What would you do? Fixing a mess -

The phone rings. It's a friend. She has a friend. A friend who is trying to get the record keeping done using QuickBooks, not a current version of the software, by the way. I've had so many of these calls this year that this time, I am writing out the answers.  I love getting calls from friends, but really? Why does everyone think that because they used to keep books that they can deal with a QuickBooks mess? Once it's a mess, drop it like a hot potato, that's my first advice.

It's the usual, this friend got permission for me to look at the books, but nothing is working. The bank isn't reconciled. There are all these entries in the bank register that aren't reconciled. But someone did bank reconciliations. They just ignored everything in the register that wasn't reconciled, yes, they left it there, to hang out, if you will. And they are using Journal entries everywhere, even to record payments for Amex for business expenses. They have a bank account set up as the shareholder loan account.

If this sounds familiar, its why your books are a mess. The chart of accounts is meant to be used properly. If that isn't happening, and you aren't naming every transaction, there's not going to be a complete, accurate set of books because it won't make any sense without names, dates, choice of the right types of accounts, and items being used to match sales and cost of sales.

The deposits were entered at journal entries and somehow journalized out again to create sales. Invoice forms weren't used, Items weren't used, everything was done by journal entry.

The opening balances, well, the friend of the friend, she didn't know to ask for the trial balance.  She has the financial statement, and the T2, and the comparatives aren't completed by the previous accountant.

What would I recommend?

Get some training on how to use QuickBooks properly. By properly, I mean how to use Items, Forms, how naming works, how to reconcile accounts. What a register is, and why you'd look at the register to fix it so that the reconciliation really is a reconciliation. I have videos and sample data files to help you with this phase. And this phase will likely take a concentrated two weeks. The software may be called Quick... but it's not quick to learn. It's quick to use once you know how. That's why I love it.

Become an expert. It takes at least 100 hours to learn how to use the software properly, and about 1000 hours to become even remotely expert. Most people who are already bookkeepers or accountants are watching my videos 3 times over, and there's 20 hours of basic course, and another 5 hours of how to use the report writer to reconcile accounts and create working papers. They watch the video, starting and stopping it, and play with the sample data file that they restore from my free stuff on my website.

Start over. Ditch the old file.  Keep it to refer to if you think there's anything there that would be helpful. I doubt there is. After 2-3 bookkeepers have been at it, and you're third up to bat, it's pretty much a write off.  It's going to take about three or four times longer to fix the mess than it is to do it right by starting over. And while you're starting over, check that the entity you are accounting for is actually a corporation or self-employed, or a partnership, by checking the documentation. Don't just take someone else's word for it.

Watch my best practices videos. That will show you how to enter the opening balances and balance up to the trial balance so that you have what you need to download the comparatives for the T2 schedules S 100 and S 125.

Take the last trial balance, reconcile the T2's since inception of the incorporation to make sure there's no dividend/ retained earnings fraud that needs to be fixed,

Create a new QuickBooks data file, start with the opening balances, download the bank transactions, coding all deposits to Customer Names by using the Payment window and grouping deposits, adjusting for credit card charges, then code all the payments to AP.  Watch my video on YouTube on the TaxDetective channel for how this is should be done. it's called It doesn't matter how it was paid.

Do full accrual accounting the way it's meant to be done, on a daily basis, using the right dates for invoices, purchases, deposits and payments, reconcile everything properly. And post the adjusting entries to the end of the last year, not the first day of the next year.

Oh yes, and if you think you need to get your hand held, it's going to cost you thousands of dollars to fix this.  Or, you could purchase my video series bundle of products and start with the first video, for under $300. Business owners who start to get it after the first couple of thousand in consulting fees swear that they should have listened to me from the beginning and bought the videos for their office, themselves, their spouse, and made everyone watch it.

email me for more info eileen@taxdetective.ca