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5 Common Mistakes Contractors Make Using Quickbooks

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5 Common Mistakes Contractors Make Using QuickBooks

 


5 Common Mistakes Contractors Make Using QuickBooks

 

5 Common Mistakes Contractors Make Using QuickBooks

Ever wonder why you have costs running through your revenue accounts or why your office manager’s wages are running through your direct labor account? Below is a list of common mistakes contractors make using QuickBooks:

  1. 1. Posting Direct Costs Charged to Jobs to Overhead Accounts

    When charging direct costs to jobs, the transactions should only post to accounts listed as cost of goods sold accounts. With that being said, when setting up your chart of accounts, all of your direct expenses should be set up using the “Cost of Goods Sold” as the account type in QuickBooks.

  2. 2. Jobs Named “Overhead”

    Creating a job specifically for overhead does not mean you can have transactions posting to direct expenses. In fact, more times than not, having an “overhead” job makes extracting actual job information from QuickBooks more difficult.

  3. 3. QuickBooks Product and Service Items Used Interchangeably

    Product and service items in QuickBooks are designed to handle “behind-the-scenes” accounting while tracking product or service costs and revenue detail. Companies sometimes improperly use items and end up with costs posting to revenue accounts or revenue posting to cost accounts.

  4. 4. Incorrect Setup of Payroll Items

    Do not shortcut when setting up payroll items in QuickBooks. If you have hourly labor that is a direct expense and hourly labor for office staff, you should be utilizing separate payroll items for each so that the direct labor that is to be charged to jobs is posted to a cost of goods sold account, and the office labor is posted to an overhead expense account. Be sure to setup payroll items for the company’s burden and let the system accrue the company’s portion of taxes and benefits for you.

  1. 5. Bill Payment Check Dates Prior to the Vendor Bill Date

    When paying vendor bills, the date on the check should be after the date used on the vendor bill in QuickBooks.  If the date on the check is prior to the vendor bill date, the vendor balance will show a credit balance until the vendor bill date is reached.  This is extremely important at the end a period, as the vendor check could be in one period and the bill in a later period and the actual expense doesn’t post to the profit and loss statement until the date on the vendor bill.

 

Other Mistakes Using QuickBooks Across All Industries

  1. 1. Not Using Account Numbers in Your Chart of Accounts

  2. 2. Using the Opening Balance Equity Account

  3. 3. Void vs Delete

  4. 4. Year End Password Protection

  5. 5. Inventory Adjustments: Do I Adjust Quantity and Value?

  6. 6. Creating User Roles, Permissions, and Passwords in a Multi-User Environment

 

If your company is facing any of these issues and would like help, please reach out to Mindi Harling or your local Blue & Co. representative.

 

 

 

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