What I Look for When I Open a QuickBooks Online File for the First Time
When I open a QuickBooks Online file for the first time, I am not trying to identify every problem immediately. I am trying to understand the file. I want to see how the books have been handled, how money is moving through the business, what looks normal, what does not, and where I need to dig deeper. A few areas get reviewed every time, because they reveal so much about the overall condition of the books.
Starting with the Balance Sheet
I go down the accounts from top to bottom and look at the balances, and at this point I am not analyzing any account in depth. I am looking for anomalies. Does a balance look unusually high or low, or negative when it should be positive? Has a loan balance not changed in a year? Is money sitting in Undeposited Funds or a clearing account that should have cleared long ago? Are payroll or sales tax liabilities building up? Do Accounts Receivable and Accounts Payable fit the business? There is almost always something that catches my eye.
Bank and Credit Card Accounts
From there, I review the bank accounts more closely, because bank activity tells me a lot about both the business and the bookkeeping. I look at what is coming in and going out, how transactions have been recorded, whether activity appears to be missing, and whether the accounts have actually been kept current. This is also where I start to see recordkeeping patterns. Were transactions entered manually, or were bank rules doing most of the work? Were deposits added instead of matched? Are transfers handled consistently? Does payroll appear to be recorded properly? Are loan payments split correctly, or simply posted to an expense account?
I do the same with the credit cards. Most of that activity relates to business expenses, so I look at what has been recorded, what may be missing, and whether the activity is what I would expect for the business. Reviewing the bank and credit card accounts also tends to surface bank feed issues: a connection that dropped for a period of time, duplicate accounts, or an entire account missing from the file. I see all three.
Reconciliations and Their History
A bank or credit card account can technically reconcile in QBO while hiding many errors. I have seen income duplicated because deposits were added instead of matched, uncleared transactions piling up in the register, loan proceeds recorded as income, credit card payments posted to expense accounts, and journal entries or reconciliation adjustments used to make differences disappear. I have seen plenty of creative ways to “reconcile” an account. The reconciliation page may show zero, but that does not mean the transactions underneath it are correct.
Income
Income gets its own review because I want to understand exactly how revenue gets into QBO. For some businesses, that is relatively straightforward. For others, income may originate in ServiceTitan, Shopify, Toast, Etsy, PayPal, Stripe, or several systems at once. I want to know what is syncing into QuickBooks Online, what is being entered manually, how deposits are being matched, whether sales are being recorded gross or net, and whether merchant fees and sales taxes are being handled appropriately.
Inconsistent integrations often show up here. A completely broken integration is usually obvious, but one that works correctly, for the most part, can be much harder to spot. I recently reviewed a file where some deposits were recorded correctly at gross income with the related merchant fees separated, while others were recorded at the net amount deposited into the bank. The bank account reconciled and income appeared on the Profit and Loss, but the reporting was inconsistent and gross income was understated in some periods.
Patterns and What Is Missing
Across all of these areas, I am looking for patterns rather than just individual mistakes. One incorrect transaction may be a mistake. Fifty transactions entered the same way tell me something about the process. Patterns help explain how the file got into its current condition, and sometimes they show that the bookkeeping changed halfway through the year because someone new took over. There are files where I can almost see the point where the bookkeeping changed hands.
At the same time, I look for what is missing: transactions, credit cards, bank accounts, fixed assets, loan balances, payroll activity, integration activity. What is absent from a QuickBooks Online file can be just as important as what is in it.
Accounts Receivable and Accounts Payable
When these accounts are in use, I review them to find out whether the balances are legitimate and whether the underlying workflows have been handled properly. An old invoice may truly be unpaid, but it may also be there because a payment was applied incorrectly, the invoice was duplicated, or the balance was simply never cleaned up. The same is true of Accounts Payable, where bills may remain open long after they should have cleared because the bill workflow was never implemented correctly or because expenses were also being recorded directly through the bank feed. QuickBooks Online will carry those balances forward indefinitely, but that does not mean they are valid.
Journal Entries
Some journal entries are normal year-end or adjusting entries. Others reveal previous attempts to correct balances, clear accounts, force reconciliations, or fix a problem without correcting the underlying transactions. Sometimes the journal entries make sense of the file, and sometimes they create more questions.
The Chart of Accounts
This tends to come near the end of my review. I look for duplicate accounts, unused accounts, overly broad categories, unnecessary detail, and accounts that simply do not make sense for the business. I am not looking for a universally perfect Chart of Accounts, only one that fits that particular business and produces useful financial reporting. An HVAC company should not necessarily be structured like an online retailer, and a restaurant should not necessarily look like a consulting firm. That seems obvious, but QuickBooks Online files do not always get built that way.
The Profit and Loss
This is my final stop, and I review it as a whole. By this point, I know a fair amount about how the file has been handled, so the question is whether the numbers fit the business and everything else I have seen. I look for large fluctuations from period to period, categories that seem too high or too low, and anything else that does not belong. Sometimes something I noticed earlier in the review becomes much more obvious when I see how it is affecting the results. I am not going through every line item at this stage. I am looking at the overall picture.
What the First Review Tells Me
By the time I have gone through all of this, I usually have a pretty good sense of what I am dealing with. I have not identified every problem yet, and that is not the point. The first review is about understanding the file well enough to know what needs a closer look, what needs to be verified, and where the cleanup work is likely to be concentrated.
The file may be in good shape and need only a few corrections. It may have several areas that need attention. Or it may be clear that a more substantial cleanup is required. That is what I am trying to determine when I first open a QBO file. I need enough information to form a reliable opinion about the condition of the books and, depending on the purpose of the review, to document my findings or define the scope of a cleanup project.
For Firms Taking On a New File
For any firm taking on a new client or inheriting a file from someone else, the point is to understand the file before scoping the work. A consistent first review will not uncover every issue, but it will tell you enough about what you are dealing with before you commit to a timeline, a price, or a cleanup plan.
The projects that go badly are rarely the ones with the most errors. They are the ones where the size of the problem was not understood until the work was already underway.
Valerie Armstrong is a QuickBooks Online cleanup specialist and founder of CleanUp Consultants, helping accounting, bookkeeping, and tax firms resolve challenging client files with confidence. With hundreds of cleanup projects completed over the last eight years, Valerie brings professional judgment, investigative thinking, and valuable experience to the work, collaborating with firms to provide clear, reliable QuickBooks Online files for their clients.