Category: Insights

Illustrative example: a seller sees $40,000 of monthly sales but only $36,200 of bank deposits. The difference might reflect fees, refunds, reserves or timing. If QuickBooks instead shows $76,200 of income, check whether both the sales and their settlement deposits were recorded as revenue. A difference needs reconciliation, not an assumption that every figure is correct.

A payout is not a sale

Shopify Payments and Amazon do not send you your sales. They send you a settlement: sales for a period, minus refunds, minus processing and selling fees, minus advertising or fulfilment charges, plus or minus adjustments and reserves. Sales tax collected is often inside the payout too, and on marketplaces some of it may be collected and remitted by the marketplace itself.

Recording only the net deposit as income can hide fees and adjustments and misstate sales. Recording the deposit as new income after sales have already been booked can double-count revenue. Reconcile the settlement components and apply the accounting treatment agreed with your accountant.

Timing makes it worse

Settlement periods rarely line up with calendar months. Amazon settlements commonly span two weeks, and a payout that arrives early in the month can relate mostly to the month before. Without an adjustment, sales land in the wrong period and month-to-month comparisons become unreliable.

The clearing account method

The standard solution is to record each settlement in full, not only the net deposit.

1. Create a clearing account for each sales channel, for example “Shopify clearing” and “Amazon clearing”.
2. For each settlement, post a summary entry: gross sales, refunds, each category of fee, sales tax collected and any reserve movement, with the net amount going to the clearing account.
3. When the payout reaches the bank, record it as a transfer from the clearing account.
4. At month end the clearing account should show only settlements still in transit. Any other balance is an error to find.

Tools such as A2X automate the summary entries and split settlements that cross month end, which is why I use it for most Shopify and Amazon clients. The method works without a tool as well. It simply takes longer.

A monthly reconciliation routine

• Match every bank deposit from each channel to a settlement.
• Confirm each clearing account balance equals the payouts in transit.
• Compare gross sales in the books to the channel reports for the same period.
• Reconcile sales tax collected to the liability account and to what was filed or remitted.
• Review fees as a percentage of sales. A sudden change is worth investigating.

Why it matters beyond tidy books

With gross sales, refunds and fees recorded separately, you can see true margin by channel, notice when fees or return rates rise, and give your CPA figures that agree with the forms the platforms issue at year end.

I work with Shopify and Amazon sellers on exactly this. See bookkeeping and monthly close, the e-commerce section of my industries page, or get in touch.

This article is general information. Sales tax obligations depend on where and how you sell, so confirm yours with a qualified adviser.

Home care payroll is harder than payroll in most small businesses. Hours change every week, caregivers work for several clients at different rates, and the source data sits in scheduling or visit-verification systems that were not designed for payroll. I have prepared weekly and biweekly home care payroll since 2020. This is the checklist I work through before any run is submitted.

Why checks belong before payroll, not after

A payroll error found after payday costs far more than one found before. It means a correction run, an uncomfortable conversation with an employee, and amended entries in the books. Almost all of the errors I see could have been caught with a consistent review of the hours.

The checklist

1. Confirm the pay period and cut-off

Make sure every visit in the export falls inside the pay period, and that late-approved visits from the previous period are handled deliberately and not paid twice.

2. Reconcile visit hours to payroll hours

Reconcile the visit export to payroll caregiver by caregiver, then document any additional payable time or other approved adjustments. Investigate differences instead of assuming that visit hours alone represent the complete payroll record.

3. Look for duplicates and overlaps

Two visits for the same caregiver at the same time, or the same visit imported twice, are among the most common causes of overpayment.

4. Check for missing or unapproved visits

A caregiver who normally works thirty hours and shows twelve needs a review. Check for schedule changes, leave, missing entries and visits awaiting approval. Resolve discrepancies using the supporting records rather than assuming the cause.

5. Review rates

Confirm that rate changes, new-hire rates and any client-specific or shift-specific rates are in effect from the correct date.

6. Review overtime

List every caregiver above forty hours in a workweek and confirm that overtime has been calculated under the rules your agency follows. Overtime rules for home care workers are set by federal and state law and have changed over time, so the rules themselves should come from your payroll provider or employment counsel, not from a spreadsheet.

7. Apply paid time off, reimbursements and deductions

Check each against the written policy and the supporting request. Mileage and other reimbursements need the same review as hours.

8. Compare with the previous period

A simple comparison of gross pay and hours by caregiver against the last run highlights anything unusual in seconds.

9. Get approval

Send a short summary to the person who approves payroll: total hours, gross pay, headcount, and a list of exceptions with explanations.

After the run

• Tie the payroll register to the amount that left the bank.
• Post the payroll journal entry and reconcile payroll liability accounts.
• Keep the reconciliation and approval with the payroll records. Auditors ask for them.

Make it a routine

The value of a checklist comes from using the same one every period. Write it down, keep the evidence, and the process no longer depends on one person remembering what to look for.

If your agency wants payroll prepared and reconciled this way, see payroll administration or read about my home care experience.

This article is general information about payroll process. It is not legal advice on wage and hour requirements.

Most business owners sense that their books are off long before anyone confirms it. The reports look plausible, but something does not add up. Here are seven signs I look for when I review a QuickBooks Online file, what each one usually means, and what a cleanup involves.

1. The bank balance in QuickBooks does not match the bank

QuickBooks Online shows two figures for each bank account: the balance at the bank and the balance in your books. A small difference can be timing. A large or growing one usually means duplicated, missing or unreconciled transactions.

2. Accounts have not been reconciled

Reconciliation checks the books against the bank statement and explains outstanding items. If several months are unreconciled, or an adjustment was used without a documented explanation, investigate the difference before relying on the affected balances.

3. Old uncleared transactions

Open the reconciliation screen and look for checks and deposits from long ago that never cleared. They are often duplicates or entries that should have been voided, and they distort the cash balance.

4. A large balance in Undeposited Funds

Undeposited Funds holds received payments until a bank deposit is recorded. Its balance can legitimately include payments awaiting deposit. Review old items and trace them to deposit records; an unexplained or growing balance may indicate missing matches or duplicated income, but the balance alone does not prove an error.

5. Uncategorized income and expenses, or a busy Ask My Accountant account

These accounts are meant to be temporary. When they hold many months of transactions, the profit and loss statement is incomplete and tax deductions may be missed.

6. Negative balances where they do not belong

A negative accounts receivable, accounts payable or payroll liability balance is a signal. Common causes are payments not matched to invoices, bills paid without being entered, and payroll posted to the wrong accounts.

7. The balance sheet has lines nobody can explain

Opening Balance Equity with a balance years after setup, loans that never reduce, or assets the business no longer owns. Lenders and buyers read the balance sheet first, so these matter.

What a cleanup involves

1. Diagnosis. A review of the file and a written list of problems, before anything is changed.
2. Scope. A decision on how far back to go. Closed tax years need a conversation with your CPA before they are touched.
3. Reconciliation. Every bank, card and loan account is reconciled from the agreed starting point.
4. Correction. Duplicates removed, postings corrected, holding accounts cleared.
5. Close. Periods are closed and locked, with a log of what changed.

Can you do it yourself?

Sometimes. If the problem is a few months of unreconciled activity in one account, an owner with patience can catch up. When several signs appear together, or prior years are involved, it is usually faster and safer to have it done by someone who does this regularly.

If your file shows several of these signs, see my cleanup and catch-up bookkeeping service or send me a note describing what you see.

This article is general information, not tax or accounting advice for your situation.