Year-end like a Pro with Quick Books
There are a few things I like to do at year end
for my clients, just to get their files tidied up.
Now is a wonderful time
to review the work. Look for areas that need clean-up. Again,
preliminarily see if there is any place you can spend, if you have a decent
profit sitting on the books and some good cash flow.
It’s a good time to look
it over and maybe make those purchases before the year closes for your
particular business.
If you are a business
owner with QBO Plus, Essentials, or Simple Start and don’t have QuickBooks
online accountant version, you can still manage to investigate the troublesome areas
in QuickBooks. It will just take some extra steps and super-sleuthing skills to
get you there.
Review your accounts
looking for anything that seems to be in the wrong column. What I mean by that
is if you are looking at an asset with a credit balance or a liability with a
debit balance, something is probably wrong. You will also see them with a
negative balance. Unusual balances are generally a red flag that something is
not right.
2. Assets/Depreciation and
Prepayments
Assets: If you’ve been entering your own
depreciation, look at these balances too. I have seen where people do their own
depreciation by memorizing what the accountant has recorded in past years. They
memorize it to continue forever. If the life of the asset is gone, you will see
a negative asset balance which will need investigating.
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Some clients will just enter the whole amount
into the insurance expense category. Their insurance may run from 8/1/19 to
8/1/20 so you cannot expense the entire payment in 2019 since 8 of the months
are for the 2020 financial year.
3. Loans and Credit card
balances
Loans: People
tend to enter the entire loan payment into the loan account (liability) and not
expense the interest on the account. Look to see if you have properly broken
out your loan payment. You should see several line items on a payment entry:
loan account, interest expense. Remember, a loan is NEVER an expense,
just the interest portion is. For the final month of the year, attach
the loan statement that ties to the year-end balance so your
bookkeeper/accountant has access to these important documents.
4. Review the Accounts
Payable (you owe) and Receivable (you are owed)
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A balance of 0.21
balance lingers on the accounts receivable report and is never adjusted off.
It is unlikely that the customer will pay this, for the most part.
So, it is a good practice to either write these off with a credit note
using the same item as the original invoice (Cash accounting) or Bad Debt
(Accrual accounting).
5. Unapplied cash payment or
income accounts
Why did this
happen? It is usually a date issue. Someone dated a customer payment or a
bill payment before the date of the invoice or bill. Simply go into the
transaction and amend the date.
6. Review the Profit and
Loss Report
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7. Directors Loan Account
(Limited company) or Drawings (sole trader)
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If this all sounds like a lot to do, please give me a call and we
can discuss the Bookkeeping Packages I offer.
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