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7 Best Practices for QuickBooks Online

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Even if you’ve been using QuickBooks Online for a long time, it’s good to step back and evaluate your actions.

“Best practices” aren’t enforceable rules. They’re simply guidelines businesses commonly follow in one area or another. If you’re in retail, for example, one best practice might be to always ask customers checking out if they found everything they were looking for. This serves two purposes: It conveys a feeling of concern for the customer’s shopping experience, and it may also lead to increased sales.

QuickBooks Online has many best practices, some of which may serve multiple purposes, including these:

  • They keep your company data safe and clean.
  • They provide insight on your financial status.
  • They save time.
  • They can lead you to better relationships with customers and vendors.
  • Are any or all the following common practices for your business?

Reconcile accounts regularly.

One of QuickBooks Online’s most useful features is its ability to connect to your financial institution’s websites and download cleared transactions. QuickBooks Online also offers tools to help you keep your accounts reconciled online, like you used to do every month when your paper statement came. Reconciling accounts can help you uncover errors. It gives you a truer picture of your cash flow, and it improves the accuracy and timeliness of some reports.

It’s not a particularly pleasant process, but you should be reconciling your accounts regularly in QuickBooks Online. We can help.

Clean up your lists.

Some lists in QuickBooks Online aren’t overly long. You don’t have to worry about, for example, Payment Methods, Terms, or Classes. Your lists of customers and vendors, products, and services, on the other hand, can grow unwieldy over the years. This means it can take more time than it should to scroll through lists when you’re using those entities in transactions. It also puts unnecessary stress on your company file. If you can’t delete any, at least make them inactive.

Never leave QuickBooks Online open when you leave your work area.

This goes for everyone, even people who work alone and don’t access their company files away from their work areas. The obvious reason is to keep someone else from getting in and authorizing payments, for example, or otherwise compromising your financial information. It also protects the integrity of your data file in case your internet connection suffers some kind of outage.

Keep track of 1099 vendors.

Whether your company uses 10 vendors or a hundred or more, you may have to supply at least some of them with an IRS Form 1099 at about the same time you’re preparing W-2s for employees. Your 1099-related tasks will be much easier if those individuals and/or companies are earmarked. If you think vendors might need 1099s when you create their records in QuickBooks Online, click in the box to the left of Track payments for 1099 in the lower right corner. Not sure? Ask us.

Classify everything with care.

Every time you have to create a record or transaction where categories are involved (i.e., Classes, Customers and Vendors, Territories), check and double-check that you’ve assigned them the correct classification. Errors here can result not only in problems with daily workflow, but your reports will not be accurate. A related best practice: Create a meaningful group of Classes, and use them faithfully. They’ll help you make better business decisions.

To create your list of Classes, click the gear icon in the upper right and select All Lists | Classes | New.

View reports on a regular basis.

There are some advanced financial reports in QuickBooks Online that we should be creating for you on a regular basis, either monthly or quarterly. These include Profit and Loss, Balance Sheet, and Statement of Cash Flows. The mechanics of creating them aren’t difficult, but analyzing them is. You should be running reports on your own at frequencies that you think would be helpful, like A/R Aging Detail, Unpaid Bills, and Sales by Class Detail.

If you’ve been using QuickBooks Online for a while, you could probably come up with your own list of best practices. If you’re new to the site, consider scheduling some time with us to go over more of them. Develop good habits from the start, and there won’t be nearly as much need for troubleshooting down the road.

Risk Assessment Basics

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Risk Assessment

The AICPA and accounting profession have been emphasizing the benefits and need for risk assessment at all entities for many years. For most small businesses, these standards have been a challenge to implement. While many businesses may feel they don’t have the resources or the need to implement these practices, they can be extremely beneficial and very easy to implement with some minor changes to their every day practices.

I took a class once where they explained that it may be a change in the way we look at things that allows us to implement these standards. At some level, we all do a risk assessment, on a routine basis. For example, I don’t post pictures of my credit card on social media. While this seems obvious, the reason is ultimately that I deemed this practice to be putting myself at risk for misappropriation of my assets. That’s risk assessment. And it can vary from person to person, situation to situation. Maybe I don’t believe it’s too high of a risk to give my card to my husband, but I do feel it’s too high of a risk to give that card to my teenage daughter. I have never written this thought process down, but innately, I have identified where in my life I feel my risks lie.

This same process can be applied at any business, regardless of its complexities or lack thereof. Any business owner could sit down on an annual basis and try to brainstorm the areas of their business that may have a higher risk than others. Maybe you sell something of such high value that your inventory is an obvious risk of theft. If that’s true, I would bet you have some controls in place to ensure that your inventory is not stolen. That’s your internal control. If you don’t have any way to prevent it, then we would consider that area a high risk and would work to develop some ways to better protect that inventory.

Having this discussion with your CPA can be invaluable. A good CPA should be well positioned to help you not only identify these control risks, but to help you develop workable solutions to help mitigate these risks. Business owners that are able to come to a CPA with some idea of where their risks are can get much more value out of this discussion than someone that has never gone through this thought process. While CPA’s can be great, we will never know your business as intimately as you do. Your roadmap can help us get to the issues that are most important and valuable to you, and ensure that we can best assist you with any problems that may exist.

If you have any questions on the above or would like to consult with one of our professionals about your specific situation, please contact us at admin@wcr.cpa or 303-792-3020.

Resources

https://www.aicpa.org/content/dam/aicpa/interestareas/frc/auditattest/downloadabledocuments/risk-assessment/risk-assessment-wp.pdf

http://www.nacubo.org/Documents/business_topics/Risk_Assessment_Toolkit.pdf

 

Hello world!

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Welcome to Our New Blog! We will be posting articles that we believe to be helpful to our client base. These articles will range from tax, to new Accounting standards, to general business tips. Every client’s situation is different, so if ever want some additional guidance on how a certain article may pertain to your specific situation please reach out to us at admin@wcr.cpa. We hope you enjoy, if you have any suggestions on topics you’d like to see please let us know. Thank you!

 

Sincerely,

Watson Coon Ryan, LLC