LEARNING CENTER
Why January is Prime Time to Sort Out Your QuickBooks
The beginning of each year marks a resolution for many business leaders: to bring order to their financial records. With last year's disarray behind, and new revenue targets ahead, QuickBooks offers a chance for a fresh financial start.
Yet, this period often illuminates a harsh truth—many find their financials aren't in the tidy state they assumed. Without an automatic reset every January, any discrepancies from the prior year—be they misclassified transactions, duplicated bank entries, inaccurate payrolls, or unreconciled invoices—continue into the new year. Correcting these issues before tax season gains momentum is crucial.
This makes January an opportune month to amend QuickBooks, setting a clean slate for the year to come.
Why Your Opening Balances Matter
QuickBooks captures a snapshot of your business's financial status on January 1, carrying over cash balances, credit cards, loans, receivables, inventory, and owner equity from December 31. Errors from the previous year now form your "opening balances." Consequently:
Overstated income in the prior year leads to inflated opening equity.
Misclassified expenses might skew your tax return.
Miscalculated loans could result in inaccurate perceived wealth.
Amending these faults in March or April drags you back into a closed tax year—a cumbersome and expensive task. January offers a simpler, cleaner opportunity.
February: The Perfect Time for Reconciliation
Businesses use QuickBooks bank feeds to integrate transactions automatically. By February, prior-year activities have cleared the banks, streamlining reconciliation.
Delaying too long can lead to:
Improper application of bank rules on outdated transactions.
Unwanted duplicate transactions.
Accumulation of unmatched deposits and payments.
Reconciling in late January or early February assures accurate cash balances as you move forward.
Why Your Accountant Prefers Neat Books
During tax season, accountants often spend valuable hours tidying QuickBooks files that should already be review-ready. This cleanup incurs additional costs and postpones your tax return.
When your records are accurate before filing:
Your tax return is processed more swiftly.
The likelihood of needing amendments reduces.
You mitigate the risk of mismatches triggering IRS notices.
You receive more precise tax planning advice.
Remember, QuickBooks is not just for bookkeeping; it's the cornerstone of your tax return.
Addressing Payroll Errors Early
This period when W-2s and 1099s are issued also brings payroll errors to light.
Common QuickBooks payroll glitches include:
Misclassification of employees.
Improper taxation of benefits.
State withholding inaccuracies.
Overlooked payroll tax deposits.
Leaving these issues unresolved can invite penalties and audits.
A Clean QuickBooks Equates to Informed Decisions
An accurate QuickBooks file transforms it into a potent business tool.
It enables you to manage:
Real profitability metrics.
Cash flow tendencies.
Hiring capacity evaluations.
Tax saving allocations.
Identifying financial waste.
In absence of clean data, QuickBooks is just a digital shoebox.
Steps for Business Owners Now
Here's how to kick off the year
Request a QuickBooks review from our experts at Cherokee CPA.
Ensure all bank and credit card accounts are reconciled.
Check that your chart of accounts aligns with your tax return.
Correct any misclassified income or expenses.
Verify payroll and tax settings.
Lock last year’s figures once everything is accurate.
Tackling these tasks now can save time, money, and stress for the entirety of the year. A tidy file reduces surprises, decreases accounting costs, and enhances decision-making quality. Additionally, your business value improves because prospects, lenders, and investors scrutinize your books.
If QuickBooks has been an enigma or source of frustration, now is the time to make a change. Contact us for assistance today!
Want tax & accounting tips and insights?
Sign up for our newsletter.
I confirm this is a service inquiry and not an advertising message or solicitation. By
clicking “Submit”, I acknowledge and agree to the creation of an account and to the
and
.
Get In Touch With Cherokee CPA
You can count on us for professional, timely, and reliable tax and accounting services. If you’re ready to get started, just fill out this form and we’ll be in touch.
Welcome to Cherokee CPA. How can we help?
Click here for assistance
Welcome to Cherokee CPA. Do you have some questions we can answer?
Please fill out the form and our team will get back to you shortly
The form was sent successfully