Here are a few areas you need to checkout in your QuickBooks file during the middle of the year. It's the time when you're halfway to tax time. Let's save a few headaches and lots of time and money by resolving any problems you have right now when there's not a lot of pressure.
Review these areas:
1. Reconcile all of the bank accounts up to date.
2. Review your undeposited funds account. The balance of that account should equal the cash and checks that are sitting in your drawer waiting to go to the bank.
3. What do your customers owe? Print out an Accounts Receivable listing to make sure that all payments have been applied to invoices. The actual total of your Accounts Receivable account should equal what you still expect to be paid.
4. Print out an inventory listing. Does it look reasonable? Inventory messes at the end of the year are NO fun! (yes, I've been there, done that, for clients .) Make sure that inventory is being purchased properly into your inventory account. Sometimes your inventory items on your items list are setup incorrectly.
5. What do you owe your vendors? Print out an Accounts Payable listing. The total in the accounts payable account should equal what you actually owe on bills to vendors. Sometimes checks get written without using the "pay bills" function.
6. Credit Cards. Is the amount showing in the credit card LIABILITY account, what you actually owe right now? This account needs to be reconciled just like a bank account on a monthly basis.
7. Are you using QuickBooks for payroll? Checkout the payroll liabilities section. If it's negative, there's an issue. You should be able to tell if it's reasonable by looking at which taxes are coming up soon.
Problems with waiting
Here's a few things you'll experience at year end:
1. Pressure. There's a lot of things that have to happen to get your financial statements right for your tax return. Year end is really busy already.
2. Memory loss. Who remembers what happened in January or February when you're closing your books at year end? Look at the first half of the year now so you can fix and adjust things while you still remember what happened.
3. Time and Budget issues. If you have to pay an accountant or bookkeeper to figure out how to fix the errors, pay for them mid year instead of at the end of the year. They are busier at year end, and your time and dollar cost will likely be higher.
Take some action
Here's an action step to take right now. Schedule time in one hour sessions (unless you're like me and can handle getting into numbers for more than an hour at a time) within the next two weeks. This process may take you one hour or it may take you 6 hours or more it depends on your company file. Make sure the time you scheduled is uninterrupted time. I find that early in the morning is best for problem solving.
You may be surprised at what you find during this review. Use your findings to make your processes in your business better. You'll be thankful you did this when January rolls around!
Review these areas:
1. Reconcile all of the bank accounts up to date.
2. Review your undeposited funds account. The balance of that account should equal the cash and checks that are sitting in your drawer waiting to go to the bank.
3. What do your customers owe? Print out an Accounts Receivable listing to make sure that all payments have been applied to invoices. The actual total of your Accounts Receivable account should equal what you still expect to be paid.
4. Print out an inventory listing. Does it look reasonable? Inventory messes at the end of the year are NO fun! (yes, I've been there, done that, for clients .) Make sure that inventory is being purchased properly into your inventory account. Sometimes your inventory items on your items list are setup incorrectly.
5. What do you owe your vendors? Print out an Accounts Payable listing. The total in the accounts payable account should equal what you actually owe on bills to vendors. Sometimes checks get written without using the "pay bills" function.
6. Credit Cards. Is the amount showing in the credit card LIABILITY account, what you actually owe right now? This account needs to be reconciled just like a bank account on a monthly basis.
7. Are you using QuickBooks for payroll? Checkout the payroll liabilities section. If it's negative, there's an issue. You should be able to tell if it's reasonable by looking at which taxes are coming up soon.
Problems with waiting
Here's a few things you'll experience at year end:
1. Pressure. There's a lot of things that have to happen to get your financial statements right for your tax return. Year end is really busy already.
2. Memory loss. Who remembers what happened in January or February when you're closing your books at year end? Look at the first half of the year now so you can fix and adjust things while you still remember what happened.
3. Time and Budget issues. If you have to pay an accountant or bookkeeper to figure out how to fix the errors, pay for them mid year instead of at the end of the year. They are busier at year end, and your time and dollar cost will likely be higher.
Take some action
Here's an action step to take right now. Schedule time in one hour sessions (unless you're like me and can handle getting into numbers for more than an hour at a time) within the next two weeks. This process may take you one hour or it may take you 6 hours or more it depends on your company file. Make sure the time you scheduled is uninterrupted time. I find that early in the morning is best for problem solving.
You may be surprised at what you find during this review. Use your findings to make your processes in your business better. You'll be thankful you did this when January rolls around!
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