QuickBooks is the accounting software that many of our small business clients use. While QuickBooks is a really good accounting software program, many small businesses could be benefiting from it at a higher level than they currently are. As is true with any software, QuickBooks will only benefit you and your business at the level to which you use it.
In today's article, we will discuss some tasks that can be done within QuickBooks to help you save your CPA's time and, in turn, your money at year-end.
QuickBooks Tips to Save Your CPA's Time and Your Money at Year-End:
- Reconcile all bank and credit card accounts. This is a great thing to do to make sure that transactions entered in QuickBooks match the statements received, so information is not left out.
- Reconciling accounts should be done monthly, but could be done less regularly depending on amount of activity for the specific account.
- Pay attention to “uncleared” transactions, as these may be duplicate entries.
- Try not to use the “reconcile now” function, unless it is a small amount that you are unable to find a reason for the discrepancy.
- Compare the Balance Sheet to Last Year. This report can be generated by selecting Reports > Company & Financial > Balance Sheet Prev Year. Select the date range to be “This Fiscal Year” or “Last Fiscal Year,” depending on when you are viewing this report.
- The first account to review is Retained Earnings or Beginning Capital. Double click on the amount in the current year and make sure nothing was posted to this account by accident. The $ Change should always equal the prior year Net Income (Loss). If it does not, ask yourself the following questions:
- Did I post the transactions that my CPA provided to me after my taxes were prepared?
- Have I changed any transactions in a prior year, either by posting additional bills or voiding checks in the prior year?
- Review accounts receivable and accounts payable. Any customers that should be written off that are older than 90 days and payment is unlikely to be collected? Are you current with bills that need to be paid and there are no duplicates entered?
- Once those accounts looks correct, start with the bank accounts and move down the balance sheet to compare the amount in the current year to last year. Even look at the $ Change column to guide you.
- Note any account that seems to have a large difference between the two years.
- Is there a balance in “Undeposited Funds” or “Opening Balance Equity”? There probably should not be a balance in either one of these accounts.
- Are loan balances decreasing as payments are being made? Do you know what portion of each payment is principal and interest?
- Compare balances for any statements received to what is being shown in QuickBooks.
- Compare the Profit & Loss to Last Year. Just like for the Balance Sheet this report can be generated by selecting Reports > Company & Financial > Profit & Loss Prev Year and selecting the correct date range.
- Review all of the income accounts for reasonableness. Where about the same amount of income earned as last year? Does the fluctuation make sense with what you would expect based on the type of year that you had?
- Review each expense account and compare the balance of the prior year. Most expenses occur every year and those accounts with an irregular difference should be investigated.
- Pay special attention to tax related expenses because these should be very similar year to year, unless there is a known difference as in a change number of employee hours working during the year.
- Contact your CPA or QuickBooks ProAdvisor for help with any of topics noted above or other questions you may have.
- Here at BHT&D CPAs, Dwayne Houghton, CPA is a certified ProAdvisor through QuickBooks and would be happy to help with any questions.
- Remember that time you save your CPA, is money you could save on your year-end accounting and tax preparation. So take the time to review the items noted above before sending your QuickBooks file.
