How do I know if my books are accurate?
The most basic check is bank reconciliation. Open QuickBooks and compare the ending balance in every bank account and credit card to your actual statements. If those numbers don’t match, your books aren’t accurate. They should tie out to the penny. If you haven’t reconciled in months, that’s already a strong indicator something is off.
Next, pull up your balance sheet and look for things that don’t make sense. Negative cash balances when you know there’s money in the account. Accounts receivable showing invoices from customers who paid months ago. Loan balances that don’t reflect what you actually owe. The balance sheet is a snapshot of where your business stands financially, and if it doesn’t match reality, the underlying transactions are wrong somewhere.
Your profit and loss statement should also pass a reasonableness test. Does revenue roughly match what you collected over the period? Are expenses landing in the right categories? If your office supplies line shows $12,000 for the year and you barely buy any, something got miscategorized. Your P&L should tell a story that matches how you actually operated.
Check for uncategorized transactions. In QuickBooks, these often sit in “Uncategorized Expense” or “Ask My Accountant.” A handful is normal temporarily. Dozens or hundreds means nobody is properly maintaining the books. Every uncategorized transaction is a gap in your financial picture.
Look at accounts receivable and accounts payable. Do the customers listed as owing you actually owe you? Are there stale invoices that should have been written off or marked paid? Same with bills. If your AP shows vendors you already paid, the payments weren’t recorded correctly. These aged reports should reflect what’s actually outstanding today.
Finally, compare your financials to your most recent tax return. Revenue on your P&L should be close to what was reported. Large discrepancies mean either the books or the return has an issue, and you need to find out which one.
If you’ve gone through these checks and found problems, that’s normal and fixable. Many small business owners discover their books have been quietly drifting for months or years. A QuickBooks ProAdvisor in Chandler can help you identify exactly where things went wrong and get them corrected.
If your books look fine but you still aren’t confident, or you simply don’t have the accounting background to evaluate what you’re looking at, consider bringing in an external controller to review your financials. Having a second set of trained eyes on your numbers gives you the confidence to make decisions based on what the reports say, instead of wondering whether they’re right in the first place.
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More Questions
How do I manage bookkeeping when my crew works across multiple job sites?
Every expense needs to be tied to a specific job. That means tracking labor hours per site, coding materials to the right project, and allocating shared costs so you can see true profitability on each job.
Read answerHow do I use my P&L to make better pricing decisions?
Your P&L shows what it actually costs to deliver your product or service and how much is left over. By understanding your gross margin and overhead, you can work backward to find the prices that support real profitability instead of guessing.
Read answerWhat financial reports does a trades business need to review monthly?
At minimum, review your profit and loss statement, balance sheet, and cash flow statement. Trades businesses should also track accounts receivable aging and job profitability to stay on top of cash and pricing.
Read answerShould I run payroll myself or outsource it?
Most small business owners are better off outsourcing payroll. The cost difference between DIY software and a payroll service is often small, but the time savings and reduced compliance risk make outsourcing the better value.
Read answerHow should a general contractor track costs per project?
Assign every expense to a job number and cost category in your accounting software as it happens. Break costs into labor, materials, subcontractors, and equipment so you can compare actual spending to your estimate and catch overruns early.
Read answerHow do I track inventory costs in QuickBooks Online?
QuickBooks Online uses the FIFO costing method to track inventory automatically. Set up each product as an inventory item with its cost, and QBO handles the cost of goods sold calculation when you record sales.
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