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10 Tips to Prepare QuickBooks for Tax Season

Tax season is approaching  and before giving your QuickBooks file or  reports to your tax accountant or CPA.  Here are some useful tips to help reduce the amount of work related to making changes and adjustments with your accountant.  We mention these techniques in our Advanced QuickBooks Training Course, and I feel all business owners and bookkeepers should know this. Having clean books and easy to understant financial statements, will lower your tax preparation costs and will give you much clearer understanding of the tax situation, not to mention the ability to plan and avoid surpises down the line.

These 10 tips are:

  • Method of Accounting: Make sure that the reports are in the correct accounting method (Cash or Accrual) Remember that most small businesses start at cash basis reporting for tax purposes and once they convert (or choose to change to) Accrual basis, changing back to cash basis is prohibited in 5 years.
  • Transaction Dates: Revise transactions done near end of year (Dec 15th to Jan 15th) to make sure that the correct dates are assigned to the transactions to make sure you report income and expenses in the correct year.
  • Accounts Payable: make sure that open bills (A/P Aging Summary) are actually for money owed, it’s very common to have bills and checks repeat in a QuickBooks file, this double counts expenses
  • Accounts Receivables: make sure all open invoices in accounts receivable report (A/R Aging Summary) are real invoices for work performed / product delivered and all invoices are collectable.  In the case of overstatement, there will be additional income reported that should not be.
  • Accounts with Negative values: Please remember that generally there should be no negative accounts in the P&L Summary Report (unless is a return of some sort).  In the Balance Sheet is common to see accounts such as “Accumulated Depreciation”, “ Allowance for bad Debt” , “Shareholder Distributions” , “Draw” as negative accounts, but it does not necessarily mean they should exist.
  • Uncleared Checks and Deposits: Pull a report of uncleared checks and deposits from the bank statement to make sure they are really outstanding items.. if not, delete them. For this to work, all bank statements MUST be reconciled first.
  • Report Comparison: if available pull a report comparing last year with current year to se major abnormalities or changes from year to year
  • Chart of Accounts: try to use a consistent chart of accounts are the previous year
  • Fixed Assets: try to assign a sub-accounts for each major fixed asset to make it easy for the accountant to identify and build depreciation tables for them
  • Memos: try to have as much detail in the memos to make it easier for review.

End of year tax prep work could be stressful time if there isnot a structured process.  I tell all attendees of our QuickBooks Training Seminars, that tax preparation is an ongoing process, follow these techniques year round and avoid surprises.


Hector Garcia, RTRP
QuickBooks ProAdvisor & Registered Tax Return Preparer
QuickBooks Training Courses, South Florida

Hector Garcia

Hector Garcia

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