Cleaning up QuickBooks for 2020
We know December is a busy month. However, take some time now to make sure QuickBooks is ready for 2020.
Yes, it’s here again: the end of the year. You probably have a lengthy to-do list full of tasks that must be done before December 31. There’s one task—or rather, a series of tasks—that you should definitely add to that list: year-end QuickBooks cleanup. Following the guidelines provided here will do three things. It will:
- Ensure that you’ve processed every 2019 transaction (or that you know why you can’t).
- Give you a sense of closure, knowing that you’ve dealt with all your 2019 financial data.
- Allow you to start your 2020 QuickBooks activities with as clean of a slate as possible.
General Year-End To-Do’s
• Reconcile all bank and credit card accounts. If you have uncleared transactions older than six months, verify that they are actual transactions and not duplicates. Correct any errors and/or write off old, uncleared transactions. Prepare copies of year-end statements to send to your accountant.
• Reconcile loan balances to match your bank’s year-end balance. Prepare copies of the year-end loan statements to send to your accountant.
• Review accounts payable for unapplied credits.
• Review receivables for unapplied credits. Write off outstanding receivables that are considered to be uncollectible.
• Review sales and use tax records to prepare for annual filings, if applicable.
• Compile a list of equipment, vehicles or fixtures acquired or disposed during the year. Verify major purchases (over $2,500) are posted as fixed assets and not expensed.
• Take a physical inventory, if applicable, and adjust to actual.
• Review 1099 vendors – verify information is correct; process 1096 and 1099 forms, or send information to our firm to prepare before the January 31st filing deadline.
Payroll Year-End To-Do’s
• Review employee records – verify social security numbers and addresses are correct.
• Prepare year-end returns: 941, 940, state withholding reconciliations, and unemployment reports prior to processing W-2 forms to verify payroll information is correct.
• Reconcile all four quarters of Form 941 to Form W-3.
• Process W-2 and W-3 forms.
• Before processing your first payroll in the new year:
o Update your tax tables by running “Payroll Update.”
o Update unemployment rate changes.
Account For All Of Your Income
You certainly want to have received all the money owed to you by December 31 if at all possible. So, run a report to see which customers have outstanding, overdue balances. Open the Reports menu and select Customers & Receivables | A/R Aging Summary.
The first column here will read Current. You don’t have to worry about these customers. It’s the next four columns that will require follow-up. If your default payment terms are 30 days, you’ll see columns for 1-30, 31-60, 61-90, and >90. Customers with dollar amounts in those columns have not met their obligations and are past due by those date ranges.
Note: If your default terms are different (like 15 days), you’ll need to customize the report. In the toolbar at the top, you’ll see a field labeled Interval (days). Change it to reflect your own default terms and click Refresh in the upper right corner.
If your report contains only a sea of zeroes in those four columns, everyone is paid up. If not, you can send statements to anyone who is at least one day past due to remind them of what they owe. Open the Customers menu and select Create Statements to see this window:
Partial view of the Create Statements window:
Make sure the Statement Date is correct since QuickBooks will use this to calculate aging. Then you can either enter a specific Statement Period or request All open transactions as of Statement Date. If you choose the latter, you’ll most likely want to limit the statements to customers whose payments are overdue. So, you’d click in the box in front of Include only transactions over [your number here] days past due date.
Below these options, you’ll be able to indicate which customers should receive statements. The most common choice is All Customers (who fall into the group you just defined), but you can also send to one or multiple customers, for example. QuickBooks will display a list if you select one of these. The right pane of this window contains several additional options that you can check or uncheck. When you’re satisfied, you can Preview, Print, or E-mail the statements.
Pay Outstanding Bills
You should also try to settle your Accounts Payable before the end of the year. Open the Reports menu and select Vendors & Payables | A/P Aging Summary. Look for dollar amounts in the columns that show aging beyond the first column. You can also run the Unpaid Bills Detail report and look at the Aging column, as pictured here:
Look in the aging column of this report to see which bills are past due and by how many days.
Note: QuickBooks has multiple Preferences that relate to reports and aging. We can go over these with you if you haven’t explored them.
Our Client Support Services team is always happy to assist you with any questions. Please contact our Leesburg or Warrenton office to make an appointment.