Learn about the acronym GAAP and how you can apply its concept to your accounting workflows in QBO to stay safe, compliant, and productive.
Every industry has, by nature, guidelines for best practices. They’re the result of lessons learned the hard way, innovation, and the need for standardization in order to optimize efficiency. In accounting, these guidelines are called Generally Accepted Accounting Principals (GAAP). Public companies are required to adhere to them, and many other businesses, large and small, follow these rules and procedures because, as the title says, they’re generally accepted as the best way to perform accounting tasks.
As we’re not an accounting services company, we’re not going to discuss GAAP in this month’s column much further. However, GAAP are important to know about, and we’ll keep them in mind as we focus on sharing actions you can build into your QuickBooks Online processes to streamline your bookkeeping tasks and keep your work in line with what other successful businesses do.
How Do GAAP Help?
Accounting best practices have numerous benefits. For example, they:
Help maintain the integrity of your QuickBooks Online data files.
Improve the accuracy of your accounting work.
Save time.
Provide insight into the financial health of your business.
When you incorporate best practices into your work, you may even find that your relationships with customers and vendors improve because you’re handling business with them conscientiously. In this article, we’ll discuss seven suggestions you can implement for a smoother accounting process in QuickBooks Online.
Track your 1099 vendors
If you work with freelancers, independent contractors, or anyone else who is not an employee, you should be creating vendor records for these individuals. Click Expenses in the toolbar and then select the Vendors tab. As you’re completing a record, you’ll see a section labeled Additional info. Check the box in front of Track payments for 1099. Now, it will be much easier to create 1099s directly from QuickBooks and deliver them to your vendors when the time comes.
If your business employs contractors, make sure that you indicate their 1099 status in their vendor records.
Reconcile, reconcile, reconcile
Once you’ve downloaded cleared transactions from your financial accounts, it’s essential that you reconcile them. This is probably one of your least favorite tasks, but QuickBooks Online simplifies things by walking you through the process. Reconciling accounts regularly can help you:
Discover errors and missing transactions.
Get a more accurate picture of your cash flow.
Make your reports more precise.
Before you click Finish Now, remember to look for uncleared transactions that don’t make sense, and research each one to see if it needs to be corrected or deleted.
Keep your lists up to date
Your QuickBooks Online company file can grow substantially over the years. Though the site has excellent search capabilities, you could still end up scrolling to find the entries you want. This isn’t as big a problem for lists like Payment Methods or Terms, but overly lengthy lists of Products and Services, Customers, and Vendors can become unwieldy over time. Please spend some time keeping them current by marking individual records inactive. You can do so by clicking an Action link in the listing table for each.
If your QuickBooks Online Lists are getting too lengthy, you can make some of the records Inactive.
Categorize and classify everything that you can
Your QuickBooks Online company file consists of hundreds or thousands of individual records and transactions. Though each is a unique entity, there will be times when you want to assemble those related to each other in groups. For example, you might want a list of all of your customers in a specific ZIP code or all services that go into creating a marketing program.
There’s more than one way to get this information quickly. You can customize reports. Assign Classes, Categories, and Tags. View a Project. Whatever method(s) you choose, do use them consistently. They can provide insight in various ways to help you make better business decisions.
Warning: Before making lists of these classification tools and assigning them, think carefully about what they should be. You can always add to and edit the lists, but you’ll want to make them as focused and flexible as possible. Let us know if you need help with this.
Assign user permissions carefully
QuickBooks Online makes it possible to restrict users to specific areas and functions on the site. Use these tools! You can find them by clicking the gear icon in the upper right and then Manage users. You trust your employees, or you wouldn’t have hired them, but you must establish controls to protect your sensitive company data. If you need more granular user controls, you may need to upgrade to QuickBooks Online Advanced. Please contact us for assistance.
Use QuickBooks Online’s reports
Are you taking advantage of QuickBooks Online’s report templates? It’s essential that you keep up with reports in areas like Who owes you and What you owe. We can help with this. We can also generate and analyze the standard financial reports you occasionally need, like Statement of Cash Flows and Profit and Loss. We have a great article on getting started with QuickBooks Online reports here.
Don’t leave QuickBooks Online running and walk away
This should go without saying if you’re in a multi-person office. Also, don’t use the QuickBooks Online mobile app on a public Wi-Fi network when you’re out and about. Your company file contains information about your customers, vendors, and employees that should never be compromised. You can also control automatic logging off after a specific time of unattended use in the settings.
More Than Common Sense
These best practices may seem common sense if you’ve been using QuickBooks Online for a while. But when you first start using web-based financial applications, they might not be so intuitive. That’s why we’re sharing them with you: to remind you that conscientious use of QuickBooks Online is critical to the safety, accuracy, and usefulness of your company data. As always, we’re here to answer any question you have.