What Should You Fix First in QuickBooks?
In this episode of QuickBooks Mastery for Small Business Success, Lee Davis and Erica Northrup discuss one of the most common questions business owners ask when their books feel messy or overwhelming:
Where do I even begin?
When bookkeeping problems start piling up, it’s easy to feel stuck. But according to Erica and Lee, the best place to start is often the issue that’s causing the most stress or uncertainty.
Listen!
Start With What Feels Wrong
Many business owners first notice a problem when something obvious doesn’t look right—such as a checking account balance in the chart of accounts that seems completely off.
That discomfort is usually a signal that something needs attention.
Rather than ignoring it, start there.
Why Google Isn’t Always the Best Solution
When bookkeeping issues arise, many business owners immediately search online for answers.
While online resources can sometimes help, QuickBooks problems are often tied to the specific way your books were set up. Generic advice may not fully solve the issue—and in some cases can make things more confusing.
The key is understanding the why behind the problem, not just applying a quick fix.
1. Start With the Chart of Accounts
According to Erica and Lee, one of the first places to review is the Chart of Accounts.
If the structure of your accounts is incorrect, everything connected to those accounts can become inaccurate as well.
Common issues include:
- Accounts classified incorrectly
- Too many unnecessary accounts
- Accounts that don’t fit the business properly
One practical tip is to use your Schedule C as a guide when cleaning up your chart of accounts.
Most importantly, your chart of accounts should be customized to your specific business—not copied from someone else’s setup.
2. Review the Bank Feed
The bank feed is another area where problems often begin.
Common mistakes include:
- Duplicate transactions
- Incorrect account assignments
- Automatically accepting suggested categories without review
While automation can save time, it still requires oversight and accuracy checks.
3. Check Your Reconciliation
Reconciliation issues are another major source of frustration.
Often there are:
- Transactions sitting unreconciled
- Duplicate entries
- Missing or incorrect transactions
When reconciliations are inaccurate, your reports become unreliable.
Reviewing and cleaning up reconciliation discrepancies can significantly improve confidence in your books.
4. Improve Categorization
Categorization mistakes can affect nearly every financial report in QuickBooks.
Erica and Lee recommend:
- Using bank statements to verify transactions
- Matching entries carefully
- Categorizing transactions intentionally
One important reminder:
Don’t automatically trust QuickBooks’ suggested categories.
When setting up products and services, it’s also essential to connect them to the correct income accounts so sales are recorded properly.
How Do You Know the Cleanup Is Working?
Bookkeeping cleanup can feel overwhelming, so it’s important to recognize progress along the way.
According to Erica and Lee, once that first major issue is resolved, you’ll often feel like you’re finally moving in the right direction.
A good way to measure success is by reviewing:
- Your Profit & Loss Statement
- Your Balance Sheet
When those reports begin making sense and reflecting reality more accurately, you know the cleanup process is working.
Final Thoughts
Fixing your book is crucial to gaining control of your business. Lee has been in the business of cleaning up messy book for over 10 years, and entrepreneurs usually have similar problems.
You could hear it in the tone of his voice during the podcast – this is old hat to him. He has looked at enough books to instantly spot the problems. If you are needing help, don’t hesitate to reach out.
If you liked the podcast, you will like our training course. Click on the link below to join our upcoming course.