As more small businesses start using QuickBooks Online, we (accountants and bookkeepers) need to be prepared to support them. Clients often start using QuickBooks Online on their own, but then call us when they’ve made mistakes.
One of the great features of QuickBooks Online is having bank and credit card transactions automatically downloaded every night. This saves A LOT of time by minimizing data entry. However, in this article, I’ll point out three common mistakes users make related to downloading transactions in QuickBooks Online.
Mistake 1: Deposits as Income
With downloaded transactions, many people will add deposits and post them to an income account. However, when you record income via a deposit, the transaction won’t be reflected in the Customer Center, on sales reports, or with sales transactions. Figure 1 shows a deposit added as income from a customer named “A Deposit.”
Figure 1: The deposit has been downloaded and added.
The customer’s deposit is included as income on the Profit and Loss report and in the detail for the income account, as shown in Figure 2.
Figure 2: Deposits are included in the Transaction Report.
However, when you look in the Customer Center, you won’t see deposits. Notice in Figure 3 that the filter for All Transactions doesn’t include deposits.
Figure 3: The All Transactions drop-down doesn’t include deposits.
The customer’s deposit shows on the Income by Customer report but not on the Sales by Customer report, as shown in Figure 4.
Figure 4: Deposits show on Income by Customer report, but not on Sales by Customer report
To fix this common mistake, first Undo the deposits, as shown in Figure 5. Then, enter an Invoice or Sales Receipt that will be reflected in the Customer Center, on sales reports, and with sales transactions. Go back to the downloaded transactions to match the deposit to the Invoice or Sales Receipt.
Mistake 2: Duplicate Transactions
When you add a new account to download transactions, the last 90 days of transactions will be downloaded. However, if you converted from the desktop version of QuickBooks, many of these transactions may already be in your QuickBooks Online version. A common mistake is to add the downloaded transactions, which results in duplicate transactions.
The good news is you don’t have to delete each transaction individually. Instead (see Figure 5), to remove the duplicate transactions, click on In QuickBooks, select All, and unselect any that aren’t duplicates (if the client’s books were current prior to converting, then almost all of them will be duplicates). Then, under Batch Actions, select Undo.
Figure 5: Use Batch actions to remove duplicate transactions.
This will remove the transactions from the books and put them back in the New Transactions area. Then, select the duplicates, Batch Actions, and Exclude them, since the transactions are already recorded in QuickBooks Online. Alternatively, you could match them to existing transactions. However, this is optional and not necessary if the accounts have been reconciled already.
Mistake 3: Wrong Account Type
Another fairly common problem people encounter is receiving an error message when trying to add a transaction: “You need to select a different type of account for this transaction.” Most users try selecting a different expense account (category), but they continue to receive the error message, as shown in Figure 6.
Figure 6: Error message – “You need to select a different type of account for this transaction.”
This is a problem because the bank or credit card account is the wrong type of account. In this example, the Visa account is set up as an Other Current Liabilities account type (see Figure 7), which is causing the error message.
Figure 7: Using the wrong account type.
It’s easy to fix the problem. Simply edit the account and change the account type to a bank or credit card account.
Now that you’re aware of these three common mistakes, hopefully you can help your clients avoid making them, or you’ll know how to quickly identify and fix the problems if mistakes are made.