Top Common Mistakes New QuickBooks Online Users Make (and How to Avoid Them)
by Gil Halevy
1/28/20253 min read
QuickBooks Online (QBO) is a powerful tool for managing your business finances, but new users often encounter pitfalls when getting started. Learning to avoid these mistakes can save you time, frustration, and money. Here’s a guide to the top common mistakes and how to steer clear of them.
1. Not Customizing the Chart of Accounts
The Mistake:
Many users rely solely on QBO’s default chart of accounts without tailoring it to their specific business needs.
Why It’s a Problem:
A generic chart of accounts may not accurately track your revenue and expenses, making reporting less meaningful.
How to Avoid It:
Go to “Settings > Chart of Accounts” and:
Add, edit, or remove accounts to match your business structure.
Use account categories relevant to your operations.
2. Failing to Reconcile Bank Accounts Regularly
The Mistake:
Skipping or delaying bank reconciliations.
Why It’s a Problem:
Without reconciliation, errors and discrepancies between your books and bank records can go unnoticed.
How to Avoid It:
Reconcile accounts monthly.
Go to “Accounting > Reconcile,” select the account, and match transactions to your bank statement.
3. Incorrectly Categorizing Transactions
The Mistake:
Assigning expenses and income to the wrong categories.
Why It’s a Problem:
Misclassification can distort your financial reports and lead to tax filing errors.
How to Avoid It:
Review the suggested categories for each transaction.
Set up rules under “Banking” to automate categorization for recurring transactions.
Consult a bookkeeper for guidance on complex transactions.
4. Not Setting Up Bank Rules
The Mistake:
Manually categorizing recurring transactions.
Why It’s a Problem:
It wastes time and increases the risk of errors.
How to Avoid It:
Go to the “Banking” section and create bank rules to automate categorization.
Specify criteria such as payee name and transaction amount.
5. Ignoring the Accounts Payable and Receivable Modules
The Mistake:
Not tracking bills and invoices in QBO.
Why It’s a Problem:
This leads to poor cash flow management and missed payment deadlines.
How to Avoid It:
Use the “Expenses” tab to record and track bills.
Create and manage invoices under the “Sales” tab.
Set up reminders for due payments.
6. Not Using Recurring Transactions
The Mistake:
Manually creating repeat invoices or bills each time.
Why It’s a Problem:
It’s time-consuming and prone to errors.
How to Avoid It:
Go to “Settings > Recurring Transactions.”
Create templates for invoices, bills, or journal entries.
7. Neglecting Reports
The Mistake:
Failing to regularly review financial reports.
Why It’s a Problem:
Without reports, you may miss important insights about cash flow, profitability, and tax liabilities.
How to Avoid It:
Explore the “Reports” section to generate key reports such as Profit & Loss, Balance Sheet, and Cash Flow.
Customize and schedule reports for regular review.
8. Forgetting to Track Sales Tax
The Mistake:
Not setting up or tracking sales tax properly.
Why It’s a Problem:
This can lead to compliance issues and penalties.
How to Avoid It:
Enable sales tax tracking under “Taxes.”
Regularly review tax reports to ensure accurate filings.
9. Failing to Backup Data
The Mistake:
Assuming cloud-based software doesn’t require backups.
Why It’s a Problem:
Data corruption or errors can occur, and having a backup ensures peace of mind.
How to Avoid It:
Use the “Export Data” feature periodically to save copies of your financial data.
Maintain a schedule for regular backups.
10. Not Inviting Your Accountant or Bookkeeper
The Mistake:
Managing finances entirely on your own without professional support.
Why It’s a Problem:
You might miss tax deductions, overlook compliance requirements, or make costly mistakes.
How to Avoid It:
Go to “Settings > Manage Users.”
Invite your accountant by entering their email.
Grant them appropriate access to collaborate in real time.
Final Thoughts
Learning to navigate QuickBooks Online effectively is key to managing your business finances with confidence. By avoiding these common mistakes and leveraging QBO’s features correctly, you’ll set your business up for smoother operations and better financial health. Don’t hesitate to seek professional help if you’re unsure — it’s an investment that can save you time and money in the long run.