Year End Processes with QBO Part 1

Hi there, Linda Artisani, Artisani Bookkeeping. So I wanted to share with you, and I'm going to do this in several steps, processes that I follow. For the most part, I do these things with my customers monthly or quarterly. I don't tend to do them annually, although I do have some clients that I do work with just on an annual basis. I have clients that I work with monthly, and those are the ones I always send the reports to myself monthly and review. And these are some of the processes that I go through. Some clients are just annual. They're bookkeeping support clients that have a relatively low fee with me and they have me as their support system. They have a question on a, on a transaction or process, they reach out to me and maybe I'll email them back the answer. Some of them have a little bit of a higher level of support where I'll actually do a video on their, on their product and maybe show them how to do something in their file. And then of course I've got people who Have me review their records quarterly. And also as a support person, we do an annual review of their records, and I'll be the intermediary between their CPA, and we do a formal review meeting at year end. Usually it's done in January after the records have closed, or February. We try to get the records to the CPAs as early as possible, possible, because the CPAs get overwhelmed with work. And I try to keep the files as in real time as possible, which is what's so wonderful about QuickBooks Online. It actually speeds up this process more than when we had just, just desktop files. So let me take you into a file. Let me just minimize this. So this is my year in process. Let me just minimize this down so you still see me. And I'm going to take you into a file that is basically the steps that I would follow. So I'm going to start here because if you have QuickBooks Online Accountant, This is the new view that we have that I love. It's really wonderful. We've got this new overview page. This actually does all the steps for me in here, so I can quickly at a glance see that this customer hasn't reconciled their records since March 31st of this year. So they need to— first, they need to go through and reconcile, right? And they've got a lot of transactions that aren't accepted. So if I were reviewing this client file, I would talk to this customer and say, you need to Get caught up. You're not, you know, you're not to the end of the year. This should say November 30th by at this point. Today's the 23rd of December. Also, you would probably, you know, this is an accountant-only view. So you don't— if you don't have accountant's version, you wouldn't have this in your file. And I'm going to show you the steps of how to do exactly what's here, what you can see here to find these things. But if you're a business owner working your own file, you probably know if you haven't reconciled. And then I would actually say to the client, you know, if you want me to catch up for you, I will. This is a great time to reach out to clients that maybe you see are far behind to help them get ready so they'll be able to file their tax return in a timely fashion. I love this new page and it's only going to get better. I can just see them putting more and more things on here. Opening balance equity has a big minus amount. So this is an account we always look at. It should be zero. There should never be a balance in it. So that tells me there's something wrong there. They have negative asset and liability accounts. So usually you don't see negative— in other words, it would be an asset has a debit balance. It's, you know, it's going to have a debit balance for it if you looked at it on the balance sheet. If it's got a credit balance, there's probably something wrong, and vice versa for a liability account. And that could include accounts payable, accounts receivable. It could be any of those accounts as well. Uncategorized anything should not exist in QuickBooks. The uncategorized accounts were really put in place for the online banking feature. And a lot of people— the online banking actually actually suggests, hey, this should be an uncategorized asset, and people just click it and say yes. So I highly recommend in this case to really look at these categories and put them in the right account. So if you purchased furniture for your office, put it in office furniture or furniture and equipment asset account. Don't put it uncategorized. The accountant won't know what to do with it. Uncategorized income, you know, all your income should have a category, whether, you know, if you're a restaurant, your restaurant sales, you're consulting, consulting income, anything like that, you want to rename your income account specifically to what you do and what you sell. And should never— nothing should really be in uncategorized income. Same for uncategorized expense. It's almost like the black hole of miscellaneous expense in the past desktop days. I also like to view the chart of accounts. So that's another area that can tend to get a little bloated. People get a little happy about adding accounts. And usually that can be cleaned up. Sometimes they see duplicates. So that's another place you'd probably want to look into. So if you don't have this page, what I would recommend is going to your balance sheet and just take a look at the balance sheet. Don't be afraid of the balance sheets. A lot of people are like, that's the accountant's report. But really, it's really where your health of your business is, right? So your balances on your bank account. Of course, you go into this and look to see when it was last reconciled. You know, you come over to the reconcile window and look. Go into any of these accounts that you have here. Credit card accounts. Here I can see PayPal has a negative balance. Something's wrong, right? Generally, it doesn't go into the negative unless the account actually is negative. But if you do see a negative account on your asset, that's the red flag I was talking about, that there's something probably wrong, and reconciliation is going to find that for you. Uncategorized asset, you'd want to come in here and take a look and see what's in it. And then just really go and see if it's transfers. So there's some transfers in there. You probably want to Correct those. Now the problem with transfers, the biggest problem with transfers I, I run into is people put these transfers in because online banking kind of suggests it. And then at the end of the year, they're kind of stuck. So if this was something that was completely like belonged in an equity account or something the owner purchased personally, and then they put it into the uncategorized asset figuring, well, that's where it belongs. That's probably something that a good clearing bank account would help you out with. So you don't have to destroy any reconciliations that are there. You just switch it to the clearing account and flow the other transactions through that clearing account. Clearing account will always be zero at the end of the day. But this is a way to fix these errors without having to actually delete the transaction that maybe was already reconciled and change that to the right account. As we scroll down here, you know, American Express is a negative balance. That's very possible that you overpaid your credit card, but probably not. You might want to look into that. If you have a credit card account with subaccounts, that's another area where I find that people Really struggle with balances. So I would like to think that it's a good idea that you could look at those balances, and I'll refer you to another— I have a whole blog post on how to make sure your credit card with subaccounts balances properly, and a journal entry you can do at the end of the year. And I'll direct you to that in the actual post that accompanies this video. Obviously, opening balance equity is an account that we need to fix. It probably has a lot of things in it. We can just hit the All Dates to find it. And a lot of times it comes from when you hook up your bank account initially, connect it to the bank, the bank feed, and, you know, QuickBooks makes this opening balance to account for the balance that's in there. It looks like some of these are just journal entries and things like that that would need to be fixed, right? So these are really extreme pictures for you, but so you can get an idea of where you're looking at some of these things that you'd see that were wrong on your account. You'd also want to look through your equity accounts and make sure that they're in the right— that's in the right category. If it's a partner account, you want to see the same thing. It's, you know, the equity of the business. You want to make sure that those accounts have the right balances and that you've kind of got the subaccounts so you can roll them up to the parent. So I wanted to also show you what it looks like if you had a payroll account that had some wonky balances in it. So the payroll account should be— it should zero out every month. It's probably going to have a balance in it at year end because you're going to accumulate that and it's date driven with payroll and then you pay it the following month. It's due before the 20th. So anything that accumulated in payroll will be— have the balance and then the payment will happen like before the 20th of the following month and then you'll see that zeroing happening. This is a place that sometimes I see an issue where maybe a client had paychecks for the payroll service last year and they switched to QuickBooks Online payroll service, full service, which I highly recommend. If you are interested in it, let me know. I can hook you up with the best team ever to move you over. Now's a great time starting for January 1st. But in this case, if this payroll was last year's payroll, this might be those balances that are just kind of hanging that need to be cleaned up for the following year. So they might be— maybe you did payroll manually and you have these balances. So these were paid in this year, this fiscal year, but in January for the prior tax period. So you really need to get into those accounts and look at them and see what's there, what needs to be fixed. And I'll show you here with just the FICA one here that you can see. Let's go to— let's go to the 31st of December. Let's go over here. So you can see that it, it actually does zero out and then the following year has transactions in it. So this This company did have payroll with another firm, and then they did sign up for QuickBooks Online. So, you know, these are things that need to be corrected in the file. And they can be corrected with a journal entry. So that's it in a nutshell on where I go to look to see there's problems in the file, and I work through fixing them. A lot of the things that I just showed you, and I'll get through the profit and loss next time when I do the next video, but this is just to show you where to look for problems. A lot of these problems can be corrected, especially on the balance sheet, with just basic simple reconciliation, getting caught up in the reconciliation process. Opening balance equity is just going to be fixed by drilling down on each transaction. Be really mindful though that, you know, here's— there's only one transaction here that affects 2018. But if I want to go back to all dates and see these problems that are in here, these should have been fixed in the prior year. They're all in 2017. So these needed to be corrected last year. So we just have to figure out what that balance is and make an offset and make that adjustment in 2018 because 2017 is closed. There's been a tax return already prepared on it. You don't want to disrupt any of that kind of work. So I hope this is helpful to where you can find the errors. Of course, if you need help with cleaning it up or anything like that, you certainly can reach out to me and I will, I will help you figure out the problems that you have in your file and help you get it corrected and ready To be ready for tax time in a very short period of time. If you're a corporation, you're looking at March 15th as the date that the tax return is due. So the accountant needs to have the file way before that because they have to process a lot of files really quickly. So certainly a process. It's definitely a service we provide. So if your file is not quite there and you're really worried about it, and for the year end you're looking at a good amount of money in the account that you might want to address and maybe work with me. If you're cash basis, give me a call. We can take a look at the file, give you a price. You can pay for it this year before the year ends, and we'll do the work next year. And you'll get the expense in, lower down some of your taxes. So it'll be a little tax saving there. So I hope that's helpful. And I hope that maybe gave you some insight into what you need to do to get your records ready and where you need to start to look. And this is a great week for it, right? It's a holiday week, kind of quiet. It's a great week to look through your books and get ready for tax season. It's Just around the corner. Thank you so much for watching. If you have any questions, please reach out to me, and hope to see you soon. Bye now. Bye.