This article was written by Dick Ginnaty, CPA
Years ago, the bane of accountants was the arrival of the client with the shoebox full of receipts, announcing that the box contained all their business receipts, and that everything the accountant would need was contained therein. Needless to say it took a lot of time to make sense of the contents of the box.
Well, there is a modern version, the shoebox is digitalized and it is contained in the QuickBooks file from some clients. I called it the “electronic shoebox”. It contains all the information the client thinks you need. The problem is that as untrained business people they have put the information into accounts and areas where it doesn’t make sense, and the accountant has to spend a lot of time unwinding the entries (and charging you for it).
The following hints are meant to help minimize the “electronic shoebox.
For checks and payments which you don’t know what to do, create an account called “suspense” as another asset account and charge the amount to that account. Your accountant can then analyze this account and distribute it to the appropriate accounts.
Establish a second “trial” company where you can try new things in QuickBooks to see if you will get the desired results before doing it in your real company file. Things that don’t work won’t contaminate the real data.
Sit down with your accountant before year end (November is a good month), and review your file. Accountants have more time available, and they can correct errors then. It serves the purpose of cleaning up your company file and having a year end review and tax planning session at the same time.
If you have just implemented QuickBooks, review your setup with your accountant within the first 30 days of usage. A lot of the “shoebox” effect happens upon startup, and the accounting for startup costs.
These are only a few suggestions, but avoiding the “electronic shoebox” will save you money, and give you a more accurate financial picture.
Good luck and here’s hoping it “all adds up” for you.
(If there is any area in accounting or tax that you think needs to be addressed in this newsletter please e-mail Dick at Ginnatycpa@aol.com and if it is of general interest, he will address it in future articles).