How to Review Your QuickBooks File for Accuracy and Reliability

Regularly reviewing your QuickBooks file is essential to ensure that your financial data is accurate and reliable. This process not only helps you maintain clean books but also prevents issues that could lead to costly mistakes during tax season or when making business decisions.

Here’s a step-by-step guide to help you review your QuickBooks file effectively:

1. Reconcile Your Accounts

Reconciliation is one of the most critical steps in verifying the accuracy of your QuickBooks data.

• Bank Reconciliation: Regularly reconcile your bank accounts to match the balances in QuickBooks with your actual bank statements. Any discrepancies should be investigated and resolved immediately.

 

• Credit Card Reconciliation: Similarly, reconcile your credit card accounts to ensure that all charges and payments are accurately recorded.

 

How to Do It in QuickBooks:

• Navigate to the “Reconcile” option under the “Banking” tab.

 

• Select the account you want to reconcile.

 

• Enter the statement date and ending balance as per your bank statement.

 

• Match each transaction, making sure the cleared balance matches the bank statement.

 

2. Review the Profit and Loss Statement

The Profit and Loss (P&L) statement, also known as the income statement, provides a summary of your business’s income, expenses, and profits over a specific period.

• Check Revenue: Ensure that all income is recorded under the correct categories.

 

• Expense Review: Look for unusual or miscategorized expenses. Ensure all expenses are recorded and reflect accurate amounts.

 

• Comparative Analysis: Compare current period P&L with previous periods to spot any discrepancies or unusual trends.

 

How to Do It in QuickBooks:

• Go to “Reports” > “Profit and Loss.”

 

• Customize the date range and filters to suit your review period.

 

• Review each line item for accuracy.

 

3. Analyze the Balance Sheet

The Balance Sheet provides a snapshot of your business’s financial position, showing assets, liabilities, and equity.

• Verify Asset Accounts: Ensure that all asset accounts, such as bank balances and accounts receivable, are accurate and up to date.

 

• Check Liabilities: Review liabilities to confirm that all loans, accounts payable, and other obligations are correctly recorded.

 

• Equity Accounts: Ensure that equity accounts reflect accurate owner contributions, retained earnings, and distributions.

 

How to Do It in QuickBooks:

• Go to “Reports” > “Balance Sheet.”

 

• Select the date range for your review.

 

• Carefully review the asset, liability, and equity accounts.

 

4. Audit Your Accounts Receivable (A/R) and Accounts Payable (A/P)

Managing A/R and A/P is crucial for maintaining cash flow and ensuring that your records accurately reflect outstanding amounts.

• Accounts Receivable: Check the A/R Aging Report to ensure that all outstanding invoices are accurate and follow up on any overdue amounts.

 

• Accounts Payable: Review the A/P Aging Report to ensure that all vendor bills are recorded, and there are no unpaid or overdue bills that could impact your credit or supplier relationships.

 

How to Do It in QuickBooks:

• For A/R: Go to “Reports” > “A/R Aging Summary.”

 

• For A/P: Go to “Reports” > “A/P Aging Summary.”

 

• Review each report and compare it with your records to ensure accuracy.

 

5. Run a Transaction Detail Report

The Transaction Detail Report gives you a comprehensive view of all transactions recorded in QuickBooks. This report helps you identify any unusual or erroneous entries.

• Review for Errors: Look for duplicated transactions, incorrect dates, or unusual amounts that might indicate a mistake.

 

• Verify Categorization: Ensure that all transactions are properly categorized to reflect accurate financial statements.

 

How to Do It in QuickBooks:

• Go to “Reports” > “Transaction Detail by Account.”

 

• Customize the report to show the transactions for the period you are reviewing.

 

• Scan through the report for any discrepancies or errors.

 

6. Check for Unreconciled Transactions

Unreconciled transactions can cause discrepancies in your books and make it difficult to accurately assess your financial position.

• Old Transactions: Review any transactions that remain unreconciled for an extended period. These may indicate errors or forgotten items that need attention.

 

• Review Suspense Accounts: Ensure that any amounts temporarily placed in suspense or undeposited funds accounts are properly allocated.

 

How to Do It in QuickBooks:

• Go to “Reports” > “Reconciliation Discrepancy.”

 

• Review and resolve any outstanding items.

 

7. Verify Payroll Records

If you use QuickBooks for payroll, it’s important to verify that all payroll transactions are accurate.

• Check Payroll Liabilities: Ensure that payroll taxes and other withholdings are correctly calculated and recorded.

 

• Review Employee Records: Verify that employee pay rates, hours worked, and deductions are correctly entered.

 

How to Do It in QuickBooks:

• Go to “Employees” > “Payroll Center.”

 

• Review payroll reports and liability balances for accuracy.

 

8. Review User Access and Permissions

If multiple users have access to your QuickBooks file, it’s important to review and manage their permissions regularly.

• Check Access Levels: Ensure that users only have access to the areas of QuickBooks relevant to their role.

 

• Audit Logs: Review the Audit Log to track any changes made by users and ensure there are no unauthorized modifications.

 

How to Do It in QuickBooks:

• Go to “Company” > “Users” > “Set Up Users and Roles.”

 

• Review and adjust user permissions as needed.

 

Conclusion

Regularly reviewing your QuickBooks file is essential for maintaining accurate and reliable financial records. By following these steps, you can ensure that your books are in order, identify and correct any discrepancies, and confidently use your financial data to make informed business decisions. This proactive approach to bookkeeping not only keeps you compliant but also provides peace of mind, knowing your business’s financial health is in check.

Is It Time to Hire a Professional to Prepare Your Books and Tax Return?

Regardless of the current size or scope of your business, you’ll likely benefit from hiring a professional to prepare your books and annual tax return. While it’s possible to perform these tasks on your own or hire internally, these are time-consuming processes that might be best performed by a professional who knows exactly what they’re doing.

Many smaller businesses make the mistake of handling the majority of operational tasks without the assistance of professionals. Along with the length of these processes, it’s also easy to make costly mistakes if you don’t have ample experience with preparing your books and tax returns. The following guide should help you determine if now is the time to hire an accounting or bookkeeping professional.

Financial Difficulties When Growing a Business

There are plenty of reasons why a company should consider hiring a professional to prepare their books and annual tax returns. Even though your company’s needs can differ depending on the current stage of growth, the need for a tax or bookkeeping professional is ever-present.

The professional you hire can help you during the formation of a company, if a tax audit needs to be done, and when a loan application needs to be submitted. Keep in mind the professionals you hire for all of your bookkeeping needs don’t need to be employed full-time. It’s possible to obtain these services on a monthly basis or as needed.

Many small businesses believe that hiring a bookkeeping professional would cost too much money. In reality, the costs are rarely ever too high since services can typically be customized to suit your exact needs.

Hire a Professional When You Don’t Have Time to Prepare Your Books

No business owner wants to spend their time performing bookkeeping services. While these services are essential, they aren’t the main tasks that your business must perform on a day-to-day basis. As a business owner, you likely want to spend more time doing things that are directly related to your current business. However, keeping your books in order and your tax returns up-to-date is necessary if you want you want your company to remain financially strong.

Keep in mind that nearly 40% of small business owners usually spend over 60 hours each week doing their taxes and bookkeeping. Along with taking up too much time, you likely don’t have the expertise needed to avoid making any mistakes during these processes. A mistake on a tax return can lead to an audit, which only worsens the situation. If you find that you’re currently spending too much time on these tasks, it may be time to hire a professional.

Hire a Professional When You Need Advice About the Company’s Legal Structure

Not every business has the exact same legal structure. It’s possible for businesses to be referred to as corporations, sole proprietors, limited companies, or limited liability partnerships. If you have yet to determine which legal structure your business will have, it might be the right time to hire a professional. The person or firm you hire should be able to help you identify which legal structure is best for tax purposes.

While many small businesses enjoy the sole proprietor classification, working as a self-employed company means that the owner is directly responsible for meeting any business-related obligation. In the event that your company defaults on a loan or doesn’t pay a supplier on time, these issues would affect you as the owner. Limited liability structures are different since the company’s liability is only placed on the assets that are directly owned by that company.

Hire a Professional When You Need Help with Your Financials

While the financials for a small business are less complicated, they can still become more complex if you make the mistake of preparing your books and tax returns on your own. A single mistake can balloon and lead to many additional mistakes. In the event that the bookkeeping professional you hire uses bookkeeping software, your business accounts can be sent directly to you once they’ve been prepared.

This professional should also be able to develop charts and tables that allow you to better understand the current financial situation that your company is in. With this approach, it will become easier for you to monitor the financial health of your company.

Hire a Professional to Save Time When Filing Your Tax Return

Filing a personal tax return is difficult enough. Attempting to fill out and submit a tax return for your business without any professional help can take an ample amount of time that’s best spent elsewhere. If you want to hire a professional for this process, it’s also practically essential that a professional is hired to prepare your books. Otherwise, you might be providing a tax professional with incomplete or messy books that would take a long time to sift through.

When it comes time to file your taxes, you shouldn’t even need to think about this process. Full bookkeeping services should cover all of your tax return needs. It might also be time to hire a professional if your recent business tax returns haven’t gone the way you expected them to. It’s possible that you aren’t properly deducting specific expenses, which would result in a larger tax bill.

When you hire a bookkeeping professional, this individual will identify all of your business expenses and categorize them correctly. While doing so, they’ll spot every potential deductible expense and note them on your tax return.

They can also assist you in identifying less common deductions. For instance, it’s possible to deduct the annual fee on a business credit card. Having a professional by your side should make it easier to avoid missing out on certain tax write-offs and deductions.

Bookkeeping professionals are able to assist you throughout every facet of your company’s growth and development. During the year, the professional you hire can prepare your books as well as your annual tax return, which substantially reduces the possibility of a tax audit by the IRS.

How to Safely Switch From QuickBooks Desktop to QuickBooks Online

Good businesses know that the world is always changing. Great businesses adapt their practices to accommodate that change.

There are two main structures that require change many times during the life of a business.
The first is external practices. This includes things like marketing, location development, packaging choices, order fulfillment, and client relations.

The second is your internal processes: recruitment, management, and bookkeeping. For today, we’re going to focus on changing your bookkeeping practices.

Perhaps the most common change in bookkeeping is switching from Quickbooks Desktop to Quickbooks Online. Quickbooks Online is becoming the more popular choice for bookkeeping, thanks to its cost effectiveness, remote work-ability, and improved features.

Let’s explore that change and elaborate on how to do it properly.

Set Up Your Company File For Transfer

A common mistake we see when companies attempt to transfer their data from QBD to QBO is that they jump the gun on transferring before their data is properly managed and formatted for the change.

First, be advised that you can only change your company over to a QBO account within the first 60 days of creating said account. If you wait too long, you may need to spend an appreciable number of labor hours transferring it manually.
Second, you need to hold off on starting payroll in your QuickBooks Online account. If you do, you won’t be able to convert your company smoothly to that account.

You should also, in your QBD terminal, hit Ctrl + 1 to see the number of targets on your file. If it’s over 350,000, you’ll need to consolidate the file before converting it.

Finally, we heavily recommend backing up your QBD company file. In the unlikely event that the transfer has a critical failure, you want to make sure your important financial data is protected.

With the preparations out of the way, let’s get started on transferring your file!

Transferring Your Company File From QuickBooks Desktop Pro and Premier to QuickBooks Online

To begin, create your QuickBooks Online account. There are a number of packages to choose from, so make sure the package you opt for has enough featurability and storage for your needs. Remember, you must perform the transfer within 60 days of creating this account.

After you create your account, go to your QBD terminal and log in as an admin. Make sure your Desktop version is up to date (you can begin a trial with a new version and restore your company file to do this for free.) By the way, the transfer process is the same for both Pro and Premier. If you use QBD Enterprise, you can skip ahead.

Then, go to Company, and select Export Company File to Quickbooks Online. You may be prompted to sign in (do so as an admin). You’ll be asked whether or not to want to transfer inventory. Bear in mind that only QBO Plus and Advanced have the ability to track inventory.
From there, simply select the QBO company you want to transfer to, enter some information and hit Agree. That’s all! It’ll begin the transfer, which may take up to 24 hours.

Steps to Take After Transferring from QBD to QBO

After the transfer is complete, we suggest keeping your QBD records up to date in tandem with your new QBO records. This allows you to prevent loss of data should, for any reason, your QBO account go kaput. It also gives you a chance to try out QBO for all bookkeeping practices without feeling pressured to stick with it if it doesn’t work out. You should also run a P&L report on your new QBO account to ensure all data converted appropriately.

Make sure to go to your settings and enable automatic payments and credits in QBO, since they will not be applied during the transfer. Finally, connect your bank accounts to QBO via autofeed, since this is not done by default.

Transferring From QuickBooks Enterprise

If your firm uses QBD Enterprise, it’s recommended that you start fresh with QBO and do not attempt a transfer, as transferring a QBD Enterprise file almost always results in data loss. If you’d like to give it a shot anyway, follow these steps:
First, sign into your QBD Enterprise account as an administrator. Then, hit Ctrl + 1 to open up your company’s information.
Then, press Ctrl + Q + B, and then select OK. Hit Start Your Export. Sign in as an admin to your QBO account, and then follow the steps like normal!

How Your Various Accounts Will Transfer

When you convert a company from QBD to QBO, some things will be converted to different names, will be grouped differently, or will not be converted at all. Let’s rattle off a few of the major discrepancies to keep in mind.

1.) If you have an audit trail in QBD, it will not be transferred to QBO. QBO will automatically keep a record of who has opened the books.
2.) If you have a bill discount in QBD, it converts to a vendor credit in QBO.
3.) Budgets only convert to Plus and Advanced QBO accounts.
4.) Profit and Loss is the only budget type that can be transferred.
5.) Credit card charges in QBD convert to expenses in QBO.
6.) Jobs are converted to sub-customers in QBO.
7.) Quickbooks Desktop has more payroll features than QBO. Paychecks will be converted into regular checks and employee addresses may indeed be fixed. Remember to set up payroll AFTER the transfer.
8.) Reconciliations will not be transferred, so you will need to manually enter an ending balance and reconcile.

Booktied Can Help With Your Transfer

If you find yourself having trouble converting over to QBO, just give us a shout! Booktied offers a number of services relating to Quickbooks and to bookkeeping itself.

With Booktied, you can give your team the training it needs to be self-sufficient in all bookkeeping practices. You can also outsource your bookkeeping to us as the ultimate time-saver! We’re just a call or click away!

QuickBooks Online VS QuickBooks Desktop: Which one should I use?

QuickBooks has been a staple in the bookkeeping business for almost four decades.  Its predecessor, also made by Intuit, is called Quicken.

Quicken was launched in 1983.  That means businesses had been using Intuit’s accounting technology for a full 8 years before the Berlin Wall fell.  It’s no surprise, then, that Intuit is the biggest name in bookkeeping software, and has been for decades.

Quicken initially became popular by far exceeding its competitors in one main area: simplicity.  While every other accounting software that was on the market was extremely complicated, Quicken employed a simple checkbook-like interface that made it especially appealing for both personal finances and simple business accounting.  By enabling just about anyone to boot it up and start bookkeeping, Quicken changed the game.  As a result of that initial genius, Intuit is still the king of the bookkeeping software space 5 decades later!

Quicken is still around today, although it’s best for personal finance, rather than for corporations.  By the early ‘90s, Intuit realized that Quicken was missing the functionality necessary for accounting and bookkeeping for larger, more complicated businesses.  In order to fill this hole in the market, Intuit launched QuickBooks.  Initially, QuickBooks was only available as a desktop application that the user paid for one time and then used on one computer, as most software was back then.  QuickBooks Desktop is still available as one of the main forms of QuickBooks to this day.

By 2002, however, the internet was a huge industry and growing fast.  Intuit had another stroke of genius when it decided to pioneer the field of cloud-based accounting with QuickBooks Online.  QBO allows multiple users to access the same QuickBooks account from different computers, anywhere with an internet connection.  It’s paid on a monthly subscription, which can be scaled up or down according to the needs of the business.

Today, QuickBooks Online represents a significant portion of the use of QuickBooks.  But, perhaps surprisingly, it has not completely dominated the field.  QuickBooks Desktop still has its own loyal user base.  But which version of QuickBooks is right for your business?  What are the advantages and pitfalls of each?

Let’s walk through those questions and find out everything you need to know about QuickBooks for your business.

Comparing QuickBooks Online to QuickBooks Desktop

QuickBooks Online is the most popular version of QuickBooks.  In the modern era where everything is cloud-based, it makes a lot of sense to make your accounting software match.

QuickBooks Online is typically most popular with small to medium-sized businesses.  The versatility of being able to log in from anywhere makes it very attractive to small business owners who must be mobile or who multitask with both administrative and operational responsibilities of their business.

Another big advantage to using QuickBooks Online is the sheer amount of add-on applications that are available for it.  Since it’s internet-based, many apps, both third-party and Intuit-built, can link with QuickBooks Online and give it even more featurability.  QuickBooks Desktop does have add-on applications, but they’re limited in usefulness by comparison.  QuickBooks Desktop does allow the download of transaction information from your bank, however, which is one of the most important features for accounting software in general.

QuickBooks Online differs from QuickBooks Desktop in price, as well.  A basic QBO Essentials plan costs $40 per month.  Depending on your needs, however, you may opt for the cheaper QuickBooks Simple Start ($25/month) or the more expensive QuickBooks Advanced ($150/month).  There are, obviously, differing features on each level.  Intuit has outlayed a comparison of QBO plans on their website.  As of writing, your first 30 days with QBO is totally free.  After that, your first three paid months are 50% off.  Talk about value!

QuickBooks Desktop, by contrast, starts at a one-time fee of $300 for the Pro version.  The Premier version, which comes with additional features such as forecasting and industry-specific transactions, will run you $500.  The flagship version of QuickBooks is called Enterprise, and it’s the perfect choice for large businesses with more complex finances.

Within Enterprise, there are varying levels of power and customizability, each with a different price.  All of them are paid on a subscription basis, with discounts available for your first year.  The Silver edition is the base level, which is $850 for your first year (30% off).  The Gold level will run you $950 for the first year (40% off), and Platinum is $970 for the first year (50% off).  You can find a full comparison of QBD versions on the QuickBooks website as well.

This pricing structure allows business owners to get the exact functionality they need, without having to spend extra on features they don’t.  Depending on your exact needs, you will find that either QBO or QBD presents a strong financial advantage over its sister program.

Which version of QuickBooks is right for me?

Determining which version of QuickBooks you should use is fairly simple:  It boils down to pricing and which features you can’t do without.  If you need web-based CRM apps or time trackers, or if you need to access your books from anywhere, choose QuickBooks Online.  If you want to create back-ups and copies of your financial data for external audits, or if a one-time purchase is better suited for your financial situation, choose QuickBooks Desktop.  If you’re an inventory business or large company that needs powerful tax and payroll software, choose QuickBooks Desktop Enterprise.

QuickBooks is one of the most important inventions of the last 50 years.  By allowing any business, from sole proprietorship to multinational corporations, to electronically manage their finances for an accessible price, Intuit has single-handedly innovated the efficiency and accuracy with which the business world’s financial performance is analyzed.