Common QuickBooks Cleanup Mistakes

Undeposited Funds should be a temporary holding account. Payments sit there for hours or days until deposited.

Common state: hundreds of transactions from years ago, distorting the balance sheet.

Fix: match old items to actual bank deposits, or clear via journal entry against revenue for items that were double-recorded.

Owners pay themselves and code it to 'Owner Compensation' as an expense.

Result: business shows a loss it doesn't really have, and equity is understated.

Fix: reclassify all owner draws to owner's equity draws (or shareholder distributions for S-corps).

Loan payments coded entirely to 'Interest Expense.'

Result: massive fake deduction, loan balance never goes down on the balance sheet.

Fix: split each payment into principal (reduces loan balance) and interest (expense) per the loan amortization.

Manual entries plus bank feed imports create duplicate revenue and duplicate expenses.

Fix: identify duplicates (usually same date, same amount, different memo), delete or merge.

Businesses in sales-tax states (not Montana) sometimes code the full customer payment to revenue.

Fix: reduce revenue by tax collected, book tax collected to a liability account, and clear when remitted.

Every mystery number lives on the balance sheet: negative bank balances, huge 'Opening Balance Equity,' unreconciled loans.

Fix: reconcile every account, resolve or write-off suspense items with owner approval, and prevent recurrence with monthly close.

This article is general information for Montana small business owners, not tax, legal, or accounting advice for your specific situation. Rules change, and how they apply depends on facts we don't know about you. Before acting on anything you read here, talk to a qualified professional. If you're a Montana business owner and want a real conversation about your books, payroll, or tax, that's what Marlow Accounting is here for — call 406-290-1214 or schedule a discovery call.