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Why QuickBooks Online is Not That Magic

Oct 31st 2016
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During this Halloween season, magic is in the air. Bookkeeping and Accounting professionals have long observed that our clients think there is magic in QuickBooks Online, and bank feeds do work wonders.  However, when our clients are under the illusion that bank feed downloads are magic bullets, and that clicking “Add” or “Match” is all that is required to have clean and accurate books, we need to educate them more about the work we really do, and why they need us.

Here’s a list of talking points which will help to break the spell:

1.    Missing Payee/Vendor Names
Yes, QBO bank feeds pull in the transactions, like magic, including a peek at the Vendor name, the date the transaction cleared, and the dollar amount. But it takes a careful eye to notice that if the transaction is from a new Vendor, the Payee name will be blank, even though the client sees it under the “Description” column, and they should not post a transaction with a blank Payee/Vendor field. 

2.    Loan Payments
Yes, QBO pulls in the full payment from the bank feed, but the unwary client tends to post the entire amount to Principal or to Interest. It takes more than the wave of a wand to break down the payment into Principal and Interest, as applicable, for the P&L and Balance Sheet to be accurate.

3.    Blank Checks
Yes, QBO pulls in data for a check which has cleared, but if that check was not pre-entered in QBO, or is not a one-for-one match for a Bill payment, and if the bank feed is the first time that QBO is “seeing” that check, then the check needs a magic touch to fix the check date, add the Payee, post the expense to the correct account, and add a description or memo describing the expense.

4.    Bank Reconciliations
Yes, QBO does pull in all the data which appears on a bank statement, but the account still needs to be reconciled. If not reconciled, you run the risk of not detecting duplicate or missing transactions. Duplicates can result from what I call online banking hiccups, such as when a single transaction gets duplicated, or an entire day is missing. It happens! 

5.    The Human Touch
The witchy ways of QBO do not trump the need for human input on certain transactions, such as an office supplies purchase which also includes a piece of equipment, such as a printer, scanner, or phone equipment. Instead of allowing QBO to automagically assign the entire purchase to “Office Supplies,” the experienced bookkeeper will create the splits to move the equipment into a second account, as appropriate.

6.    Class Tracking
When Classes are used, sometimes QBO magically applies the right Class, and sometimes it does not, so vigilance is required and corrections often must be made.

7.    Cash Expenses
QBO will never be able to conjure up cash expenses from a bank feed, although they can be sent to QBO when using a third party app like ReceiptBank or Hubdoc. An experienced professional will remind their clients that a system needs to be in place to account for all cash purchases.

8.    Payroll Entries
Yes, QBO will download the payroll debits, but if your client is using a third party non-Intuit payroll service, you will need to manually enter the payroll so the bank feed will show a green “Match.”  If your client tries to apply the payroll bank feeds using the “Add” button, chaos ensues. 

9.    Sales Tax
Yes, QBO will download the sales tax payment when it clears, but if you have not pre-entered the sales tax paid, creating a green “Match,” who knows to what account your client will “Add” the debit? Sometimes it takes a magician to figure out what the client did when you weren’t looking. 

10.    1099 Vendors
Yes, QBO will download the payment the client made to a new Vendor using their credit card, PayPal, or maybe even (wonders of wonders!) a pre-entered check in QBO which arrives as a “Match.” However, we still have to take a look at the Vendor record to see if they are set up as a 1099 Vendor (or not), and we have to ask the client if they obtained a W-9 form when appropriate. QBO cannot magically do that for us!

It’s true that the QBO bank feeds do save us time and effort in many ways, but they are not a silver bullet, and Bookkeepers and Accountants are still needed to work their magic to create a clean set of books. 

Editor's Note: The above review is the viewpoint and experiences of the author and do not necessarily reflect those of AccountingWEB, its parent Sift Media or any of its valued affiliates.

Jody Linick is an AIPB Certified Bookkeeper and a QuickBooks® Certified Pro Advisor.  Her company, Linick Consulting, specializes in remote bookkeeping services using hosted QuickBooks and QuickBooks Online. She works her magic in Alameda, California.

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