How To Get Ready For Tax Season in QBO


Check out these steps to get fast understanding and prepare your books
for tax filing with a peace of mind.


1. Reconcile in all bank accounts – process to make sure, that what you entered into
QBO matches with what the bank sees (your bank statement)
Accounts: PayPal/ Square-, Loans-, Checking-, Credit Card-, Petty cash-,
Investments-, any banking transaction they have money in and out.
● Get your bank to send you monthly bank statement.
● Also download your statement as .csv excel document and file monthly.
● Set reminder to print/file your statements every month.
● ‘Gear Icon / Reconcile / Account’
● Reconcile accounts every single month. Completing the December
reconciliation is the first step for ending the year.

2. Properly categorize transactions – make sure, all transactions were put into right
● Pull the last year Profit & Loss (P&L), and the Balance Sheet.
● In P&L click on every amount and check every transaction, look for
miscategorized records.
● If found one, click on the entry and change the category to the correct
● Important: Ones you are inside of the entry, make sure every record have
attached required documents. Like PDF files of bills, invoices, loan
documents, rental agreement …
● BTW: Using QBO, you can take picture of your receipt and create a
transaction on the spot

3. Inventory – in QBO put in the correct quantity. System will do all the needed
updates for you.
● valuation of Inventory Asset in QBO is at LIFO cost accounting.
● Pull Inventory report (Inventory Valuation Report) to see what you have
in stock, what it suppose to be.
● Enter necessary quantity adjustments within the product itself. ‘Gear
Icon / Products & Services / Edit’

4. Depreciate your assets – you want to spread out the asset cost over years
● Ask your accountant/CPA to make the adjustments in QBO for you
● Depreciation adjustments are made through Journal Entry.
● The basic journal entry for depreciation is to debit the Depreciation
Expense account. (Which appears in the income statement). Credit the
Accumulated Depreciation account. (Which appears in the balance sheet as
a contra account that reduces the amount of fixed assets).

5. Run reports to analyze your business – look around, find out which report is
relevant to Your business and how
● Start with P&L report & Balance sheet to see Expenses/Profits and
● Reports can show you which of your services or products is most popular,
or which one makes most money?! ‘Sales by product/service report’
● ‘Sales by customer summary’. You can analyze, what are the clients /
customers like, that are making you most revenue?
● And also compare the last years and evaluate the differences.

6. Close the Books – after your Tax is submitted, after your bookkeeper & CPA have
finished everything for the year.
● Closing the books will lock all data in place, so it matches with Tax
return submitted to IRS.
● ‘Gear Icon / Company Settings / Advanced / Accounting / Close the
books’, in ‘preferences’ set up password and the date is 12/31 XX.

7. Make a backup
● QBO – Only Internet Explorer supports exporting data
● Choose to file/archive all financial statements, and make sure it
matches with tax return numbers.



Notes – When & where to get help

If you haven’t been keeping up with record keeping, start with contacting bank
to download for you the whole year bank transactions.
Start in QBO recording and classifying them and add all important documents
that supports those transactions.
If you struggle with any of these steps, that means, a bookkeeper or/and CPA
would be a great help to you & your company.
A great place to find someone to clean up your QuickBooks file, is Intuit’s
list of QBO certified professionals/Pro-Advisors.

Bookkeepers/CPA usually have checklists for internal control. It’s to ensure
the accuracy and reliability of accounting records. Which of results are
financial statements and reports. Created onn weekly, monthly, quarterly and
yearly basis.
Talk to your bookkeeper. Let him/her know, how often do you need updated
financial information about your business. Or other questions you might have.
They are many great bookkeepers, offering custom services adjusted to you &
your businesses needs.

Emilia Lopez
Certified QBO Pro-Advisor

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