Speeding up the QuickBooks write-up. Helpful tips for your clients.
 

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How to make your QuickBooks write-up a productive endeavor.

Review the preferences: Before beginning a write-up take a few moments to review the set-up preferences within QuickBooks.  Knowing the set-up will explain some of the nuances you will encounter during the engagement, for example, why certain menu items may not be available; if the reports are being generated on a a cash or accrual basis; or if sales tax is paid on the cash or accrual basis.  It will become apparent if the client is using the software as intended - this may mean additional consulting revenue after tax season. Make any and all changes to the preferences that will speed your use of the software, none of your changes are permanent or irreversible. so don't be concerned about putting a monkey wrench in the works. Set-up preferences can be found under the edit menu. 
Suggested- but not necessary -Change the report default from cash to accrual.

Before beginning the write-up, send the Balance Sheet report (1/1/new year) to an Excel file.
  Reports created within QuickBooks contain an Excel button at the top of the report. There is a seamless integration between the two software packages. Just click on the button, select new spreadsheet option, and you will have a  report available to easily calculate the AJE for the client  to bring their account balances up to speed.

Successful write-up procedures

To avoid confusion with dates, the discussion will refer to a tax write-up for the 2008 tax year, which makes 2007 tax  year -  the prior year. It is a "work in process". with suggestions for improvements the more comprehensive this list becomes, the more useful it will be to you and your staff.  

For steps a-g I suggest you access the clients QuickBooks data remotely.  Make the corrections on the original file while the client is watching. The client will consider it training time not tax prep time which makes it easier to collect your billable rate without write-downs. The client learns, makes less future mistakes, you get a clean file to 12/31/tax year (2008) which makes the tax work for future years so much easier. 

If you are not making these adjustments at the clients place of business I suggest starting a Word document of "to do's for your client" - you will e-mail this to the client to conduct the same voids and changes on their system.

A few comments before  beginning:

  • If the client is on the accrual tax basis, the discussion below talks about deleting and voiding erroneous transactions that were entered into QuickBooks but remain uncleared or open.  It may be that these transactions have been deducted  on prior tax returns or income was recognized on prior tax returns - so technically an amended tax return would need to  be prepared to remove these erroneous transactions. This discussion makes the assumption that the difference is immaterial and all adjustments are accounted for during the current tax year (2008).
  • Keep in mind while you are removing old or outstanding transactions from prior years, that the prior year accountant may have already adjusted these items on his/her trial balance but the adjustments never found their way into the clients copy of QuickBooks. 
  • By conducting your write up in the following order you can  permanently clean up all the erroneous data and make your future write-ups run much smoother.
  • Remove the password: Avoid delays in accessing the client file on your computer, write the client password on the inside cover of your client file for safekeeping and then remove this password from the QuickBooks file. To access the password go to the company drop down menu, select change passwords, enter the existing password and leave the new password field blank.
  • The following reports are very helpful for troubleshooting balances. I recommend downloading and importing into each of your QuickBooks client files before you begin- These links are QBR files that can be imported into your
    QuickBooks.  You will first need to download to your desktop.  To download, Right click on these links and select save target as
    a. Uncleared Bank Transactions

    b. Uncleared Credit Card Transactions
    c. What items are causing A/R to appear on a cash basis balance sheet
    d. What items are causing A/P to appear on a cash basis balance sheet
    e. Payroll Liabilities paid by month (if you are using QB Payroll)
    f.  A group of troubleshooting reports

    The above links will open to a QBR file for you to download, then import into your customers QuickBooks file. While it is not necessary, they
    make short work out of finding and fixing problems.  To import, from within the QuickBooks file > Report Menu > Memorized Reports Menu> select Memorized Reports List >  Click on the Memorized Report button in the lower left and choose to import the reports.

Write up steps using QuickBooks:

  1. Do a find on transactions dated 1/1/08. Change these trx dates to 1/2/08. Its very helpful to see 1/1/08 balance sheet with 12/31/07 amounts except Net Income has been closed to Retained Earnings, so we should have a match to the tax return. Now print the 1/1/08 year Balance sheet. 
  2. See if there are any outstanding checks still open in the bank reconciliation window from prior year ( 2007) or from the first 9 months of 2008.. Run the memorized report (see above) for uncleared bank transactions. If so, make a note of the check number, payee and account used to create the expense.
    Void these checks with a Journal entry dated in 2008.
    Check to see if there are any old  'undeposited funds' that should be deleted (Banking Menu > Make Deposits> if you do not see a window pop up with old transactions, continue to the next step). Before deleting or voiding, investigate the open transaction. Use the find window and filter on the dollar amount of the deposit in question. Has the deposit had been entered twice? Run a report on the checking account for the month surrounding the old transaction.  Has the deposit been combined with another deposit creating a duplicate? Double check with the client before voiding.  If voiding reopens an invoice to A/R, then the Invoice will  need to be deleted or voided.
  3. Search for transactions that were sent to the wrong period. It is very common when the new year rolls around to enter the wrong year on a transaction. Newer versions of QuickBooks offers protection against this type of error by setting a password. From Edit menu > Preferences > Accounting > Set a closing date. But, many clients do not do this timely and it is still a good idea to do a quick search.
    Determine the check number range for the tax year 2008 and the invoice number range for tax year 2008. Do an advanced find. Filter for the range of check numbers used in 2008 and add a 2nd filter for date range of 1/1/07 to 12/31/07. Click on Find. Investigate the results and make any changes in the dates as needed.
    Reset the find window, and filter for the range of invoice numbers used in 2008 but add a 2nd filter for date range of 1/1/07 to 12/31/07.  Click on Find. Investigate the results and make any changes in the dates as needed.
    Run an accounts payable summary report for the prior tax year (12/31/2007).  Drill down on any bills that are over 90 days old and click on the history button to see what date they were paid.  Investigate with the client, make any changes.
  4. Reprint  the 1/1/tax year (2008)  Balance sheet and compare to the prior year tax return.
    Make AJE's as of 12/31/07.  A/R and A/P adjustments require a customer/vendor name. I set up a name called "Adjustments AR" as a customer and "Adjustments AP".
    If you are working on the clients ongoing QB file, do not adjust A/R or A/P to zero for cash basis statements there is a step after step O below that will address cash to accrual.  So your retained earnings will be off by the difference between A/R and A/P
  5. Enter reversing JE 1/2/tax year (2008) for any JEs you entered in Step D for made to Bank Accounts, Inventory, A/R accounts, A/P accounts.
  6. Reprint the 1/1/tax year (2008) Balance Sheet for your files
  7. Run a Balance Sheet report 12/31/tax year (2008). Click on the modify button and change the date range to include 1/1/tax year - 12/31/tax year(2008).  Now you can drill down on any account and get 12 months of activity.
  8. Search for future transactions belonging in the tax year write up period. Run a transaction detail report (found under Reports menu > Accountants Reports) using dates 1/1/2009 through 1/1/2025. Look for post-dated dates. Transactions that have a check mark in the cleared (clr) column of the report means the check has cleared the bank- look at the check numbers, is it out of sequence? It may mean the date was typed incorrectly. Investigate and change the date.
  9. Clients will do anything to correct a customer accounts receivable balance.
    Print a 12/31/tax year (2008) Accounts Receivable summary report. Drill down on the over 90 day and fax to the client for verification that the balances are still open. If the balances are erroneous, create credit memos dated in the tax year (2008). If you are working on the client's working file, link the credit memo to the invoice. Zoom in on the grand total of the A/R summary report and search outstanding transactions for Negative amounts. Any negative (credit amounts) must be applied to invoices if these payments are to be included in the P&L cash basis.
  10. Repeat step j. for accounts payable.
  11. For Cash Basis returns, Run the memorized reports  (download and import into your QB file)
    What items are causing A/R to appear on a cash basis balance sheet

    What items are causing A/P to appear on a cash basis balance sheet
    These reports will identify reasons that are causing the A/R and A/P balances that exist on the cash basis balance sheet.  Generally this is due to credits (payments and credit memos) not applied to invoices, cost basis of inventory sold plus sales tax included on an invoice that has not been paid yet, and inventory purchases (A/P) that have not yet been paid.
  12. Is there an account named "opening balance equity" in the equity section of the Balance Sheet? If so, it is   home to all the "plug entries" your clients created in order to balance the checking account or adjust inventory balances without assigning an account. If the customer started with QuickBooks during the tax year, this account is the account used by QuickBooks set-up wizard as the offset to starting balances.   Generate the AJE's needed to bring this account to zero. If you do not, your schedule M-1 on your tax return will not work!
  13. Run a general ledger for the year. Filter to include all accounts except exclude accounts receivable, accounts payable, payroll tax liabilities, sales accounts, salaries & wage accounts, payroll tax expense accounts. You are left with a manageable report to review for classification mistakes.  I recommend starting at the bottom of the report and work your way up
    • You may find accounts that are set-up as the wrong type (Bank, AR, AP, Fixed Asset, Other Asset, Liability, Income, COGS, Expense ) to correct, go to the chart of accounts, edit the item and change the account type. If the account is a subaccount, first uncheck the subaccount, save, then re-edit to move to the correct account type.
    • You may find accounts that should be combined with other accounts. To correct, merge the two accounts from the chart of accounts, select and edit the account that you DO NOT want to be the surviving account and edit and rename the account to be the exact spelling of the surviving account.
    • You may find transactions coded to the wrong account.  Your can to drill down to the original transaction and change to the correct account or simply make a reclassification journal entry. 
  14. Continue with your normal adjusting entries, all year end balances on the balance sheet should be compared to the original balance documentation.
  15. Print and retain a copy of the final accrual Balance sheet. Ask the client to fax over a Balance sheet as of 1/1/2009 new year - and provide the AJE's needed to bring their new year in line with the tax return. They get the benefit of better management reporting and you can be assured of saving time next tax season. Possibly passing the file to a less senior staff member because the file has been cleaned up with good beginning balances.

Other tips:

For each client that has a superb chart of accounts, export their list to an .iif file, and import into a generic QuickBooks Company file with a company name like "Retail Chart of Accounts" or "Architect Chart of accounts"
Then edit to remove all client-specific unique accounts.  Next time you have a new QuickBooks set-up, you have a file which can be copied saving you significant set-up time.

 

Using Different Version of QuickBooks on your computer:

Keep more than one version of QuickBooks on your computer.  By selecting custom install when installing QuickBooks you can offer ongoing support to those clients who refuse to upgrade. During the installation, when prompted, enter a name for a new directory such as C:\QB2007. The software will create and install into this new directory. On your desktop, right click on the newly created icon and rename this link to the new version of the software to QBV2007or other meaningful name.

Restoring Client files When restoring client files to your computer, be sure to change the file name. Use the company name but append the fiscal year and the version used. Example: a disk containing  SMGinc.qbw  for QB version 2008 should  be restored as SMG2006QBv2008.qbw

Use the same version? If you will need to return the file to the client, open the client's data file using the same version and release that the client uses. QuickBooks data files are not "backwards compatible".  This means  if you open a client's file with a newer version than the one they use, your client will not be able to open a copy of  the file with their version later. Upgraded files can't be converted back to the earlier version.

Since the  release 6.0 of QB2008, you can now detect the version of the clients data file:
By hovering over the client file - you can see which QuickBooks Edition you should use to begin work:

You will notice that the "Last opened with:  QB2001 R1" not only displays the
version but also the release the client is using.  If your client is not on the latest
release of the software for the version they are using, please inform them to update.
There is no charge for the latest releases and are easy to install.

See http://www.qbalance.com/QuickBooks_Update.htm for instructions


If you are have trouble getting the detector to work  try initiating the detector as follows:
From the START menu > Run > Type: 
       regsvr32 "C:\Program Files\Common Files\Intuit\QuickBooks\QBVersionTool.dll"
Click OK
Once initiated, by hovering with your mouse over a QB file, the file properties will display including version.

 


 

 

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