Now that the weather is reminding us that Fall is here it’s time to think about year-end financial tasks. If your business uses QuickBooks as your accounting system then auditing QuickBooks should be a regular November or early December activity. Looking over the accounting records is important even if you don’t expect a formal IRS tax audit of the books. Making sure accounts and balances are reconciled now can point out any areas of concern in plenty of time to look for supporting documents like receipts and pay stubs.
How to Prepare for Auditing QuickBooks
QuickBooks offers several reporting features that can help you streamline the auditing process. Here’s a list of the primary reports needed to prepare for a tax audit and to make sure your books are in good shape.
Profit & Loss Report: shows every transaction from all income and expense accounts generating a final statement of profits or losses for the fiscal year.
Income Transaction Detail Report: includes more information on payments received such as date and invoice number.
Expense Transaction Detail Report: offers more details about your expenses and will lead you to any supporting documents you need to verify expense totals.
Reconciliation Report: explains the amounts currently in your bank accounts.
Audit Trail Report: lists out all of the changes made to your accounting documents and specifies which person made the changes which is an especially useful report if multiple users have access to the accounting system.
Once you have your reports in hand here are a few key questions to ask as you determine how well prepared you are for tax time.
- Does the general ledger bank balance reconcile to the actual bank statement?
- Does the company still have all the fixed assets or have there been changes?
- Is the depreciation correctly recorded for the fixed assets currently owned by the business?
- Have all of the payables been accurately recorded?
- Do the payroll tax liabilities match the quarterly reports?
Answering these types of questions can be very challenging for business owners who are not accounting professionals. Since the accuracy of the accounting records for the business is absolutely necessary to maintain a profitable business and meet compliance requirements getting the correct answers to these and similar questions is very important. That’s why it is a wise business decision to partner with a trusted accounting professional who can guide you through this process or handle it for you entirely.
The accounting professionals at Lindemeyer CPA are experts in bookkeeping and tax preparation. We can offer a wide array of tax and accounting services to make the bookkeeping process easy to manage or take them off your hands completely as your outsourced bookkeeper. QuickBooks is a great financial management tool and knowing how to utilize the system and reporting features is just one of the ways Lindemeyer CPA can partner with you to help you safeguard your business’ success.