Most advice about bad bookkeeping is about the bookkeeper. Whether they answer emails, whether they explain things, whether the price is fair. That is worth knowing, but it does not tell you whether the numbers are right, and those are separate questions. A responsive bookkeeper can hand you a file with four years of drift in it, and a quiet one can be doing careful work.
The good news is that a lot of what goes wrong in a small business file is not a judgement call. It is a setting, a date, or a missing connection, and you can check it yourself without knowing any accounting. Below are six checks. Each one takes a couple of minutes and gives you a yes or a no.
We open a lot of files that somebody else has been keeping. These are the things that turn out to be wrong most often, and none of them require an opinion to spot.
1. The accounting method on the file does not match the basis you file on
QuickBooks has a company-level default of either Cash or Accrual, and every report you open uses it unless you override it by hand. Most small businesses file on cash. Plenty of files are set to accrual, sometimes because that was the default when the file was created and nobody revisited it.
When those two disagree, every report anyone opens is answering a different question from the one your tax return answered. Your net income on screen is not your net income on the return. Neither number is wrong, exactly, but the one people quote in conversation is the one the file defaults to, and that is the one nobody checked.
How to check it: go to Settings, then Advanced, then the Accounting section. The accounting method is listed there. Compare it to how you file. If you are not sure how you file, the front page of your last return says so.
Every report also prints the basis it ran on in the footer, so you can confirm a specific report rather than trusting the default.
2. Close the books is off
QuickBooks has a closing date with an optional password. When it is off, anyone with access to the file can post a transaction into a year you have already filed. Nothing warns you. The report you ran in March and the report you run in September can disagree, and the difference is a transaction somebody added in between.
This matters more than it sounds. Once a year is filed, the numbers behind it are supposed to be fixed. If they move, the return no longer ties to the books, and the balances carried into the following year are wrong from day one.
How to check it: Settings, then Advanced, then Accounting. Look for Close the books. If it reads Off, that is your answer. It should be on, dated to the end of your last filed year, with a password.
There is a real reason to leave it off temporarily. If your accountant is still posting adjustments for that year, locking it gets in their way. That is a reason to turn it on when they finish, not a reason to leave it off indefinitely.
3. A bank feed has stopped, and nobody noticed
Connected accounts drop their connection. The bank changes an authentication requirement, a password expires, a token lapses. When that happens, transactions stop arriving.
This one is worth understanding properly, because it does not look like a problem. Uncategorized transactions pile up in For Review where you can see them. A dead feed leaves nothing in For Review at all. The account just goes quiet, and quiet reads like a month where you did not spend anything.
So the accounts most likely to be broken are the ones that look calm.
How to check it: open Banking and read the last updated date on every connected account, including the ones with nothing waiting for you. Any account that has not updated in the last few days is not feeding the books. Then compare the balance QuickBooks shows against what the bank actually shows today.
4. The reconciliation dates are not what you were told
Reconciling an account means agreeing it to the statement, line by line, until the difference is zero. It is the step that catches a duplicate, a missing deposit, or a transaction entered at the wrong amount, and there is no substitute for it.
An account can look completely normal and not have been reconciled in a year. Nothing on the screen announces it.
How to check it: Reports, then search for Reconciliation Reports. It lists each account and the last period reconciled. Do this per account rather than assuming they move together, because in practice they do not. The operating checking account tends to get attention and the credit card, the second card, and the savings account tend not to.
If someone has told you the accounts are reconciled through a date, this is where you confirm it rather than take it on trust.
5. Payouts from Stripe, Shopify or PayPal are booked as revenue
When a payment processor sends you money, that deposit is not a sale. The sale already happened, usually days earlier, and it happened at a larger amount, because the processor kept its fee before sending the rest.
If the deposit gets coded straight to income, two things go wrong at once. Revenue is understated, because you are recording the net rather than what your customers actually paid. And the processing fees disappear entirely, because they were never recorded as an expense, which quietly overstates your margin.
The version that goes the other way is worse. If both the individual sales and the payout deposits are recorded as income, revenue is counted twice.
How to check it: find a payout deposit in the bank register and look at the account it is coded to. It should be moving money between accounts, not creating income. Then take one payout and compare it to the same period in your processor's dashboard. All three numbers belong somewhere in your books. If the only one you can find is the net, the fees were never recorded as an expense.
6. The tax return was not built from the books
This is the one people are most surprised by. A preparer who works from a spreadsheet, a bank export, or last year's return can produce a perfectly filed return that has no relationship to your accounting file.
When that happens, the return and the books diverge, and the divergence carries forward. Fixed asset and depreciation figures are the usual place it shows up, because they only exist on the return unless somebody posts them back.
How to check it: take net income from your return and compare it to net income in your file for the same period on the same basis. If they do not agree and nobody can explain the difference in specific transactions, the return was prepared somewhere other than your books.
A difference is not automatically a problem. Adjustments happen for real reasons. What matters is whether somebody can name them.
What to do with a no
If one of these comes back wrong, the useful next question is how far back it goes. A closing date that is off since last month is a five minute fix. An accounting method that has been wrong since the file was created means every report anyone has read has been on the wrong basis, and it is worth going back through the decisions that were made on those numbers.
You do not need to fix all of it at once, and you should be suspicious of anyone who tells you a cleanup has to be all or nothing. Reconnecting a dead feed and reconciling the accounts gets you most of the way to books you can trust, and the rest can follow.
If you want the full sequence, we keep a cleanup checklist that runs through it in the order the work is actually done, from the first backup through locking the closed periods. It works the same way in Xero.