Year-End processes for QuickBooks Online – Part 2

year end processes for QuickBooks

Year-end processes for QuickBooks Part 2. Such a great topic for this time of year.  Who doesn't want to have their books in order proactively?  If you would like to see Part 1, you can access it here.  

There are a few things I like to do at year-end for my clients.  As we sit here ready to blast off into 2019, what are the items you need to do to address in order to be ready for tax preparation?  After the balance sheet items, you need to look at the profit and loss accounts.  I also noticed that I missed discussing the reviewing your accounts receivable and accounts payable.   So, in the video below,  I show you best practices for making sure these accounts are accurate.

The benefits of looking at your accounts payable today, is that if the cash flow is good, you can pay these bills. Get the 2018 expenses paid (especially if you file your return on a cash basis) and this will help you to get an accurate picture of the entire year as well as lowering your net income for which you will be taxed on.

Year-End Processes for Quickbooks:  Review the Accounts Payable and Receivable

Reviewing these accounts is a must.   I have seen some books where it is never looked at and some books where it is just small housekeeping to clean up tiny left over amounts.  Let's just say a customer paid you $320.00 when their invoice was $320.21.  So a .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 memo using the same item as the original invoice.  Or write off using a bad debt item, if the books are done on an accrual basis.

Year-End Processes for Quickbooks:  Steps to clean up AR - cash basis books

  • Open the old outstanding invoice for the customer
  • Open a 2nd tab and click + credit memo.  Use the same item(s)/amounts as the original invoice for what you want to remove from the record.  Date the credit memo in the current fiscal period.
  • Click + Customer payment to apply the credit memo to the open invoice.  Make sure the date of this payment is in the Current fiscal period.

Year-End Processes for Quickbooks:  Steps to clean up AR - accrual basis books

  • Open the old outstanding invoice for the customer
  • Go to +products & services and add a new item called "bad debt".  If you don't already have an expense account called bad, you can add it from the item screen.
  • Open a 2nd tab and click + credit memo.  Use the bad debt item(s)/amounts as the original invoice for what you want to remove from the record.  Date the credit memo in the current fiscal period.
  • Click + Customer payment to apply the credit memo to the open invoice.  Make sure the date of this payment is in the Current fiscal period.

Year-End Processes for Quickbooks:  Look out for unapplied cash payment income cash payment 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.  Also, I have seen people enter a customer deposit as a negative receivable (before the date of the invoice too).  That is incorrect.  A customer deposit is an account that is a liability . You owe your customer ....insert product/service here..... so you need to create an item for customer deposit and then also use that in an sales receipt for the customer when they pay you up front for the goods/services.

Year-End Processes for Quickbooks:  Review all transactions in Income and Expense categories

Use the Profit & Loss Detail report or Reclass tool (QBOA) This is where you can really drill down and make sure every transaction is in the right category.  None are listed in deleted accounts in the Chart of Accounts.  Everything single transaction is in its correct account. Nothing is Uncategorized or in Ask my Accountant.  Nothing or very small items are in Miscellaneous.  This is the best way to get accurate records which will help you when we look at analyzing the data in next week's blog post.  

If you have any questions or would like to see a future video on another topic, please reach out to me on Facebook.  Since this post is right before Christmas, I want to wish everyone  a Prosperous New Year!  Now you will be ready to bring on 2019!

Lynda Artesani

Being in the accounting field for over 20 years, I have watched this industry evolve. It is an exciting time to be an accountant with all the changes in technology. I am honored to be on the Intuit Advisory Council 2018-2019 and to be a member of the Intuit Trainer Writer Network. I am also an Advanced Certified ProAdvisor. In addition, I am the co-founder of QB Community Live! With Matthew Fulton. It is a Facebook group where I help other accountant and small business owners. My firm specializes in working with Law Firms and with Real Estate owners and Start ups.