As 2024 comes to a close, tax experts are getting ready to prepare and reconcile client accounts for the next year. QuickBooks Online (QBO) provides tools to assist company owners complete year-end tasks and guarantee their records are tax-ready for 2025. Below, we'll look at QBO tools that make year-end preparation easier, from running thorough reports to cost management suggestions that help you have everything in order before tax time.
1. Auto-Categorization and Expense Management
Key feature: Improved auto-categorization.
QBO's expanded auto-categorization tool has been upgraded to detect and categorize typical transactions, saving time during reconciliation. Accountants may evaluate client expenditure by category on the Expenses page, utilizing the software's rule-based capabilities to verify transactions are tax-compliant.
How To Use Auto-Categorization:
- To classify transactions automatically by vendor or keyword, go to Banking > Rules in the left sidebar.
- To find anomalies in auto-categorized transactions, go to Banking > Categorize before completing costs.
2. Reconciling bank and credit card accounts
Reconciliation Tool Updates are a key feature.
Recent QBO upgrades have enhanced the reconciliation tool, enabling you to more correctly match client transactions to bank statements. This application is very useful for busy company owners, particularly when dealing with high-volume accounts.
Steps for Efficient Reconciliation:
- Select the account to reconcile and input the final balance from the most recent statement under Accounting > Reconcile tab.
- Use advanced filters to identify unreconciled transactions. To avoid mistakes, QuickBooks now alerts you to any unreconciled bank feeds.
- To ensure accuracy, mark transactions as reconciled and keep the Difference column at zero.
- This year-end reconciliation will exactly match QuickBooks records with bank accounts, which is a required step prior to tax filing.
3. Utilizing QuickBooks Reports for Year-End Review
Key Features: Customizable Year-End Reports
QuickBooks has simplified reporting by providing customization choices for filtering data by client-specific accounts or particular financial requirements. These reports may give useful insights into clients' finances at a glance, allowing accountants to effectively evaluate year-end data.
Important Year-End Reports to Run:
- To evaluate revenue and spending, go to Reports > Profit & Loss. Customize date ranges and pick particular accounts to study.
- Balance Sheet Report: Accessible under Reports > Balance Sheet, this report provides a comprehensive summary of assets and liabilities to identify any year-end modifications.
- Trial Balance Report: Under Reports > Accountant Reports, pick Trial Balance for a summary of debits and credits across all accounts. This is an important check to ensure accounts are balanced.
QuickBooks' customization options may filter these reports by class or area, providing additional in-depth insights that help both company owners and their tax advisors complete year-end reviews more quickly and thoroughly.
4. 1099 Tracking and E-Filing Options
Key feature: 1099-NEC and 1099-MISC tracking for contractors.
QBO simplifies 1099 preparation by allowing users to manage contractor payments and instantly produce e-files for customers' end-of-year forms, making it simple to arrange independent contractor spending.
How to Set up 1099 Tracking:
- Go to Expenses > Vendors, add or change vendors, and choose Track payments for 1099.
- To examine or change vendor 1099 categories, navigate to Expenses > Vendors. Prepare 1099s in January, which will include any missing W-9 or address information.
5. Completing Accounts Receivable and Invoices
Key feature: Batch invoicing and accounts receivable management.
QuickBooks has updated its batch invoicing feature, making it simpler for tax professionals to assist customers in completing year-end accounts receivable (A/R). Unpaid bills must be reviewed to ensure that customers' accounts receivable entries represent correct, taxable revenue.
Steps for the Year-End Accounts Receivable Review:
- To see outstanding balances, go to Sales > Invoices and run the Open Invoices Report.
- To generate a batch invoice, go to Sales > Customers and pick numerous customers or invoices. Use the batch action to swiftly apply payments or cancel invoices.
- Use the Accounts Receivable Aging Report (Reports > Accountant Reports) to detect late accounts that customers may need to write down before year-end.
Helping customers amend outstanding receivables lowers the risk of erroneous reporting, which is particularly troublesome when closing books.
6. Preparing Clients for 2025 with QuickBooks Cash Flow Projections
Key Features: Cash Flow Projection Tool
QuickBooks' cash flow forecasting features enable tax professionals to present customers with forward-looking information until 2025. This tool is intended for customers of QBO's Essentials and Plus plans, and it is updated on a regular basis to assist clients in assessing their financial health as the new year approaches.
How to Use Cash Flow Projection:
- Create Cash Flow predictions using typical monthly revenue and spending in Dashboard > Business Overview.
- Encourage customers to update predictions with expected changes, such as substantial expenditures or seasonal income swings.
- Help customers better manage and allocate money by reviewing the cash flow overview for the first quarter of 2025.
A clear picture of cash flow may provide customers peace of mind and allow them to make smart business choices before the tax season starts.
Remember, our office is here to help you with all of your year-end QuickBooks requirements. We want your records to be precise and well-organized, laying the groundwork for a successful 2025 tax season.