[fname], 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 Interest Expense.

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 other reasons.

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 313-388-0300.
 


Regards, Phil

Philip Schreiber, CPA

Schreiber Advisors, PC

Certified Public Accountants
14801 Southfield Rd

Allen Park, MI 48101

313-388-0300

phil@cpatechs.com

www.detroit-cpa.com