QuickBooks health check

Find out what your QuickBooks file would tell an accountant.

Before taking on a file, a ProAdvisor runs a set of checks that reveal its real condition in under an hour, usually finding things the business had no idea were there. These are those checks: where to look in QuickBooks Online, what a healthy answer looks like, and what each warning sign actually means. You can run the whole thing yourself.

Start the health check See the red flags first

Purpose

What a health check tells you that reports don't

A profit and loss tells you what your books say. A health check tells you whether your books can be believed, which is a different and more urgent question.

A QuickBooks file in poor condition doesn't announce itself. It produces reports that look entirely normal. The totals add up, and nothing on screen suggests that a bank feed stopped six months ago, that Undeposited Funds is holding payments from last year, or that Uncategorized Expense has been quietly absorbing anything nobody understood. Problems surface later, at the worst possible moment: during due diligence, when a lender asks for something, or when a CPA starts year-end work and the questions begin.

A health check looks at the file the way an outsider would: testing whether each number can be traced to something real, whether the controls that should exist do, and whether the process producing the numbers is sound. Most of it is mechanical. The value is in doing it deliberately rather than assuming.

Timing

When to run one

Annually at minimum. But six situations make it urgent, and in each the cost of not knowing is much higher than the hour it takes.

Before any funding process

Lenders and investors will find what you didn't. Discovering it during diligence costs you leverage and sometimes the deal itself.

When bookkeeping changes hands

Both directions. Check the file when someone leaves, and check it before someone new inherits problems they'll be blamed for.

Before year-end work starts

Issues found in October cost a fraction of the same issues found by your CPA in March under filing pressure.

Before moving off QuickBooks Desktop

A conversion copies problems across faithfully. Check the file first, so the new one starts clean.

When the numbers feel wrong

If margin swings without an operational reason, or cash doesn't match what the P&L implies, trust that instinct. It's usually right.

Before hiring us or anyone else

Knowing the file's real condition is how you get an accurate quote instead of a cheap one that expands later.

The health check

32 checks across seven areas

Work through these in order. They are written for QuickBooks Online; a few need admin access. If you don't have it, your accountant or bookkeeper does, and these are reasonable things to ask them to run.

For each check: where to look, what healthy looks like, and what a warning sign means. Don't skip the boring ones; the mundane checks catch more than the sophisticated ones.

Foundations

If these are wrong, everything built on top of them is wrong too, and no amount of careful monthly work will fix it.

Checks 1–5: file foundations
Check	Where to look	Healthy	Warning sign
1. Opening Balance Equity	Balance Sheet	Zero once setup is complete	A balance that never cleared: opening balances nobody agreed to a prior trial balance
2. Company settings	Settings, Account and settings, Advanced	Correct first month of the fiscal year and accounting method	Left at the defaults, or a basis that differs from the tax return
3. Chart of accounts size	Chart of accounts	Every account is used, and each has a distinct purpose	Near-duplicate accounts, or dozens of accounts with no activity
4. Account and detail types	Chart of accounts	Accounts sit in the right section of the P&L and balance sheet	Costs of sale classified as overheads, or assets sitting in expenses
5. Closing date set	Settings, Account and settings, Advanced, Close the books	Closing date current, with a password required to change it	No closing date: prior periods are fully editable by anyone

Banking

The most common source of serious problems, and the easiest area to be misled by a screen that looks finished.

Checks 6–11: banking and reconciliation
Check	Where to look	Healthy	Warning sign
6. Every account reconciled to its statement	Reconciliation reports vs bank statements	Reconciled at each month end, with uncleared items explained by timing	An account never reconciled, or last reconciled months ago
7. Bank feeds are live	Banking page; the last-updated date per account	Every connected account updated recently	A connection error, or an account with no new activity for weeks
8. For review queue depth	Banking, For review tab	Near zero, cleared at least weekly	Hundreds of items, or items older than a month
9. Reconciled transactions left alone	Audit log; reconciliation beginning balance	The beginning balance on each reconciliation matches the last statement	Reconciled transactions edited or deleted afterwards, so past reconciliations no longer hold
10. Undeposited Funds	Balance Sheet (Undeposited Funds, or Payments to deposit)	Only recent payments waiting to be deposited	An old balance: payments never matched to deposits, often with the income counted twice
11. All accounts actually in QuickBooks	Compare QuickBooks accounts to your bank and card list	Every business account and card is connected	An account or card operating outside QuickBooks entirely

Control accounts and subledgers

These checks are quick and catch structural errors nothing else will surface.

Checks 12–16: control accounts
Check	Where to look	Healthy	Warning sign
12. Aged payables ties to the control account	A/P Aging Detail vs Balance Sheet	Figures agree exactly	A difference: usually a journal entry posted straight to Accounts Payable
13. Aged receivables ties to the control account	A/R Aging Detail vs Balance Sheet	Figures agree exactly	A difference, or unapplied payments and credits sitting on customer accounts
14. Uncategorized accounts	Trial Balance	Uncategorized Income, Expense and Asset all at zero	Any balance: transactions are missing from where they belong
15. "Ask My Accountant" account	Trial Balance	Zero, or the account is inactive	A balance carried for months: a queue nobody is working
16. Paid bills still open	A/P Aging Detail	Nothing beyond terms without a documented reason	Bills shown as open that were paid by check or expense, so the cost is counted twice

Coding quality

Where reports go quietly wrong. Everything here still reconciles perfectly while telling you the wrong thing.

Checks 17–21: coding integrity
Check	Where to look	Healthy	Warning sign
17. Transfers coded as transfers	Transaction Detail by Account for income and expense accounts	Movements between your own accounts appear as transfers	Transfers as income in one account and expense in another: inflating both
18. Card payments not treated as expenses	Transaction Detail for the credit card liability	Payments to the card issuer reduce the liability	Card payments coded to expenses: every purchase counted twice
19. Bank rule output	Banking, Rules; transactions each rule has added	Everything a rule captures belongs where the rule put it	A rule too broad, set to auto-add, coding unrelated transactions wrongly
20. Sales tax liability	Taxes; Sales Tax Liability report	The liability agrees to filed returns and payments	Sales tax payments booked as expenses, or a liability that never clears
21. Classes and locations used consistently	Reports filtered by class or location	All relevant transactions carry a class or location	A large "Not specified" bucket, making segment reporting meaningless

Balance sheet integrity

Owners read the P&L. Long-running errors live on the balance sheet, which is why they run so long.

Checks 22–26: balance sheet
Check	Where to look	Healthy	Warning sign
22. Every balance is explainable	Balance Sheet, line by line	You can say what each balance represents and evidence it	Any line you can't explain: start there, that's your worst problem
23. Depreciation is current	Fixed asset accounts and depreciation journal entries	Depreciation posted through the last closed period and agreed to a schedule	No depreciation since the last tax return
24. Loans agree to lender statements	Balance Sheet loan accounts vs lender statements	Balances agree, with interest split from principal	Whole loan payments coded to expense, or a balance that never moves
25. Payroll liabilities clear	Balance Sheet payroll liability accounts; payroll tax reports	Clear as payments are made, leaving only current amounts	A growing balance, meaning payments are not matched to the liability
26. Round-number balances	Trial Balance	Balances are the sum of real transactions	Suspiciously round figures: usually a plug posted to force agreement

Access and security

Almost never reviewed, and the checks most likely to surprise you.

Checks 27–30: access control
Check	Where to look	Healthy	Warning sign
27. Who has access	Settings, Manage users; Audit log	Every user is current and needed	Former staff or a previous bookkeeper still holding access
28. Who has admin and accountant access	Manage users, including the Accountants tab	Only those who genuinely need it	A previous firm still listed as your accountant. Admins can change the closing date
29. Duplicate vendor details	Vendor list; Vendor Contact List report	No duplicates; no unexplained recent changes	Two vendors sharing bank details or an address, or details changed without a record
30. Separation of duties	Your own process, not a QuickBooks screen	Whoever reconciles can't also move money	One person entering, approving, paying and reconciling

Apps and year-end readiness

The last two, and both are quick.

Checks 31–32: connected apps and 1099 tracking
Check	Where to look	Healthy	Warning sign
31. Connected apps	Apps, My apps	Every connection is in use and syncing correctly	Abandoned connections still holding access, or a sync creating duplicates
32. Contractors tracked for 1099	Expenses, Vendors; 1099 settings and account mapping	Every contractor flagged for 1099, with a W-9 on file	Contractors paid all year with nothing tracked, found in January

Urgent

Six findings that need attention this week

Most warning signs can wait for a planned cleanup. These can't: each one means either that money may be moving without oversight, or that numbers already relied on are wrong.

Reconciled transactions changed afterwards

A reconciliation that no longer holds means the bank balance in QuickBooks has drifted from the bank, and every report since is built on the drift.

Two vendors sharing bank details

The classic payables fraud signature. It has innocent explanations, such as a duplicate record or a genuine parent company, but it needs checking today, not next quarter.

A former bookkeeper or firm still has access

Access should end when the relationship does. This is also an access-control failure that a lender or insurer would take seriously.

A bank feed stopped months ago

Every report since is missing transactions, and every decision made from those reports was made on incomplete information.

One person controls the whole cash cycle

Entering, approving, paying and reconciling in one pair of hands isn't an accusation about anyone. It's an unmonitored opportunity, and it's what fraud examinations find afterwards.

A material balance nobody can explain

If a significant balance sheet line, Opening Balance Equity included, has no explanation, the reports built on it are unreliable: including anything already given to a bank, board or investor.

Results

Reading your results

Count the checks that came back healthy. The bands below aren't precise, but they map reliably to what the file actually needs next.

28–32 healthy

Sound

The file is in good shape. Fix the individual exceptions, move the closing date forward every month, and re-run this annually.

20–27 healthy

Drifting

The common pattern. Recording is happening, proving isn't. A focused clean-up plus a defined monthly routine resolves most of it.

Under 20

Needs rebuilding

Don't start a monthly routine yet: it will just document the problem regularly. Catch up and clean up first, then establish the cadence.

Where to go next. Failures in banking, coding and control accounts point to catch-up and clean-up. A missing closing date and drifting reconciliations point to monthly bookkeeping. And if most areas are failing at once on a Desktop file, it is usually the moment to plan a Desktop migration and clean up on the way.

One caution on self-assessment

The hardest checks to run on your own file are the ones about coding judgment: whether an expense is in the right account, whether a balance is genuinely explainable. It's difficult to spot an error you made yourself, because the reasoning that produced it still seems sound.

The mechanical checks here are reliable self-service. For the judgment ones, a second pair of eyes finds things you won't, which is the actual argument for having someone external run this periodically.

How to read a QuickBooks reconciliation report

This is the single most useful report in a health check, and the one most business owners have never opened. In QuickBooks Online it sits under Reports, as Reconciliation Reports, with one report for every reconciliation completed. It answers one question: does what QuickBooks thinks you have in the bank agree with what the bank says you have?

Four lines carry the meaning:

Statement beginning balance. Where this reconciliation started. It should equal the ending balance of the previous one. If QuickBooks warns that the beginning balance doesn't match, a reconciled transaction has been changed or deleted since.
Statement ending balance. The figure from the bank statement for that date.
Uncleared transactions. Items in QuickBooks that hadn't reached the bank by the statement date. A few recent checks or deposits are normal; items months old usually aren't real.
Register balance. What your books say the account holds on that date: the ending balance adjusted for the uncleared items.

What you are checking for on your own file is the date of the last reconciliation on every account, any old uncleared items, and any warning about the beginning balance.

Why this matters more now

Your Books Are About to Be Asked Harder Questions

AI can answer questions from your books. It cannot tell you the books are wrong. QuickBooks Online now includes Intuit Assist, and other AI assistants connect to QuickBooks data, so you can ask "what's my cash position?" or "who owes me money?" in plain English and get an answer from live data.

It is genuinely useful. Ask it directly what is sitting in Uncategorized Expense and it will tell you, because that figure is in the file. The limit is that it answers the question you asked, and knowing which question to ask is the part that requires already understanding what should be in the books.

What it cannot see is what is not there. The invoice that was never entered does not appear as a gap. A card that was never connected cannot be compared against. A prior period that changed after you sent the numbers to your lender still looks internally consistent, because the file has no memory of what you reported.

That is the gap this health check is built to close. The checks above are the ones an advisor runs before trusting a number: comparing the file against external evidence, and asking the questions nobody thought to ask. Do them, and an AI answer stops being merely fast and becomes worth acting on.

Have us run it

Two Ways to Get a Second Opinion

Everything above is yours to run. Most people who work through it find two or three things they are not sure about, and a few they would rather someone else confirmed. That is what these are for.

No charge

30-minute file review

Free

A live walk through your file with one of our team. We look at the things that show up fast: whether the bank reconciles, how far back the file is current, obvious coding problems, and whether a closing date is set.

Accountant user access, or a screen share if you prefer
30 minutes, one call, no written report
You keep everything we find, whether or not you engage us

Book the free review

The 32-point Health Check

$750 flat, any file size

All 32 checks across the seven areas above, run by a QuickBooks ProAdvisor, including the ones that need admin access. QuickBooks Online or Desktop. You get a written report, not a verbal summary.

Written report with every finding ranked by severity
What each finding means for your numbers, in plain English
What it would take to fix, and in what order
A call to walk through it and answer questions
Turnaround in five business days

Request the health check

The $750 is credited in full against onboarding if you engage us for ongoing bookkeeping within 60 days. If the check finds nothing worth fixing, we will tell you that too.

Fixing what the check finds is priced separately, and depends on how far back the work goes. Onboarding and prior-period cleanup starts at $3,600, and ongoing monthly bookkeeping starts at $399 a month, the same pricing we publish for Xero. We will not quote either until the check tells us what is actually there.

Questions

QuickBooks health checks, answered

What is a QuickBooks health check?

A structured review of a QuickBooks file's condition rather than its results. It tests whether the numbers can be relied on: whether bank and card accounts reconcile to statements, whether the aging reports tie to the balance sheet, whether Uncategorized and Undeposited Funds balances are clear, whether coding is consistent, whether every balance sheet line is explainable, who has access, and whether a closing date protects finished periods.

Can I run a QuickBooks health check myself?

Mostly yes. The mechanical checks, such as reconciliations, aging tie-outs, Uncategorized balances, feed currency, the closing date and user access, are all self-service, and they catch most problems. A few need admin access, particularly the audit log and user settings.

The checks that genuinely benefit from an outside reviewer are the judgment ones about coding accuracy, since it's difficult to spot an error you made yourself: the reasoning that produced it still seems reasonable.

How often should I check my QuickBooks file?

Annually as a baseline. Sooner before any funding or sale process, whenever bookkeeping changes hands, before year-end work begins, before converting from QuickBooks Desktop, and whenever the numbers stop matching what you see in the business.

What does a balance in Opening Balance Equity mean?

QuickBooks posts to Opening Balance Equity when a bank account, asset or loan is set up with a starting balance. Once setup is complete it should be moved into retained earnings or the correct accounts and sit at zero. A balance that stays there means opening balances were entered without being agreed to a prior trial balance, so some of the balance sheet is unproven.

What is wrong with a balance in Undeposited Funds?

Undeposited Funds, shown as Payments to deposit in newer versions, holds customer payments until they are grouped into a bank deposit. A balance that is weeks or months old usually means the deposit was recorded separately from the bank feed instead of being matched to the payments, so the income is counted twice and the receivable never clears.

Why doesn't my A/P Aging report match my balance sheet?

Almost always because a journal entry was posted directly to Accounts Payable rather than through a bill or bill payment. The aging report only knows about bills, so a direct journal moves the balance sheet without moving the aging, and the two diverge until corrected. The same applies to Accounts Receivable.

Who should have admin or accountant access in QuickBooks?

Only people who genuinely need it. Admins can change the closing date, edit closed periods and add users. Review the Manage users screen whenever someone leaves, and remove a previous accounting firm from the Accountants tab when the relationship ends.

Does this work for QuickBooks Desktop?

Yes. Almost every check applies to QuickBooks Desktop; the settings sit in different places. On a Desktop file we also run Verify Data on a copy, under File, then Utilities, because data damage shows up there before it shows up in reports. If you are planning a move off Desktop, run the health check first.

What should I do first if the health check finds a lot of problems?

Address anything on the urgent list first: access still held by former staff or firms, reconciled transactions changed afterwards, duplicate vendor bank details, a stopped bank feed. Those either involve money moving without oversight or mean current reports are wrong.

After that, sequence rather than attacking everything at once: fix the chart of accounts if it's structurally wrong, complete any missing data, then correct coding, then clear Uncategorized and Undeposited Funds, then reconcile and set the closing date.

Fixing what the check found

QuickBooks Catch-Up & Clean-Up Bringing a file current: diagnosis, the bulk tools, and the order that avoids rework. QuickBooks Monthly Bookkeeping The routine that stops the file drifting again once it's fixed. QuickBooks Desktop Migration Moving off Desktop, and proving the balances agree afterwards.

Want a second pair of eyes on your file?

We run QuickBooks health checks for small and growing businesses, including the checks that need admin access and the judgment calls that are hard to make on your own work.

Request a health check QuickBooks at Logiframe