You know the feeling. You look at the number at the top of QuickBooks, and some part of you doesn’t quite trust it. Nothing is obviously wrong. You just can’t say for certain it’s right.
Here’s what it’s worth to find out. You either learn your books are fine and can stop wondering, or you learn what’s wrong while it’s still early. The alternative is finding out the expensive way, at tax time.
I can say that with real confidence, because of what I’ve found when I’ve gone looking.
One real example, details changed to protect the owner. The business looked fine on the surface. Money coming in, the account positive, no particular concerns. That’s usually where most people stop looking, because that’s as far as anyone ever checks.
I went further. Traced the income back to source documents, and only about 15% of it could be proven. Roughly two thirds of the year’s recorded revenue was deposits with nothing behind them, no invoice, no receipt, no record of where the money came from. 94 transactions were sitting unreviewed in the bank feed, and clearing them the obvious way would have doubled the reported income overnight. At one point the checking account had been reading negative in the file, which can’t happen with a real bank account.
None of that showed up on the profit and loss statement. The P&L looked fine.
The owner here was not careless. Good books can look fine on the surface while something underneath is quietly wrong, and it stays that way a long time because nobody ever looks past the surface number.
You don’t have to guess which one you are. There’s a free 12-question quiz that takes about two minutes and tells you roughly where you stand, and your score is yours to keep.
Take the free Books Health Quiz