Preparing for Tax Time with QuickBooks – Part 2 – Getting 2009 information into QuickBooks

QuickBooks provides you with great tools to make tax preparation faster and easier. The advantages include fast data entry from receipts or manual records, the ability to quickly identify and correct accounting errors, and the ability to, with the click of a button, import your QuickBooks records into tax preparation software like TurboTax. This post is for people who are entering last year’s transactions from journals, bank statements, receipts.

Our ultimate goal here is simply to compile the information what we need to complete our tax return. The advantage of getting our financial transactions into QuickBooks is that we can, easily review the results to get the “big picture”, easily make corrections and adjustments to create a complete and accurate tax return, and create a means for ready access to documentation in the event of an audit.

We want to make this as fast and painless as possible, so we want to keep it simple. For cash basis tax payers this requires less work because outstanding payables and receivables are excluded from the net income calculations. You enter can all bank account disbursements through the “Write Checks” form, and all credit card purchases through the “Enter Credit Cards” form. Use the “Record Deposits” for all receipts. Remember, you can add customer, vendors, and accounts on the fly as discussed in part one of this series.

Why Use both “Write Checks” and “Enter Credit Cards” for disbursements?

In order to assure you got all transactions recorded in the correct amounts, you will want to reconcile those accounts against bank and credit card statements. Notice below that the forms are almost identical. You have a bank or credit card account identified, a vendor or payee, the amount paid, and one or more classifications of the expenditure.


Why Use “Record Deposits” for Receipts

Within this form, we can classify receipts to any account in our chart of accounts and we can group receipts by day to make bank reconciliations much easier. For example, it we deposited three checks totaling $7,500 on a certain date, our bank statement would just show the total, not the detail of the checks deposited.


When You Don’t Know How to Classify a Transaction, Don’t Let it Slow You Down

You can continue to enter transactions by using the “Ask My Accountant” expense account and entering as much information as you can in the memo field. This allows you to get all transactions entered into QuickBooks and to perform account reconciliations to assure all transactions are recorded. At this point, you can print a transaction detail with just the “Ask My Accountant” entries, get your answers, and the use the report to drill down to the original transaction and change the classification of the receipt or expenditure to the appropriate account.


Save and close the form to return to your report to make your next correction. Next, we'll talk about doing account reconciliations, even when you have no beginning of tax year transaction balance forwards or statements from the previous year.

Robert Guild is Advancer Certified QuickBooks ProAdvisor in Austin, TX who conducts CPE courses for CPAs and individual training and group classes to QuickBooks users. His company at www.QBCoach.biz, maintains a sixteen-station QuickBooks lab, providing hands-on training. You can contact him directly at rguild@QBCoach.biz or follow him on twitter at QBPro