The signs of a bad bookkeeper sit in the QuickBooks Online file, and five minutes finds them without any accounting knowledge. Open Reconcile and read the last reconciled date on every bank and card account; it should be within the last 30 to 45 days. Look at the balance in Undeposited Funds; it should be near zero. Run the profit and loss and look for Uncategorized Expense, Uncategorized Income and Ask My Accountant; a handful is normal, hundreds is not. Run the A/R aging and look for negative balances. Then check whether a closing date is set. Two failures out of five means a conversation. Four means a cleanup.
Signs of a bad bookkeeper: why the file beats the behavior list
The pages that rank for this question are lists of behaviors. Team 80's fifteen signs, updated in December 2025, and Hiline's eleven red flags cover being unreachable, panicking at tax time, talking down to you and being vague about the work. Those are real. They are also no help to the owner whose bookkeeper is pleasant, prompt and wrong. The common advice is that a bookkeeper who does not communicate should be replaced; we would take a quiet one with a clean file over a talkative one with 300 uncategorized transactions, because the file is what the CPA, the bank and you actually rely on.
The file can be checked. QuickBooks Online has a handful of accounts and settings that go wrong in predictable ways when nobody is paying attention, and Boyer & Ritter, an accounting firm that cleans up files for a living, published a list of the nine most common in August 2025. Five of them can be read by an office manager in five minutes. Most owners are checking this alone: a TD Bank study with Wakefield Research in March 2025, across 250 owners, found 66 percent were the only person responsible for the company's financial preparedness and 33 percent had no trusted financial partner at all.
Check one: the reconciliation dates
Reconciliation is the monthly match of every transaction in QuickBooks against the bank or card statement, so that the two agree to the penny and every difference has been found and explained. Go to Accounting, then Reconcile, and pick each bank, credit card and loan account in turn. The page shows the statement ending date of the last reconciliation. Normal is last month. The month before is fine if the statement arrived late. A date from three months ago on the main operating account is a fail. A date from last year is a file that has been running on the bank feed alone, which means every duplicate and every miscoded deposit since then is still in it. A second flag sits nearby: a "Reconciliation Discrepancy" account in the chart of accounts with a balance in it, which Boyer & Ritter list as the sign that someone forced a reconciliation to balance rather than finding the difference. Unreconciled transactions explains what each kind does to the reports.
Check two: Undeposited Funds
Undeposited Funds is a holding account. When a bookkeeper records a customer payment in QuickBooks, the money goes there until it is grouped into a bank deposit that matches the actual deposit on the statement. Some files show it as Payments to Deposit. Its balance should be close to zero at the end of any week: a few days of receipts waiting to be deposited, nothing older. It grows when payments are recorded against invoices and then the deposits are recorded a second time from the bank feed as income, which counts the same money twice. Boyer & Ritter list this among the nine and it is the one that most often overstates revenue. Open the chart of accounts and look at the balance. A week of deposits is fine; a year of them means income is overstated by about that much somewhere in the past.
Check three: uncategorized and Ask My Accountant
Run the Profit and Loss for this year and look for three account names: Uncategorized Expense, Uncategorized Income and Ask My Accountant. Every bank-feed transaction the bookkeeper could not place lands in one of them, and the intention is that it stays there for a week or two until someone asks you what it was. Click each balance to see the transactions. Normal is under ten items, all from the last two weeks. Hundreds, going back to last summer, mean nobody asked, and the P&L you have been reading has an expense line that is really a pile of unknown things. Boyer & Ritter attribute most of this to bank-feed auto-categorization accepted without review, and the same cause produces the vendor coded three different ways that makes a vendor report useless.
Checks four and five: negative receivables and the closing date
Run the A/R Aging Summary or the Customer Balance Detail report and look for negative balances. A customer cannot owe you less than zero; a negative balance means a payment was recorded but never applied to the invoice it paid, so the invoice still shows open and the payment sits as a credit. Boyer & Ritter list unapplied customer credits among the nine. A few small negatives are timing. A dozen customers with negative balances is an aging report that cannot be trusted to tell you whom to call. Then run the A/P Aging and look at the oldest column. Bills from 2024 still showing open in April 2026 were almost certainly paid; they were entered as bills and then paid from the bank feed as expenses, so the cost is on the P&L twice and the balance sheet says you owe money you do not.
A closing date is a lock on the books. Once set, changes to any transaction dated before it are blocked or need a password. In QuickBooks Online it lives at Settings, then Account and settings, then Advanced, then Accounting, under Close the books, and the choice is between allowing changes after a warning and requiring a password after the warning. Normal is a closing date at the end of the last year the CPA filed, with the password option on. No closing date means the prior year is still editable, and Boyer & Ritter's ninth error is exactly this: a transaction moved or deleted in a filed year, so that the tax return the CPA signed no longer matches the file it was prepared from. This is the only one of the five that is a control rather than a symptom, and it is the one bookkeepers most often skip because nobody asked.
The same five checks on three files
A landscaping company, a snow and ice company and the LLC that owns the yard share one owner, one outside bookkeeper and three QuickBooks Online files. She runs the checks on a Tuesday in April.
| Check | Normal | Landscaping | Snow and ice | Property LLC |
|---|---|---|---|---|
| Last reconciled, operating account | Last month | February 2026 | November 2025 | March 2026 |
| Undeposited Funds balance | Near zero | $47,300 | $2,150 | $0 |
| Uncategorized and Ask My Accountant | Under 10 items | 212 items, $38,900 | 61 items, $9,400 | 3 items |
| Negative A/R balances | None | 4 customers, ($6,150) | None | None |
| Closing date set | Yes, with password | No | No | No |
| Score | 4 fails | 3 fails | 1 fail |
The pattern matters more than the counts. The bookkeeper is keeping up with the small, simple file and falling behind on the two busy ones, which usually means the fee was set for a smaller business than the one it now serves. In a group of companies there are two more things to look for once the five are done: the same vendor coded to three different accounts across the three files, and a due-to/due-from balance between the companies that does not net to zero when the files are put side by side. The second one means money moved between companies and was booked in one file and not the other. Intercompany transactions covers how it should have been done, and one company paying another company's bills covers the unwind.
What to do with the score
Two failures out of five, in any file, is a conversation with a deadline. Not an accusation, because most of these come from a bank feed running faster than the hours in the engagement, and Ledge's 2025 survey of 100 finance teams found even full-time teams spend 20 to 50 hours a month on cash reconciliation. Say what you found, say which report you rely on and why it has to be right, and agree a date thirty days out by which every account is reconciled through last month and the uncategorized lists are under ten. Then run the five checks again.
Four failures is a file that needs a cleanup before anyone builds a forecast or a lender pack on it. NerdWallet's March 2026 pricing survey puts cleanup and onboarding at $1,000 and up, and for a file with a year of unreconciled activity it is closer to the "and up". Get the quote from a second firm rather than from the bookkeeper who let it happen, and read what a QuickBooks cleanup costs and fixes first. Whether the current bookkeeper stays depends on why. A good bookkeeper with too many clients is a fee conversation, covered in what bookkeeping should cost per entity; one who set no closing date and forced reconciliations to balance is a different conversation.
The free accounting health check at Navigator runs these five checks, and a few more, across every QuickBooks Online file you connect, read-only, and reports per company; on the paid plans the morning brief flags a stale reconciliation or a growing uncategorized balance in any entity the day it appears. It does not do the bookkeeping, and it cannot tell you why a file went wrong, only that it did. What the five checks cannot see is a file that is reconciled, categorized and locked, and still coded to the wrong accounts; that takes a CPA's eye, or the monthly questions in what to ask your bookkeeper every month, and a close that finishes in a reasonable number of days.
Questions owners ask
How do I know if my bookkeeper is doing a good job?
Open the QuickBooks Online file and check five things: every bank and card account reconciled through last month, Undeposited Funds near zero, fewer than ten items in Uncategorized Expense, Uncategorized Income and Ask My Accountant, no negative customer balances on the A/R aging, and a closing date set with a password. Five passes is a good bookkeeper. Two failures is a conversation. Four is a cleanup.
What should the Undeposited Funds balance be?
Close to zero at the end of any week, holding only the last few days of customer payments that have not yet been grouped into a bank deposit. A balance that equals months of receipts means payments were recorded against invoices and then recorded again from the bank feed as income, so revenue is overstated by roughly that amount and the bank account in QuickBooks does not match the real one.
How often should bank accounts be reconciled in QuickBooks?
Monthly, against each statement, for every bank, credit card and loan account, within a few weeks of the statement arriving. A reconciliation more than 45 days behind on the main operating account means the file is running on the bank feed alone, and every duplicate or miscoded deposit since the last reconciliation is still in the reports you are reading.
What does a negative accounts receivable balance mean?
A customer cannot owe less than nothing, so a negative balance almost always means a payment was recorded but never applied to the invoice it paid. The invoice still shows as open and the payment sits as a credit. One or two at month end are timing. A dozen means the A/R aging cannot be trusted, and the collections calls it drives are going to the wrong customers.
Should my bookkeeper set a closing date in QuickBooks?
Yes, at the end of the last year your CPA filed, with the password option on. It lives under Settings, Account and settings, Advanced, Accounting, Close the books. Without it, any transaction in a filed year can be edited or deleted, and the tax return the CPA signed may no longer match the file it was prepared from. It is the one check on the list that is a control rather than a symptom.
Related
If the score says conversation, questions to ask your bookkeeper every month is the standing agenda that keeps the file from drifting again. If check one failed, unreconciled transactions in QuickBooks Online explains what the reports are doing to you in the meantime. And if the score says cleanup, what a QuickBooks cleanup costs and what it fixes tells you what to expect from the quote.
If you would rather have the five checks run for you across every file, the free accounting health check takes a few minutes to connect and reads the books without changing them: navigatorhq.ai/health-check.
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Published . Last updated . Reviewed by a CFO on the Navigator team.