Year End Processes with QBO Part 3

Hi there, Linda Artesani, Artesani Bookkeeping. So I wanted to continue. This is the last of the 3-part series on some of the processes that I use when I'm going to work through client files at year end. So let me share my screen. We'll get into the reporting here. So I'm going to hit share. And let's go to— let's see if I can move this out of the way. So let's go into the file. So here's my, my company file, QB Community Live. And when I get into reporting, so you would come over to your reports and there's a couple of really good reports for year end. Remember, you really need to know whether you're cash basis or accrual basis, how you do your tax return. And that would be important in, in how you want to really look through the records. You can look through them in accrual and then change the reporting for your CPA at the end of the year. Most of the most businesses I work with do file on a cash basis. And I did discuss that in the earlier videos. So the one I like, and this is a Plus version of QuickBooks, so you may not have some of these reports. You have to make do with what you have. And every, every company file, if you're in Simple Start, has general ledger. So you would, you could use the general ledger report to kind of go through the fine tuning. With the higher level or more expensive QuickBooks products, you get the better reporting, but you can make do in all of them. But I'm in Plus, I just want to show you the ones I like to use. So I like to use the balance sheet comparison one, and the profit and loss comparison. I want to see how my business is doing from last year compared to this year. You can even expand the date range to even further out if you want. It's also a good way to find errors or something that may be off on the file, and then you can make a correction at that point in time. So that's another reason why I like using these, these 2 reports. So your balance sheet, and I forgot who said this, but I love the analogy. It's like a bank account. It's like your, your health report card of your business, right? So you're gonna actually see your assets, your liabilities, your equity, the things that matter, the things that keep going year after year after year, where your profit and loss is just the little snapshot of last year when we're talking 2018. And you're really looking at how your income and your expenses were in that, in that particular report. So let's go over to the balance sheet comparison. I've already set it up. And what I did was I put the date range in of last year. And I selected in here compared to another period. I picked previous period and actually put the percentage of change because sometimes you get involved with the numbers and you can really start to dig in here and then you notice, wow, you know, I can see something like, wow, look at this change. So this is something I may want to look into. Looks like I got a whole bunch of money sitting in my undeposited fund account. Now this is my sample file. So it's, it's got a lot of stuff in here for when I do videos. So there's sometimes some things in there that, you know, there's just a lot of stuff that's probably not You know, that shouldn't, that shouldn't be in here. And that would be an indication I would need to clean it up. So I'm going to not go into the weeds on that stuff because I've mentioned those things in the earlier videos in part 1 and part 2. So I'd come in here and look and say, okay, the checking account, we'll disregard that negative balance. But, you know, it's the same as last year. So now that was an account that was closed, then maybe I should reconcile it to zero and actually close it out. This is, it's odd for bank balance to never change. in a bank account. So that would be something I would look into. Here I've got way more cash this year than last year at the end of the year, which is, which is nice. And then I've got my checking account. Looks like I've doubled my checking account here as well. And PayPal is only up a little bit, about a little bit. And that's my PayPal transfer account. So my PayPal bank account basically is what that is. Accounts receivable, I've got more people who owe me. And I would definitely look into the accounts receivable report and the accounts payable, which I mentioned in the earlier video. Undeposited funds, definitely want to go there. And you just— to find that, you just go to the plus sign and then you would hit bank deposit. And that's going to show you, maybe they were in there at the end of the year. Maybe I actually entered the deposit on my customer account here at the 31st of the— on the 31st of the year, which was Monday. And then it didn't really hit the bank account until the 2nd, 3rd, or whenever it actually cleared the bank. That's okay to have money in the undeposited funds account at the end of the year. If you did a deposit the very last day of the year and it didn't really get into the bank until You know, didn't land into the bank until after that, you might have that if somebody paid you by like QuickBooks credit cards, QuickBooks processing, it might be in there that it's in holding waiting for it to clear. So it's normal to have that. The asset hasn't changed, the inventory. If you have inventory, you should do a physical count at the end of the year. And then I recommend putting the adjustment in. So you really want to actually do that physical count, know exactly what you had in your warehouse or whatever, and then you can do the adjustment to You know, you can do the adjustment increase or decrease of however— usually decrease if, you know, there's things that are missing. Prepaid rent was minus $1,000, but it's been corrected. So now we're at zero. Uncategorized asset, obviously we went over that in the other file and it needs to be fixed. Accumulated depreciation, that's an entry that's going to come from your CPA in all likelihood, or if you've— if you have a chart, you can do that every year to depreciate your assets. Looks like I haven't done the entry yet. So that's something you might want to look into. That usually comes after the tax return. I get the tax return and look at what the accountant did and just stick it in there. Let's see, looks like we bought some equipment. Anytime you see anything here that's increased— actually, it's the computer equipment that went up, up in value— I want to go into this account and see if you're going to be able to see where the difference is. It looks like I bought something that was $9,000. So hopefully on this transaction, when I pick it up, There's an attachment with what it is. I also like to take that attachment. So if I have a purchase and sales agreement or something that I purchased, some big ticket item that's going to have to be depreciated, take that receipt for it and attach it to the transaction, to the bill or to the entry that you make. Sometimes it's a different entry. If it's like a truck purchase or something like that, it would be a journal entry. And then you're going to put that in there and then make sure you have another copy. I start a little file for the CPA so he doesn't have to hunt and search around the file. 4 attachments, he can actually look at the, the one file that I have all like any document that comes in even by mail, I'll scan it and put it all in a folder for the CPA. So it makes his life easier. So as we go through here, nothing else here has changed. We just kind of slide down, I get to look at— here's the, here's the stuff you own. And here's the stuff you owe. So we're gonna get into the credit cards and a lot of credit cards here. And it looks like this Balance. Well, that's the parent account. So there's— that's an issue. There shouldn't be anything posted to the parent. So I have to fix that. Bank of America, different balance. Looks like I'm almost the same. So I probably charged and made payments enough to stay level. We've got— look like nothing happened here. So maybe it's a closed account. I need to go in there and finish up and finalize that account and close it. If it's something that's— balance hasn't changed, that's very unusual. You must have made a payment at some point. So like I said, sample files, you kind of looking at something that doesn't show much. Chase with a minus and then Chase here, this is probably a payment to Chase. And then maybe somebody created another bank, another credit card account. So you want to see what that actually is. And maybe it belongs here as a payment to one of these accounts, making sure that all these accounts are reconciled, right? You want to make sure that every one of these credit cards is reconciled. You get down into sales tax, making sure that there might be a little balance there as you collected sales tax from your customers, and then you don't make the payment until the next year. So that's perfectly fine. It should match the amount of money that your sales tax account says you owe for that month of December. Loan payable officer, so you obviously, you know, obviously loaned yourself— you took money out of the business and made it a loan that you have to pay back. Security deposits, the same. We'll get down into here some loans. Looks like we had balances on our loans last year that these people were owed money and then they've been paid off. So they're completely paid off. So maybe I had a better year here. Opening balance equity, we discussed that in the other video. There should be nothing in that account. Shareholder distributions, that nothing's really changed there, and retained earnings. So that's basically the balance sheet that I went through very quickly. But you want to look year to year to see if anything stands out to you that you say, wow, this— that balance is way off. And that's why it's good to look at this. Plus, it's good to look at what you own and what you owe and look at the general health of the business. Let's go on to the next report that I like, and it's the profit and loss. And I do the same thing. I make it by comparison. I add the percentage of change. So here I can see that my sales in 2017 were pretty healthy, $184,000. And over here, I'm not having a good year at this point. I mean, it's just in that one sales category. You get into here, the rental income is up, and I can just see I've got a big issue here that This maybe belongs up into my other categories. This is uncategorized. It's incorrect. You want to fix that. And again, we mentioned that in the other video. Again, in the cost of goods sold, something's posted to the parent account. And then you also see that we've had a few purchases and looks like we didn't have as many purchases as we did in the prior period. Accounting fees are up. And just kind of going through, okay, advertising is down. And you can see as you come through here that there's some things that are different. As you start to go through every single one of these categories, you're going to compare, like, why did my dues go up? Why did they almost double if, you know, my sales were down? What did I spend money on? And then you just click in here to see what the things are that are in here that you, you actually paid for. And then if it's something doesn't belong in that category, you want to move it. So you want to make sure that you move it into the correct category. This is a great way to be looking for that. Insurance is up. Meals and entertainment is up. And remember, there's no entertainment anymore. It's just meals. And I like to call it at 50% deduction because I want you to remember that you're only going to get half of that expense when the tax return is prepared. Office supplies and expenses is down. Outside services is a minus. So you don't usually see that as a minus. You'd probably want to look in there and see what happened. It could have been that you paid somebody money in the prior year, although that doesn't warrant it here by looking at this $625. So you just need to figure out where that— what that is and why is it in there and probably needs to be moved. So just keep coming down to these transactions. Again, we've got a big amount in the uncategorized expense. You'll want to go in there and find out what they are and categorize them. Small tools and equipment way down in price, telephone expense way down in value. So you want to compare, make sure that everything that's in this category is in this one. So you just open it up, look at it, see what's in there. So you get the Verizon and then you get some kind of secure contact. And then you come over to the other side and the telephone expense and just open this one up. And it's the same thing. You don't have any Verizon. So then maybe you want to look and see, well, where did Verizon go? Is it in a different category, or did they just get rid of the phone and only use that, that account? That could be a reason behind it. Or is it all bundled up in uncategorized expense and I need to move it to that category? So these other accounts won't have these things in them because you've already followed the steps from the first couple of videos. But it's always good to have that second check, second set of eyes. So when you get down to the end of the day, oh wow, I made $109,000 in 2018, only made $71,000 in my, in my net income account. So that's good. So once you've cleaned all these things up, and you start to compare, you had a very— that was a really good year, 54%. And, you know, it's a, it's a great, it's a wonderful thing. So if everything is right, and you have that kind of a profit, yay for you. But that's basically all I do when I start to come through reports. And I hope that that gives you an idea of what you're looking at and what you need to look at. Of course, if you need any help with your year-end books or you have any— anything that needs to be cleaned up, I would love to help you. Just feel free to reach out to me. Thanks for watching. Bye now. Bye.