QuickBooks Tip #1: Prepare your books for quick tax preparation

Before giving your QuickBooks file and/or your financial reports to your accountant ( CPA ) for tax preparation.  Here are some great tips to help reduce the amount of work related to making changes and adjustments with your accountant.  Having cleaner books and easy to read financial statements, should lower your tax preparation costs and should give you much clearer understanding of the tax situation

1.       Transaction Dates: Revise transactions done near end of year (Dec 15^th to Jan 15th) to make sure that the correct dates are assigned to the transactions to make sure you report income and expenses in the correct year.

2.       Method of Accounting: Make sure that the reports are in the correct accounting method (Cash or Accrual) Remember that most small businesses start at cash basis reporting for tax purposes and once they convert (or choose to change to) Accrual basis, changing back to cash basis is prohibited in 5 years.

3.       Accounts Receivables: make sure all open invoices in accounts receivable report (A/R Aging Summary) are real invoices for work performed / product delivered and all invoices are collectable.  In the case of overstatement, there will be additional income reported that should not be.

4.       Accounts Payable: make sure that open bills (A/P Aging Summary) are actually for money owed, it’s very common to have bills and checks repeat in a QuickBooks file, this double counts expenses

5.       Negative Accounts: Please remember that generally there should be no negative accounts in the P&L Summary Report (unless is a return of some sort).  In the Balance Sheet is common to see accounts such as “Accumulated Depreciation”, “ Allowance for bad Debt” , “Shareholder Distributions” , “Draw” as negative accounts, but it does not necessarily mean they should exist.

6.       Uncleared Checks and Deposits: Pull a report of uncleared checks and deposits from the bank statement to make sure they are really outstanding items.. if not, delete them. For this to work, all bank statements MUST be reconcled first.

7.       Report Comparison: if available pull a report comparing last year with current year to se major abnormalities or changes from year to year.

8.       Chart of Accounts: try to use a consistent chart of accounts are the previous year

9.       Fixed Assets: try to assign a sub-accounts for each major fixed asset to make it easy for the accountant to identify and build depreciation tables for them

10.   Memos: try to have as much detail in the memos to make it easier for review.

Hector Garcia
Accountant / Certified QuickBooks ProAdvisor
http://www.qbkaccounting.com
2645 Executive Park Drive
Weston, FL 33331
954-414-1524

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Hector Garcia
Quick Bookkeeping & Accounting LLC
Davie, FL 33330
954-414-1524