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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