Year-end processes for QuickBooks is a topic I thought would be a timely to explore. 

There are a few things I like to do at year end for my clients, just to get their files tidied up. Next month tends to be the month of the cleanup jobs. So, I want to have my current clients files as ready as possible.

As we move towards the end of the year, it can get really crazy trying to jam everything into a couple of shortened work weeks.  Time will fly by.  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. This week is a good time to look it over and maybe make those purchases before the year closes.

Here is a link to last year’s tips.  

Year-End Processes for QuickBooks: Overview Page

ProAdvisor Tip:  Did you know we have a great new page called the overview page? If you’re using QuickBooks Online Accountant version, you will see all the problem areas on one screen.   I personally, LOVE this new page.  It is my one stop place to review the health of a QB data file.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.

Year-End Processes for Quickbooks:  Review the Balance Sheet

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.

Year-End Processes for Quickbooks:  Payroll Accounts

Drill down on your payroll accounts. Check the balances. If you’re using QuickBooks Full Service payroll, the balances should be accurate. Recently, I have seen a client file that had a different payroll service last year and moved to QuickBooks Online Full Service payroll this year. There was a balance that is left over from the prior tax period that was paid in the current fiscal year. That balance had nothing to do with this year’s payroll balances. You want to expand the category and look to see that it totals zero out every month. If you have an odd balance that just keeps lingering, you need to take a look at it and figure out what’s wrong.  

If you don’t use a full service payroll, another helpful page for a year-end payroll checklist can be found here.  

Year-End Processes for Quickbooks:  Assets/Depreciation and Prepaid accounts

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 on forever. If the life of the asset is gone, you will see a negative asset balance. Again, the guidance of your tax professional is key.

Prepaid Accounts:  You pay for your insurance bill in a couple of large payments. Your insurance policy period could run other than the calendar or fiscal year. You need to divide that total insurance bill by 12 months and then make a journal entry to expense it monthly. Many times I see where a customer will just enter the whole amount into the insurance expense category. Their insurance may run from 8/1/18 to 8/1/19 so you cannot expense the entire payment in 2018 since 8 of the months are for the 2019 fiscal year.

Reconciling your customer deposit account for any earned income is also a MUST.  Reconciling your security deposit account is also required if you own property and rent it out to tenants.  The CPA will need this listed out for the tax return.  Obviously, if you work with attorneys, the trust accounts will also need reconciling to finalize the year.

Year-End Processes for Quickbooks:  Loans or Mortgages, 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 loan payment check entry:  loan account, interest expense, escrow if it’s applicable. Remember, a loan is NEVER an expense, just the interest portion is.  Reconcile this account too for accuracy.  For the final month of the year, I attach the loan statement that ties to the year end balance so the accounting professional has access to these important documents.

Credit Card Balances:   Here’s one I see quite often. You can refer to this other article about making sure that the credit card card account balances look accurate. If you have sub accounts and you reconcile the parent account, the total may be correct, but the balances may be off. You need to be sure that you break out the payments by sub account.

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 very Merry Christmas and a Prosperous New Year!