Year End Tasks You Should Be Doing Now in QuickBooks

As 2020 comes to a close, thankfully, now is the time to get a head start on organizing your books and closing out the year in QuickBooks.

Apply for PPP Loan Forgiveness

While it is still fuzzy as to the deductibility of expenses used in forgiveness of a PPP loan, borrowers who took PPP loans of $50,000 or less to pay for qualified expenses, such as payroll, mortgage interest payments, rent, and other eligible costs, can apply for total loan forgiveness now. The application is simpler and can be completed quickly.

Reconcile All Accounts in QuickBooks

Frequently put off, it is important that all accounts, not just bank and credit card accounts, are reconciled through at least the 3rd quarter. This includes loan and other long term liability accounts. Void any uncleared transactions. Contact vendors of any uncleared checks. Verify sales tax and payroll liability account balances are correct, as applicable. Reconciliations confirm that what is in QuickBooks matches what has happened dollar for dollar in real life.

Check Financial Statements

Create a Profit and Loss statement on an accrual basis. Even if you file on a cash basis, this will ensure that you aren’t missing any transactions that may have been miscategorized or duplicated. Also create a Balance Sheet and check for accounts that don’t have normal balances, such as negative expenses, liabilities, or assets. If you use subaccounts, make sure that there are no balances in the parent account. In QuickBooks desktop, this will appear as Account - Other.

Run Other Reports

Create a Custom Transaction Detail Report (desktop) or Transaction List by Date (QBO) and group by Name (Payee) and filter for expense type transactions. If all expenses have a payee or vendor name (recommended), then verify the split or category is consistent for each name, as applicable. In QuickBooks Online, navigate to Expenses and make sure all transactions have attachments (recommended). I use Receipt Bank to streamline this process.

Write Off Bad Debt

Run an A/R Aging Summary report. Attempt to collect on any balances over 90 days past due. If uncollectible, create credit memos to a Bad Debt item posting to a bad debt expense account and apply to overdue invoices.

Evaluate Business Performance and Processes

Run the Business or Company Snapshot. Compare previous year to current year income and expenses. Determine if switching to a better payroll service would benefit the company. Investigate apps to eliminate duplicate entry or to improve efficiency. Hire a ProAdvisor if you can’t do all this yourself and need help.