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4 Factors to Review for Accurate QuickBooks Profit & Loss Reports - Our Guide

Thanks to the great minds over at QuickBooks and their effective accounting software options, generating a profit and loss statement is now a whole lot easier and quicker.

Long gone are the days where eCommerce business owners would have to spend nearly half their day on YouTube and forums to learn how they can generate profit and loss reports. With the help of QuickBooks’ accounting software for eCommerce, business owners will only have to spend five minutes at most when creating profit and loss statements that can aid their business decisions.

As effective as it may be to use QuickBooks to generate profit and loss reports, there’s one bit of truth about the software that every business owner and accountant should know: it has to be set up first to run smoothly.

To ensure that your QuickBooks-generated profit and loss reports are generated as accurately as possible, here are a few essential items that you’ll need to review:

1. The currentness of your business’s data

You’ll need to provide accurate data to get accurate profit and loss reports, which means that it’s essential to ensure that your business’s data is as current as can be.

Making sure that your data is up-to-date can be done by updating your business’s accounts in the banking tab, properly categorising and approving your transactions, and syncing any additional financial apps. Then, double-check everything by going over your transactions, and manually add your business’s outstanding sales or expenses that weren’t automatically imported.

2. Select a date range that best tracks your company’s operational cycle

The timeframe that you select for your reporting options can make a significant impact on the content of your profit and loss reports, as well as their usefulness. When selecting a reporting option for your QuickBooks system, make sure that you’re going for an option that best matches your goals. Also, make sure that your QuickBooks year matches your fiscal year.

3. Cash or accrual? Select the basis of accounting that you’d want QuickBooks to report in

If your business uses accrual-basis accounting, then there’s no need to go through this step because QuickBooks’ default setting for template reports uses accrual accounting. On the other hand, if you’re using a cash-basis accounting method, then select the cash method radio button before you make the profit and loss report.

4. Check if your balance sheet is balanced

One of the most important factors to review before you generate a profit and loss report is the balance sheet. A QuickBooks-generated profit and loss report will only be as accurate as it’s supposed to be if your balance sheet is properly balanced. While the QuickBooks system automatically balances your balance sheet, it will always be in your best interest to double-check the sheet itself before proceeding.

Final words

Generating accurate profit and loss reports with the help of a QuickBooks accounting software is a process that calls for ensuring that every detail is complete. By taking these four factors into consideration and checking them before you start generating reports, you’ll be able to supplement your business’s operations with accurate and complete information.

For your eCommerce business accounting needs, get in touch with The Ecommerce Accountant. Book a free strategy session today!

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