Ask the Expert - This File Is a Mess! - Accounting Software Secrets
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Ask the Expert – This File Is a Mess!

Ask the Expert – This File Is a Mess!

Ask the Expert – This File Is a Mess!

Q – You know how it goes this time of year. Small businesses had thought they could do everything themselves, and now they walk into your office saying “I know I am kind of late, but can you do my taxes so I don”t have to file an extension?” You don”t make any promises, but say you will see what you can do. You open the file and . . .

A – Although I am not a firm believer in “start over at the first sign of trouble.” I do agree that there are times when it is best to let the past fall where it does and just move forward. The analogy I often use is, let”s stop the bleeding and start the healing.

My approach to a file with significant challenges is as follows:

First determine, can it be saved?

If there are problems with inventory items that should have been non-inventory, for example, it is probably not worth saving. In certain instances this is true for payroll too. For most other problems, it will be a judgment call.

Second, what is the approach?

Usually you will not go back through all the transactions and try to correct each one. Usually it makes sense to have a cut off. Up to this date, things have problems, but the ending balances are correct coming into the next period and from that point forward everything is relatively clean. This early in the year (i.e. only 3 months) I would probably try to get the balances reconciled as of 12/31, even if it means making some manual support schedules and entries to force the balances. You need to get to a clean starting point to move forward.

Third, how do you actually do that?

Make sure the balances as of the last tax return agree with QuickBooks. If they don”t, assume the tax return is correct (hopefully it is an entity that has a Balance Sheet as part of the income tax return) and move forward. Double check the lists for obvious problems. Then work through the current balance sheet so that you feel confident you know why each balance is there. Review the P & L for obvious coding errors, but let it, for the most part, fall where is does. The QuickBooks Diagnostic Tool provides an automated, interactive way to go through the file so that issues are not overlooked.

Finally, what if you look at the file and determine that it is not worth the time to fix it?

To export and import the lists is pretty straight forward using the options under File > Utilities. In fact, with the newer versions of QuickBooks under the File > Archive & Condense data option they have made it even easier, you can just get rid of all the transactions but preserve your lists, service subscriptions, and preferences. The transactions get a little tricky. There are a couple of add-on products out there to fill this need. There are some limitations, such as paychecks come in as checks and you will need to “relink” payments and invoices, etc. but it still save some time and hassle of re-entering the transactions.

More information on this topic

File Integrity