Quickbooks, Bookkeeping and Accounting Blog

Spending some time reviewing and correcting your books in December makes it a lot easier to close them in early January and helps insure you get off to a good start in the new year. Here are some things to do:

• Reconcile bank accounts
  • Make sure all bank statements are reconciled. If there are old unreconciled items, look into them to see if they can be deleted.
• Review the trial balance
  • Look for revenue that shows up in the debit column and expenses that show up in the credit column.
• Count inventory
  • How closely you count your inventory depends on the type of business you have. However, it is good practice to at least make sure the numbers in QuickBooks approximate what you have on hand. 
• Examine accounts receivable
  • Are there invoices out that you don’t expect to receive payment on? If so, you might want to write them off.
• Examine accounts payable
  • Are there payables on the books that shouldn’t be there? If so, clean them up.
• Compare profit and loss statements to prior years
  • QuickBooks makes comparing financial statements from consecutive years very easy. Take the time to do it and look at accounts that have changed significantly. Do the changes make sense or is something showing up in the wrong account?
• Make sure payroll ties out
  • Does the total payroll on your books match the total on your payroll reports? If not, you may have accidentally recorded payroll taxes as payroll or vice versa.
• Inventory your assets
  • Do you still use all the assets on your books? If not, write off those you no longer have or use.
• Get rid of any extra expense accounts
  • Review your chart of accounts for unused or duplicate accounts. Having too many accounts makes it hard to assign expenses to the right accounts in QuickBooks and to gather useful information from your financials. It is good practice to review your accounts annually and inactivate those accounts you aren’t using.
• Assign temporary expenses
  • If you don’t currently use a temporary expense account, I recommended starting to. Set it up in QuickBooks as an “Other Expense” with account number 9999 so that it shows up all the way at the bottom and is hard to ignore. Use it throughout the year as a placeholder when you aren’t sure what account to use for a specific item. At year end, go through the items still in this account and assign them to their proper accounts.

Spending some time cleaning up your QuickBooks file a few times a year is apt to save many day-to-day hassles. Not only does it serve to get thing sin order, it is an opportunity to think through the processes you have in place and to become more familiar with the numbers behind your business.