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Introduction – Clean Up Process

MODULE 1
Clean Up Process

cleanup process no assurance

No assurance

This tutorial makes no assurance that all of your client’s books will be cleaned up. Each and every client is unique and therefore we only show you the common challenges and solutions. Still, use your judgement to do your client’s clean up. 

what is cleanup process and its significance 

Requirements to do cleanup

  • Have a bookkeeping and accounting skills
  • Understand tax entities and tax return
  • Determine periods to cleanup
  • Know the workflow of QBO and its relationship to accounts
  • Troubleshoot
  • Understand on apps and integration
  • Knowledge in diagnosing the books
  • Keen in identifying problems and the cause of the problems and come up with solutions

What is cleanup

  • When your accountant says that your books are "messy" then it needs cleanup
  • It says that your transactions are miscategorized of there are unrecorded transactions and it needs cleanup
  • It says that your accounts are in abnormal balances and needs cleanup

We need to Cleanup

  • To have an accurate financial reports ready for tax season
  • To have clean books that are reconciled

what need to cleanup

  • Bank and credit card reconciliations
  • Business and personal expenses
  • Undeposited funds
  • Accounts with abnormal balances in Balance Sheet and Profit & Loss Report
  • Accounts Receivable and Accounts Payable aging
  • Inventory
  • Miscategorized or uncategorized accounts

process of cleanup

What do you need from your client

  • Copy of tax return
  • Bank and Credit Card statements in PDF format
  • Access to QBO
  • Other supporting documents and attachments

cleanup process

  • Have a signed agreement of service and determine periods to cleanup. Ask for upfront fee and get paid
  • Get the basic information from your client as to tax entity, company name, email address, etc.
  • Plan your action or you can use project management app to facilitate the cleanup process
  • Perform the cleanup of books
  • Talk with your client of the progress of your work
  • Ask for feedback and updates on any issues and resolve
  • Review the reports and submit
  • Meeting with the client

points to remember in performing cleanup

Points to remember

  • Determine whether a tax return has been filed
  • Best thing to do is not to clean up periods in which tax return has been filed for Profit and Loss accounts
  • Review the Balance Sheet on tax return and reconcile balances in QBO (except for Schedule C)
  • Discuss with tax preparer on the amounts of discrepancies and decide the best course of action

Sample periods to clean up

  • If tax return has been filed for 2019, perform Cleanup to 2020
  • If tax return has been filed for 2020, perform Cleanup to 2021

if your client wants to cleanup periods in which tax return has been filed already

  • The client must discuss this with his tax preparer because previous tax returns might be changed and determine also the consequences
  • There are consequences related to time and even paying fees to cleanup prior years
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