bookkeeping essentials course. It goes over basics of bookkeeping that can be applied to any bookkeeping software so you can understand the rhyme and reason behind bookkeeping not just the steps to how to do it within a program. To purchase this amazing program for only $47 a month.