I don’t consider myself a paragon of QuickBooks use by any means.  I know enough to spot when something isn’t correct, and I’ve first hand experience at just what a train wreck bad QuickBooks entry is.

Let no one for a moment consider that this is some curse upon QuickBooks.  I’ve used their software for more than twenty years, and I find it to be quite reliable and effective.

We’re talking about USER issues. 

QuickBooks is a competent program for use by people who are trained in accounting.  Not someone who’s a Certified Public Accountant (CPA), but someone trained in accounting.  Even Intuit’s Quicken program can cause a world of hurt for someone not trained in accounting.

QuickBooks has made a wonderful success of creating a terrific GUI and series of spreadsheets that organize financial data in usable ways.

It, like any software, is completely subject to the adage “Garbage In, Garbage Out”.

I have looked at books for clients that were created and kept on QuickBooks.  I’ve seen loans from shareholders categorized in up to five different ways, credit cards that reflect both balances and payments as liabilities; I’ve rarely, if ever, seen non-accountant QuickBooks files that were reliable enough to be used as accurate records of whether a business was making money or losing money.

The mistake, made over and over by micro businesses and sole proprietors, is to assume that QuickBooks has magical properties that can turn a $6.00/hour clerk into an effective book keeper, accounts payable clerk, accounts receivable clerk, financial reporting manager and payroll manager.

The WORST mistake is to assume that your wife/spouse/partner/boyfriend can be transformed into a CPA with the application of a QuickBooks CD-ROM.

QuickBooks can be used as a multi-user platform; for a fee, you can have a version of QuickBooks set up on more than one machine, and have a real, live, trained accounting expert provide you with your QuickBooks data entry/reconciliation, and keep your clerk/wife/husband/girlfriend around to write checks and follow the instructions of the accountant or book keeper.

Trust me, it’s far, far cheaper to hire an external book keeper who’s an expert than it is to find after three years that you have no defensible records to support your bank loan application or Internal Revenue audit.

It’s also cheaper to hire an external book keeper than it is to pay your CPA to have your taxes done from really bad data.

The worst part of poor micro business accounting is that the owner never really knows where they stand. Are you losing money? Are you a victim of employee theft? Can you afford to expand or to do some new advertising?

When you manage your micro business as do most people their household finances, you could most easily join the ranks for those who have started a business and then failed within just a few years from lack of understanding about your own business.