QuickBooks is undoubtedly a powerful financial management tool for many small business owners. The software can simplify even the most intimidating aspects of accounting, such as invoicing, payroll, and reporting. With this being said, there are a few important things to know! Whether you’re using QuickBooks for the first time or are confident in its use, the following are the 5 QuickBooks mistakes small business owners make and how to avoid them in 2025.
1. Incorrectly Setting Up The Company File and Payroll
Proper attention must be paid when setting up QuickBooks. Most importantly, the company file and payroll portions. Whether it is done in a rush or occurs because of a touch of negligence, mistakes can easily be made. For example, improper tax information or employee details being entered incorrectly. Even a quick oversight of the pay schedule can lead to incorrect payments; this can quickly turn into even larger issues.
Solution
To prevent such issues, it is important to take one’s time while going through the steps of the easy-to-use guided QuickBooks Payroll setup. Confirm that the business name, the business’s industry, and the fiscal year have been entered correctly. Simply set aside time specifically to go through the process. This way, there will be lower odds for the information to be entered inaccurately.
There is no need to rush through the steps! Once entered, double-check that the information is correct. This may seem unnecessary if you have been careful as you input the data. However, mistakes happen all the time! Correcting these details later on can become more complicated. Therefore, take the time to do it properly during the first go-through.
2. Not Regularly Backing Up The Data
We have all spent time working on something important, just to have an unforeseen issue arise. If crucial work or data has ever been lost due to a system glitch, power failure, or otherwise, it is not an incident anyone would like to have recur. Even with the power of “the cloud”, there is always the potential for things to go awry.
Solution
Thankfully, QuickBooks understands how troublesome such an occurrence can be. This is why QuickBooks users can schedule regular automatic backups to keep all of the entered data safe. These backups can be stored using a trusted cloud service or in a local location.
3. Misclassifying Expenses
For the final reports to be accurate, expenses need to be classified correctly. One of the most common QuickBooks mistakes small business owners make is using the wrong categories.
This may not sound like a significant mistake, but think again! It can lead to incorrect financial data being analyzed, which potentially leads to false tax filings and missed tax deductions, and compliance issues. It also makes it harder to assess profitability, the success of specific products/services, and where the business stands financially.
Solution
QuickBooks makes it easy to develop and customize a chart of accounts with clearly defined categories. (Failing to customize the chart of accounts could be listed as another mistake all on its own!).
Auto-categorization can then be used for recurring transactions, which helps to limit the odds of future errors. Simply review the transaction entries carefully to confirm they are being categorized correctly! If the categories are still cause for confusion, it is best to consult a professional to help clarify the best course of action.
Over time, errors or inconsistencies may show themselves. Built-in QuickBooks features help to streamline the process, but it requires the expenses to first be labeled correctly! This is why it is important to review the transactions and their categorization regularly. Take another look at all of the expenses and match them to the proper categories.
4. Not Utilizing All Available Tools
QuickBooks offers its users several useful tools, however, many of these are left unused to their full potential. Due to this, valuable insights are missed that could potentially be life-changing for the business. For example, class or location tracking allows the financial data to be segmented for more precise insights. These valuable analytics are often overlooked and are sometimes not even set up!
Solution
While some features may be more relevant than others, take a good look at all of the features QuickBooks offers. Explore which ones can help identify profitable areas of the business. And, look for ones that help pinpoint expenses that can be reduced.
This can range from balance sheets and cash flow reports to profit and loss statements that use real-time data. All of these come together to provide key insight into the current state of affairs. In turn, this helps to make the most informed decisions based on the most up-to-date information.
5. Incorrect Bank Reconciliation
Maintaining accurate financial records requires reconciling your bank accounts in QuickBooks 2025. When reconciling an account, compare the transactions in QuickBooks with the same ones on the bank statements. Once this is done, the difference between the ending balance in QuickBooks and the bank statement should be $0.00. However, it is easy to have resulting discrepancies due to easily avoidable mistakes.
Solution
Rather than waiting until the last minute, we recommend reconciling back and credit accounts every month. At this time, review every transaction and ensure everything matches the corresponding bank statements, such as opening balances. If there is any disparity, it is important to search for where the issue originates immediately rather than waiting. The sooner the problems are resolved, the better.
QuickBooks makes this process even easier by offering automatic transaction imports and automated bank feeds. Importing transactions in real time ensures the most updated information is being used. It also reduces the risk of human error that often occurs due to manual data entry.
Bonus Tip: Don’t Ignore Regular Software Updates!
As with every other form of technology, QuickBooks is constantly improving. New features are always being added, along with updates that fix bugs and enhance security. Don’t miss out on all of the advantages the software provides! Enable automatic updates so the latest version and all its features are available.
Avoid QuickBooks Mistakes With QuickTrainer Solutions
While these are common QuickBooks mistakes, the important thing to know is that they can be avoided! QuickTrainer is the go-to expert on using QuickBooks to its full potential while limiting costly mistakes. For answers to any questions you may have, or if you would like to speak to one of our professionals for more information, contact us here. You may also call us at (910) 338-0488 or email info@quicktrainer.net.
