QuickBooks Online is a powerful bookkeeping tool, but even experienced users can make mistakes that throw off financial reports. 

Some errors go unnoticed until tax time, while others create confusion when reconciling accounts.

In this guide, we’ll cover the most common QuickBooks errors, how to fix them, and tips to prevent them in the future. 

1. Not Deducting Fees from Deposits

When customers pay via Stripe, PayPal, or Square, the payment processor takes a fee before depositing the money into your account. 

However, QuickBooks does not automatically know that a transaction includes income and a fee.

You need to record both the full payment and the deducted fee. Otherwise, your income reports will be incorrect.

How This Mistake Happens:

The business owner records the deposit as the amount received instead of tracking the full invoice payment and the associated fee.

How to Fix It:

Use a Bank Deposit to track both the payment and the fees:

1. Go to + New → Bank Deposit.
2. Select the payment received.
3. Add a second line for the processing fee:
   1. Category: Whatever you use to record fees.
   2. Amount: Enter the fee as a negative number (e.g., -$15.00).
      
      
4. Adjust the income line to the full payment amount.
5. Make sure the total matches the actual deposit amount.
6. Click Save.

📹 Watch my video on How to Record Deposits with Fees in QuickBooks Online (Stripe, Square, etc.).

Or, split the transaction in Bank Transactions:

1. Click Transactions → Bank Transactions in the left-side menu.
2. Select the appropriate bank account tile.
3. Find and click on the transaction.
4. Click the Split button.
5. Adjust the income line to the full payment amount.
6. Add the processing fee
   1. Category: Whatever you use to record fees.
   2. Amount: Enter the fee as a negative number (e.g., -$15.00).
      
7. Make sure the difference is $0.00.
8. Click Split and add.

📹 Watch my video on How to Record Payment Processor Fees in QuickBooks Online – Stripe Example

2. Not Reconciling Correctly (or at All!)

Reconciling your bank accounts ensures QuickBooks matches your actual bank transactions.

But many business owners either skip reconciliation entirely or don’t check for uncleared transactions.

How This Mistake Happens:

Old or duplicate transactions stay in the register, causing incorrect balances on reports.

How to Fix It:

Reconcile your accounts every month to catch discrepancies:

1. Click Transactions → Reconcile in the left side menu.
2. Select the bank account you’re reconciling.
3. Enter the ending balance and date from your bank statement.
4. Check off transactions that appear on the bank statement.
5. Investigate and fix uncleared transactions:
   • If a check hasn’t cleared, verify whether it’s still valid.
   • If the transaction is a duplicate, delete it.

💡 Tip: If your QuickBooks bank balance never matches your actual bank, there’s likely an error in reconciliation.

Additional Resources:

• How to Reconcile Bank Accounts in QuickBooks Online: A Step-by-Step Guide
• How to Correct Duplicate Income in QuickBooks Online – Invoice & Deposit
• How to Identify and Fix Duplicate Income in QuickBooks Online – Sales Receipt & Deposit
• How to Fix Duplicate Bill and Expense Entries in QuickBooks Online

3. Messy Chart of Accounts

A well-organized Chart of Accounts is important for accurate financial reporting. However, many business owners create unnecessary accounts or misclassify expenses as assets.

How This Mistake Happens:

A business owner adds expenses to asset accounts, like listing software subscriptions under Fixed Assets instead of as Operating Expenses.

How to Fix It:

Review your Chart of Accounts:

1. Click Transactions → Chart of Accounts in the left side menu.
2. Sort by account type to find misclassified expenses.
3. Reclassify incorrect accounts:
   1. Click the drop-down on the right and select Edit.
   2. Select an appropriate Account type.
   3. Click Save.
4. Merge duplicate accounts to simplify reporting.
   1. Copy the Account name & Detail type of the account you want to keep.
   2. Click the drop-down on the right and select Edit on the account you want to merge.
   3. Change the Account name & Detail type to match the account you’re keeping. 
   4. Click Yes, merge accounts.
   5. Click Save.

💡 Tip: If your Balance Sheet includes expenses, something is likely misclassified.

📹 Watch my video on How to Edit the Chart of Accounts in QuickBooks Online.

4. Loan Payments Aren’t Categorized Correctly

Loan payments aren’t just expenses—they reduce your loan liability. However, many users record the entire loan payment as an expense, which skews financial reports.

How This Mistake Happens:

The full loan payment is categorized under Loan Payment Expense, instead of separating the principal and interest.

How to Fix It:

Break down loan payments correctly:

1. Click + New → Check or Expense.
2. Select the lender as the payee.
3. Split the payment into two categories:
   • Principal → Assigned to the loan liability account.
   • Interest → Assigned to Interest Expense.
     
4. Click Save.

💡 Tip: Regularly reconcile your loan account to ensure all payments are recorded properly.

📹 Watch my video on How to Record A Payment To A Loan In QuickBooks Online.

5. Payroll Errors That Affect Financial Reports

Payroll mistakes can cause incorrect tax filings, unbalanced financials, and compliance issues.

Many bookkeepers struggle with tracking payroll liabilities, categorizing wages, and dealing with payroll issues.

How This Mistake Happens:

Payroll liabilities (such as taxes withheld from employees) are recorded as expenses instead of liabilities.

How to Fix It:

Ensure payroll is recorded correctly:

1. Payroll expenses (wages, employer taxes) should go under Payroll Expenses.
2. Employee tax withholdings should be categorized under Payroll Liabilities until paid.

💡 Tip: If QuickBooks Payroll is giving you incorrect payroll tax calculations, check out Payroll Restoration for troubleshooting support.

Want to avoid payroll mistakes? Learn how to handle payroll correctly in our payroll course: Gentle Frog Payroll with QuickBooks Online.

Final Thoughts: Avoiding QuickBooks Errors

Mistakes in QuickBooks can lead to incorrect reports, tax issues, and hours of cleanup work.

You can keep your books accurate and avoid financial headaches by catching and fixing errors early.

Key Takeaways:

• Split bank deposits or downloaded transactions to track full payments and processor fees.
• Reconcile accounts monthly to find missing or duplicate transactions.
• Review your Chart of Accounts for misclassified accounts and duplicates.
• Record loan payments correctly—split principal and interest.
• Ensure payroll liabilities are tracked properly to avoid compliance issues.

Spot mistakes before they get out of control with our FREE Review Your QuickBooks Mini-Course.