last week I emailed you and talked about Quickbooks Mistake #5: Not
Handling State & Local Sales Taxes Properly.
Today I want to explain...
Quickbooks Mistake #6 -
Forgetting to Separate Principal & Interest on Loans
Often if you have a loan payment you will mistakenly put the whole payment
on your Profit & Loss Statement as an Expense. When this happens your loan
amount will incorrectly stay the same and their Loan Expense grows wildly.
The correct way to record your loan payment
is to split a portion of it as Principal and a portion to Interest
Expense. This decreases your loan amount and correctly recognizes your
Often we find companies who may have bought a truck, a van, a piece of
equipment. They don't know how to make the journal entry so the Loan
Balance hits the books AND the Asset itself in on the books. There is a
correct sequence you should have followed when creating Principal &
Interest payments for any Asset you purchase using financing.
As you read the rest of the report, remember each of the mistakes just
remember that making one or more of these mistakes can cause you to under
or over pay your state and federal taxes.
Not to mention over or understating your expenses and profits on your
statements and to your bank if you submit statements to them for loans or
That is why at the end of the report you will see I offer a Free
Quickbooks Accuracy Scorecard where I or my Quickbooks expert here in
our office will perform a Free Quickbooks Evaluation on your Quickbooks
program company file.
Enjoy the report and if you have any questions or want to schedule your
Free Quickbooks Evaluation just call my office at 502-426-0000.