QuickBooks Should Come with a Warning Label

"Ugh, QuickBooks confuses the crap out of me..."

"This QuickBooks class is way over my head....I need basics"

"OK QuickBooks. I give up for the night..."

Do you feel the frustration here? Maybe you have even said the same things!

These poor souls were sharing their dismay on Twitter recently about working in QuickBooks.

The sad thing is, most of these people are headed for big and costly trouble and probably don't even realize it.

JUST BECAUSE YOU CAN DOESN'T MEAN YOU SHOULD...

What is it that makes small business owners think that they should actually keep their own books?

Especially when they have no background in bookkeeping and by their own admission "they don't want to be an accountant?" I have heard that phrase literally hundreds of times.

Is it because they saw the commercial that promised "if you can write a check, you can use QuickBooks" (the ad conveniently forgot to include the word "correctly" as in "use QuickBooks correctly")

Or was it the fact that they were lured in with a "free starter copy of QuickBooks"?

Either way, I believe their premise in doing their own books is simply wrong. Just because "do-it-yourself" accounting software exists and is inexpensive, doesn't mean that they should buy it and dive in.

It does NOT ensure that they will be sprinkled with "magic bookkeeping dust" and come to understand the issues behind keeping a good (and correct!) set of books for their business.

NOT AS CHEAP AS THEY THINK IT IS

The poor soul that buys into the "do-it-yourself" accounting fantasy usually gets a pretty rude awakening. 

That awakening comes when they hand off their financial information to their CPA at tax time.

In fact, I can hear many CPAs bellowing in their offices right now - "what a $@!* mess this QuickBooks file is!" I've heard it every year for the last ten years.

So what starts out as a "cheap" way to do their own books quickly racks up additional costs as the business owner pays their CPA to "clean up the mess". Besides, don't they want their CPA spending time trying to lower their tax bill instead of sorting out a years' worth of mis-postings and mistakes?

Was any money really saved going the DIY route? Doubtful. Very, very doubtful.

But off in the distance, you can hear the CPA going "cha-ching".

AND THE BEAT GOES ON

Unfortunately, this same cycle repeats itself year after year. New businesses spring up on a regular basis where optimism is running rampant and cash is running tight. "I can buy a cheap copy of QuickBooks and do my own books" is being muttered right now by someone wondering the aisles of Staples.

If the truth were known to these businesses, they would read (and heed!) the warning label that should be prominently attached to their software box.

THE WARNING LABEL WOULD SAY...

"Do NOT attempt to use this software unless you have working knowledge of bookkeeping or have had an expert set it up and show you how it applies to your specific business". Failure to do so can have catastrophic consequences to your checkbook."

Skeptical? Just know that poor bookkeeping practices were one of the primary factors in over 25% of bankruptcy filings according to data from the SBA.

If you remember the old commercial that said "you can pay me now, or pay me (a lot more) later", you have captured the essence of doing your own bookkeeping.

Am I missing something here? Have your own thoughts on DIY bookkeeping? Feel free to post a comment below...

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Scott Gregory is a specialist with QuickBooks Pro, Premier and Enterprise accounting software. He has been helping businesses "think beyond the ledger" for over 25 years.

Comments

[Tony]

Hello Scott,
I've been searching the net for the last year trying to find someone with your ability to shed light on the dark side of quickbooks. Finally some sound advice for business owners. Though I have not lost any clients to the do-it-myself attitude, I have had accountant files sent my way for "Cleanup". Up to now, I have been reducing my fees on these, hoping this convinces the owners to hire a pro.

Alas, I see my thinking is clouded and burning the owner with normal fees is most likely a better approach. The owner needs to learn and if running from the lion's teeth is the best way to learn, looks like the best policy should follow the thought of "spare the rod...."

[Basic Bookkeeping]

I think that is the major dilemma of many entrepreneurs hence; I suggest its either they hire a bookkeeper who will do the work for them or teach them how to use quickbooks properly or earn the knowledge online.

[Scott Gregory, QuickBooks Expert]

Lynda:

Thanks for taking time to post your thoughts.

Sadly, I find that many business owners start to sit up and start paying a lot more attention to their accounting once they get the letter from the tax dudes that say "you owe $X + $y in interest + $z in penalties".

I really do feel strongly that if proper accounting isn't done regularly, it isn't a business - just a hobby.

Scott Gregory

[Lynda Artesani]

What a great post! As a ProAdvisor, we see this continually year after year. I have a client who is doing his own record keeping and payroll. He has been doing his own accounting. He just asked me to reconcile the entire years worth of his records. Well, lo and behold, many of his EFT tax payments never cleared the bank, i.e. were NOT paid. Some as far back as February, 2009. He never reconciled or checked to see if they cleared his account.

And guess how he is saving money doing his own day-to-day record keeping? Just cutting checks and making deposits and then monthly using online banking he is downloading his records into his QuickBooks program. I think they call that "horse before the cart" accounting. He also has revenue listed in liability accounts, etc. etc. A true mess.

Some people should realize that if accounting is not your thing, then maybe giving it to a professional will free up your time to do what you do best and make money for your business.

[Scott Gregory, QuickBooks Expert]

No Fuss Accounting:

Excellent news that you were able to save your client from paying taxes on that sum! Sorry to hear about the grief you had to go through to get there though.

I've always wondered just how tax preparers get the tax return done when they "just know" the QuickBooks data isn't correct. (I think I just found another topic for a blog post!).

Unfortunately, Intuit perpetuates this "you can do your own accounting" charade with some of the promotions they have run in the past and with the lure of the free accounting via Online today.

We've asked them to reconsider those messages, as they quickly devalue their corps of ProAdvisors around the country. As you mention, "the ad said we can do it ourselves, why should we pay you?" :-)

Keep finding those tax savings!!

Scott Gregory

[Scott Gregory, QuickBooks Expert]

Greg:

Thanks for the comments.

I agree with your thoughts for sure. Having been responsible for the IT group at my former employer, I know what you are referring to.

It’s just a shame that so many small business owners have to learn about this the hard way when they could avoid the pains of thousands of similar folks who have gone before them.

Pay now or pay later for sure.

Scott Gregory

[Nofussaccounting.wordpress.com]

I totally agree.. I can't count how many times i have heard this before. They see the low price tag and feel they now they no longer need an Accountant; I have also seen many business take the next step and buy turbo tax and think they know how to do taxes.. so easy right... turbo tax does it all for you.. why to we need tax professionals...

Once of my first clients i picked up after starting my new Accounting Business, i saved them paying tax on 17,000.00 worth of income that was a Officer's loan advanced to the business, and the in house bookkeeping posted the money to "Misc Income" guess what the Tax professional did when he processed the return... Posted it to ..... Revenue!!! Wow, He didn't even review the file because the Business owner did not "engage" him to do so..The Tax Prof didn't even want to adjust the return (and it was before he finalized it also) Until the owner put his foot down and said please look at the revised numbers from my New QB Advisor... The Tax Prof. called the owner back the next day and apologized and said it was a good thing I was on board, and that the tax bill just dramatically decreased.

I think that if businesses are NOT going to take advantage of us ProAdvisors that can really review and correct the errors "properly" in their files.. then they should be clear with the tax professionals, that they are not confident with their numbers, and ask them to review and fix the file for them. If the Tax professional is not capable or willing to do that, they should find someone who can.

Thanks for your insightful Post..It made my day!!!

[Greg Charland]

Ah, Scott, we in IT see stuff like this all the time. I agree that Quickbooks should come with a warning label.

So should SBS because it's easy to put up an insecure server.
So should TurboTax because it's easy to make a wrong assumption.
So should Frontpage because it's easy to put up a really crappy web site.
So should PowerPoint because it's easy to cure insomnia.

Small business owners usually try to do things themselves in important areas. They always will.

And sometimes they will get burned.

[Shannon Tucker]

Yes, I've seen a lot of those kinds of tweets, and it makes me wonder the same thing. Folks that don't have any accounting experience or background should at least hire an accountant to help them get set up and going right at the beginning.