April 15th is only a few short months away and that means it’s tax season. Are you ready for your filing or does the very mention of taxes fill you with dread?
If you’re dreading tax season, you’re not alone. Business owners all over the country are opening up their QuickBooks files and finding their bookkeeping a total mess. Even if you’ve been diligent about recording everything all year, have your employees been doing the same? There’s no easy answer to fixing a QuickBooks mess, but there are steps you can take to diagnose the problem, and work on a solution.
Step 1: Figure out if you can salvage your books or if it would be more efficient to start over.
If you started doing the books yourself then there’s a good chance the work is salvageable. But if you trusted the accounting to someone who turned out to make a mess of things, you may be better off with a fresh start. If you discover that an employee or independent contractor is incompetent bookkeeper, you could be dealing with worse problems than inaccuracies. You could be dealing with misappropriation, fraud, and embezzlement. Start by creating a new file and re-importing your banking statements. Once you’ve reconciled all your accounts, you can go back to the previous file and see where the problems arose and what your liability is.
Step 2: Analyze the accounts to determine what needs to be fixed.
A quick glance at your year-end totals will tell you where the errors are. Any glaring abnormalities will jump out at you. Here are some examples:
- Accounts receivables that are unusually high indicate paid invoices that haven’t been recorded.
- Accounts payable that seem overly high for the business could mean that bills have been recorded more than once.
- If your tax payments seem low, the sales tax modules might not have been input.
You may also notice:
- Your overall profit seems low for what your business should have earned that year.
- Inventory records are incorrect or not up-to-date.
Step 3: Import, record, reconcile.
This is the important part. A bit like taking a walk down memory lane, your accounts can take you day by day of your business year – through all of the mistakes and successes. Import your bank and credit card statements. Record your receipts and invoices. Reconcile all accounts. Everything should balance at the end of the report.
Step 4: File for an extension (optional).
If your books are a catastrophe and you won’t finish cleaning them up in time for tax day, you can file for an extension. This will give you an extra six months to file your tax forms, but it doesn’t grant you more time to PAY your taxes. You will still have to make your regular tax payments of what you believe you owe. Failure to pay even if you’ve filed an extension will result in accrued interest due and penalties. Filing an extension comes with its own fees, but it’s better to file it if you won’t meet the deadline. Failure to file will get you a penalty, and filing a faulty return and amending it later can flag your return for an audit.
Step 5: Get Help
A skilled accountant can do an evaluation of your books and help you get back on track. If you think your QuickBooks files are a mess, JADDE Financial Solutions can work through it with you. Give us a call today and you’ll see that no accounts are beyond saving.
