Saturday, June 19, 2010

Some Client QB Tips

It is still the case that the bulk of my time preparing tax returns is involved in cleaning up QB data.  Once the QB data is in good shape, the actual tax return prep is a snap.  In order to reduce the number of adjustments needed to the QB files, I do send back comments to the clients so we can avoid repeating the same mistakes in the future.  In order to avoid having to repeat myself with other clients and help other QB users to have more usable data, I want to share some of my comments that are applicable to all QB users.

1099-MISC is only required to be submitted to IRS if you pay someone more than $600 during a calendar year for business services that you are claiming a deduction for.


Please try not to use generic non-descriptive accounts, such as "Other" and "Misc."  Add new accounts if no existing ones suffice.  This is especially important with income because IRS always starts off with the presumption that every penny deposited into your bank accounts is taxable income unless you show otherwise.


I see an expense account called "Mission Trip" with a lot of fuel and motel costs.  Was this for a church sponsored trip?  If so, we can deduct this as charitable deduction.  [Follow-up:  This was for a church sponsored trip, so I edited this account to make it a sub-account of Charitable Donations.]


Try not to lump too many different kinds of things into "Outside Services."  Large numbers attract IRS attention; so use more detailed accounts, such as Repairs & Lawn Care, which is where I moved a lot of the items for 2009.


Only make inactive balance sheet accounts that have zero balances. Use a general journal entry to zero out any balance sheet account that you want to set as inactive.