Episode 42: Is Your QuickBooks Ready for Tax Season? Start Now, Not in January

Tax season may feel months away, but waiting until January to examine your QuickBooks can leave you trying to untangle an entire year under deadline pressure.

In this episode of QuickBooks Mastery for Small Business Success, Erica Northrup and Lee Davis explain why tax readiness is a year-round process—and why September and October are valuable checkpoints for small-business owners. There is still time to correct bookkeeping problems, gather missing information, speak with your tax professional, and make informed year-end decisions before December 31.

You will learn what “tax-ready QuickBooks” actually means, why a correct bank balance does not guarantee accurate books, which red flags deserve investigation, and what your CPA expects you to provide. Erica and Lee also walk through a practical 15-minute review you can use to identify questions without making rushed changes to transactions you do not understand.

Key Takeaways

● Tax readiness happens throughout the year. Consistent monthly bookkeeping makes year-end dramatically easier.

● September and October give you time to correct problems and pursue meaningful tax planning before the year closes.

● The business owner is ultimately responsible for understanding the financial picture, even when a bookkeeper manages QuickBooks and a CPA prepares the tax return.

● A matching bank balance does not prove that QuickBooks is correct. Duplicate transactions, personal purchases, uncategorized items, and incorrectly recorded assets or loans can still distort the reports.

● Review reconciliations, bank feeds, the Profit & Loss, the balance sheet, accounts receivable, accounts payable, payroll liabilities, loans, undeposited funds, and contractor records.

● Loan payments must be separated between principal and interest. Large equipment and vehicle purchases may belong on the balance sheet rather than the Profit & Loss.

● Old bank-feed items, negative balances, unexplained accounts, and receivables you do not expect to collect are questions worth investigating.

● Gather W-4s for employees, W-9s for contractors, receipts, bills, and supporting documents before deadlines to create unnecessary stress.

● Your CPA’s job is tax preparation and tax planning—not becoming your forensic bookkeeper during the busiest part of the year.

● If your 15-minute review reveals problems, make a list and investigate. Do not start deleting or changing transactions you do not understand.

Questions to Reflect On

● Are all bank and credit-card accounts reconciled through the most recent statement?

● Are old or unexplained transactions still sitting in the bank feed?

● Does accounts receivable represent money customers actually owe—and that you reasonably expect to collect?

● Have all outstanding bills been entered into accounts payable?

● Do payroll-liability and loan balances agree with the underlying records?

● Were equipment and vehicle purchases recorded appropriately?

● Are there negative, uncategorized, or unexplained balances on the balance sheet?

● Do you have current W-9s for your independent contractors and complete employee information for year-end payroll forms?

● Can you explain the major changes on this year’s Profit & Loss compared with last year?

● Do you trust the numbers enough to have a productive tax-planning conversation?

Mentioned in This Episode

● Profit & Loss and comparative Profit & Loss reports.

● Balance sheet review.

● Bank and credit-card reconciliations.

● Bank-feed matching and duplicate transactions.

● Accounts receivable, accounts payable, and undeposited funds.

● Payroll liabilities, W-2s, W-4s, 1099s, and W-9s.

● Loan reconciliation and principal-versus-interest allocation.

● Fixed assets, equipment, and vehicles.

● Receipts, bills, and transaction documentation.

● The free QuickBooks Clarity Scorecard.

● The upcoming QuickBooks course and Episode 43 on practical tax planning.

Recommended Resources

● Free QuickBooks Clarity Scorecard

● Lee Davis & Company

● Questions or support: [email protected]

● QuickBooks course waitlist

Timestamps

00:00 - QuickBooks Mastery Podcast Intro

00:45 - Episode 42: Is Your QuickBooks Ready for Tax Season?

01:40 - When Tax-Season Preparation Should Begin

02:59 - Why the Business Owner Is Still Responsible

05:05 - What Tax-Ready QuickBooks Actually Means

07:00 - When the Bank Balance Is Right but QuickBooks Is Wrong

08:48 - The Biggest QuickBooks Red Flags Before Year-End

10:32 - Uncategorized Transactions and Old Bank-Feed Items

11:31 - Payroll Liabilities, Receivables, and Loan Balances

14:49 - Why Finding Problems Before January Matters

16:33 - Memory, Receipts, and Documenting Large Transactions

19:04 - Bookkeeping Cleanup Versus Tax Planning

20:13 - What Your CPA Expects at Tax Time

23:04 - A Practical 15-Minute QuickBooks Review

24:43 - Investigate Before You Change Transactions

26:47 - You Have Time: Start With the Clarity Scorecard

28:16 - Episode 43 and the QuickBooks Course Waitlist

30:54 - Final Reminder and Podcast Outro

Call to Action

Set aside 15 minutes and open your QuickBooks. Review the bank feed, balance sheet, Profit & Loss, reconciliations, accounts receivable, accounts payable, loans, payroll liabilities, and uncategorized transactions. Write down anything that does not make sense. Begin with questions and investigation rather than rushed changes.

If you are unsure whether your QuickBooks is ready for tax season, start with the free QuickBooks Clarity Scorecard. It will help you identify where you have clarity and where your books may need attention.

Email [email protected] with your QuickBooks questions, subscribe to QuickBooks Mastery for Small Business Success, and share this episode with another business owner who would rather prepare now than panic in January.

This episode provides general educational information. Consult your own qualified tax professional about tax planning, deadlines, deductions, retirement contributions, and decisions specific to your business.

Welcome to QuickBooks mastery for small business success.

2

I'm Erica Northrup.

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Lee: And I'm Lee Davis.

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Erica: I handle the tech,

and he handles the numbers.

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And together, as a father-daughter team,

we bring decades of experience helping

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small to medium-sized businesses thrive.

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Lee: We know that, as a business owner,

your time is best spent mastering

8

your craft and growing your business,

not getting lost in QuickBooks.

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Managing finances can be confusing,

and you don't have hours to waste

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sorting through spreadsheets

or fixing bookkeeping mistakes.

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That's where we come in, helping

you streamline QuickBooks so you

12

can focus on building your business.

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Erica: Each week, we break it all

down into simple, actionable steps

14

so you can focus on growing your

business, not fixing your books.

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Lee: Let's embark on this journey together

16

Erica: Welcome back to QuickBooks

Mastery for Small Business Success.

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This is episode 42, Is Your

QuickBooks Ready for Tax Season?

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Start Now, Not in January.

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And I know you guys.

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Some of you probably heard tax

season and thought, "It is September.

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Please don't do this to me yet."

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But that's actually why we're

talking about it now, because I

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think a lot of business owners think

getting ready for taxes is something

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to do after the year is over.

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You close out December, January comes

around, and eventually, your accountant

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asks for everything, but by then, if

something's wrong in QuickBooks, you're

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trying to untangle an entire year at once.

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So today, we want to talk about

what business owners should actually

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be looking at now while there is

still plenty of time to fix things.

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And Papa, I want to start really basic.

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So when should a business owner actually

start thinking about whether their

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QuickBooks is ready for tax season?

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Lee: Tax readiness happens

really throughout the year.

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Erica: Yeah.

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Lee: You know, really almost weekly.

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Definitely good monthly bookkeeping

makes year-end dramatically easier.

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September, October is really a

great checkpoint because there's

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still time to correct problems.

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Waiting until January means

you're trying to remember

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transactions from many months ago.

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Mm-hmm.

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And your accountant shouldn't

be the person discovering basic

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bookkeeping problems at tax time.

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You know, it's interesting, during the

summer, many clients put off dealing with

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their QuickBooks issues or problems- Yeah

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thinking they will take care of it.

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Yep.

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And so the answer is now is the time.

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Erica: Right.

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Y- Absolutely

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… Lee: you should run your profit and

loss to get a snapshot of what happened

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during the first nine months if we're

talking about through September-

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Mm-hmm … and compare it to a year

ago, and review your net profit.

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You may need to schedule an appointment

with your accountant or tax advisor.

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And I've heard stories, of course,

that people tell me when they get

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really behind, "My bookkeeper left

six months ago, and I'm overwhelmed."

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Erica: Yeah.

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Yeah, I'm sure that is

a, that's a huge thing.

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I mean, I would be overwhelmed if

my bookkeeper six months ago and

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I've just been struggling along to

get it all taken care of myself.

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Lee: So I think when you look at the

business, the way the tax season works.

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Erica: So if I'm a business owner

and I've basically been thinking, "My

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bookkeeper handles QuickBooks and my

CPA handles my taxes," why should I

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personally care about this right now?

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Lee: Well, because ultimately,

you're responsible.

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Erica: Right,

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Lee: responsible.

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Responsible for making sure that your tax

return is filed accurately and on time.

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Mm.

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You know, CPAs are, or tax professionals

are generally extremely busy.

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Mm.

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And most bookkeepers will

handle the QuickBooks issues.

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And, you know, they should not in- have

their CPAs involved in making corrections

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or reviewing their QuickBooks and,

because the CPAs are gonna do a flyover.

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They're gonna do just an overview-

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Erica: Right

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… Lee: based on their accounting software.

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Erica: Mm.

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Lee: So it's really the owner's

responsibility for understanding

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the financial picture.

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Erica: Yeah.

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Lee: Even if somebody else does the

bookkeeping, and I think that's,

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you know, really an important issue.

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You know, pull out your last year

tax return and make a checklist

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of items you need to review.

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Erica: Right.

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Lee: You may need to plan

for funding of your SEP IRA.

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Uh, depending on your net

income, you might decide to

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purchase some needed equipment.

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Mm.

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This is the time of the year

to review your budget and see

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how you're tracking with your

income and expenses for the year.

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How does your cash flow look

like for the fourth quarter?

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You know, th- those are some

areas you may wanna just consider.

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Erica: Yeah, absolutely.

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You know, and that is something

you see a lot, right, Papa?

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An owner assuming everything is

fine because somebody is doing the

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bookkeeping, and then you open the

file, and you realize it really isn't.

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Lee: That's correct.

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And, you know, most of our clients

are extremely busy during the summer.

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Erica: Yeah,

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Lee: absolutely.

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So, do you know that the last thing

they're thinking about is tax season?

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And- Absolutely … you know, and

the work potentially just piles up.

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Mm-hmm.

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And they think it'll, you know, can

get the work to us, or they can get

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all the work in before- Mm … the

end of the year, and they're all set.

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Mm-hmm.

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But I remind them, the further they

get behind, the more difficult it

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is to get a good snapshot for them.

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Erica: Yeah, absolutely.

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Okay, so when you say someone's QuickBooks

is ready for year-end or tax season, what

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does that actually mean to you, Papa?

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What needs to be true?

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Lee: I think you need to get sort

of like a, a good snapshot- Yeah

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of their books, right?

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And it would include looking

at their bank accounts.

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Erica: Yep.

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Lee: To see if, you know, you'd know

that if you got them reconciled.

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Or credit cards were reconciled,

and you'd see if they had any

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uncategorized transactions.

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And you'd have a good understanding

if you looked at their chart of

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accounts if to see if transactions

were getting recorded correctly.

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Are loans recorded properly?

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How…

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What's the status of their

payroll accounts and their, are

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their liabilities making sense?

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Are accounts receivable

reflecting money actually owed?

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You know, what's the

status of accounts payable?

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Do they have all of their bills entered?

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Owner's contribution draws, equities,

are they being handled properly?

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And major assets recorded appropriately.

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If, do they buy some equipment this year

that you know needs to be capitalized?

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Are the balance sheet

accounts supported by reality?

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As, when you think about are

there any negative balances

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where there shouldn't be?

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Mm-hmm.

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Are there any unexplained balances?

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And are there uncategorized transactions?

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And run your list of, this

is pretty practical, but run

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your list of subcontractors.

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If you record your payments to

subcontractors, you may need

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to make sure they get a W-9.

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Erica: Yep.

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Lee: And you also want to take a look

at your profit and loss in QuickBooks,

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'cause that's where you're gonna

see your contractors for the year.

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And review undeposited funds.

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If this could be a place that

income could be overstated.

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Erica: Mm.

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Lee: So, you know, while I think this

is a possible areas to look, you need

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to really just look over your balance

sheet and your income statement and,

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or your profit and loss and be able to

really eyeball it and see if there's

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anything that stands out to you.

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Erica: Absolutely.

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Okay.

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So Papa, you had something there

that I think is really important.

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Is it possible for someone's bank

balance to be right and for their

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QuickBooks to still be wrong?

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Lee: Of course.

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Mm-hmm.

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You, when you run your balance sheet and

review any negative transactions that

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may be overstating your income and/or

your expenses- If you have made large

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purchases of equipment or vehicles, these

items should be recorded on your balance

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sheet, not on your profit and loss.

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Erica: Mm.

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Lee: Check on cash transactions

that the owner may have made or

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paid for personally that need to

be recorded as business expenses.

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I have a restaurant guy who has lots

of personal expenses that, you know,

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he picks the wrong credit card.

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Erica: Oh, yeah.

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Lee: Or the wrong debit card.

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Erica: Oh, dear.

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Lee: And, you know, and so

we need to catch those- Yeah

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so that we can record

them as business expenses.

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Mm.

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And, you know, one of the things when

you reconcile your bank statement is

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review your outstanding check report-

Mm … for duplicate checks and

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transactions that are recorded in the

register that are not in your bank feed.

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So there could very well be some duplicate

checks that need to get accounted for.

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Erica: Absolutely.

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Okay.

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So because I think that's

probably a misconception, right?

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The bank account matches,

so we're good, move on.

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Right.

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But if you've learned anything,

there's one thing you learned

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from our podcast, it's match,

don't just automatically import.

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Match your transactions, Papa.

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That's

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Lee: right.

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D- don't add them.

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Erica: Right.

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Don't

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Lee: add them.

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Match, do matching to the register.

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And again, we talked about that if you

look at your bank reconciliation report,

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you can get a lot of good information

of work that may be in your register,

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but didn't come through the bank.

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So that's an, just an

important place to look.

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The place I always look.

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Erica: Yeah, absolutely.

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Okay, so let's say I'm listening

to this and thinking, y- you,

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now you've made me nervous.

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How do I know if I have a problem, Papa?

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What are some of the biggest red flags you

would look for in QuickBooks right now?

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Lee: Well, one of the areas I think

we've talked about that are very

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common is if you have, for example,

loan accounts, not just your bank

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accounts, your loan payments, they

could have been classified as expenses

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instead of, you know, classifying them

as principal and interest payments.

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Mm.

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So that's one really good place

to look and see, because if those

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are categorized incorrectly, it

overstates your profit and loss-

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Erica: Mm

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… Lee: in terms of expense.

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Again, it's a good time of the

year to review your budget and

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project your income for the year.

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Follow up on your accounts

receivable so that you have a

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good projection of your income.

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If you have a large amount of outstanding

and accounts receivable and, and a stack

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of bills that haven't been entered,

then you need to get those up to date.

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Mm.

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Because it affects your

cash flow projection.

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And if you have items that are

questionable expenses the business

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paid that are personal in nature,

that list needs to be reviewed and

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adjusted off your business expenses.

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Again, you may need to look again to

make sure that any expenses get recorded

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in this calendar year to make sure you

limit what might be your tax exposure.

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You know, you want to be able to

make sure you get as much deductible

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as possible in this calendar year.

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So again, if you've got a stack of

bills, make sure you get them entered.

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Mm.

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And if you've got accounts

receivable- Yeah … make sure

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you're following up on it.

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Erica: Yep, absolutely.

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What about transactions

sitting in uncategorized, Papa?

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What about that?

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Lee: Yeah, that is oftentimes a good

place to look because people will

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sometimes just enter transactions-

Mm … without categorizing them, and

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that's where QuickBooks says, "Oops,

you know, you need to categorize that."

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So that'll go in the uncategorized bucket.

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Erica: Yep, absolutely.

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Lee: And, and yes, you need to because

it doesn't go to a deductible expense.

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So you want to get those c-

uncategorized transactions taken care of.

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Erica: Mm, okay.

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So what about really old

things in the bank feed?

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Is there anything there

that we should look at?

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Oh,

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Lee: oh, absolutely.

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If you've got stuff sitting in the bank

feed that you've just been avoiding-

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Erica: Mm

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… Lee: just consider that much like

an uncategorized transaction.

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Mm.

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That oftentimes those are sticky wickets.

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You know, something that payroll

didn't get matched, or you've just got

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a big transaction that came through

the bank, and 'cause anything that's

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sitting in the bank feed needs to

get addressed prior to year-end.

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Erica: Okay.

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What about payroll liabilities?

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Yeah.

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Talk to me a little bit about that.

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Lee: Yeah, those payroll

liabilities need to get looked at.

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Mm.

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All right?

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If you've got an outstanding payroll

liability sitting on your balance sheet,

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you know, it's a negative balance, and

you need to look at that because that

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could very well need to be handled

because there could be some expense

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there that needs to be reported- Mm

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or there could be a payment that needs

to be made on that payroll liability.

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Mm.

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Because, you know, this is a good time

of the year to clean up your profit and

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loss and your balance sheet because the

end user might be your bank- Mm-hmm … or

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might be your accountant, or could be your

tax advisor, that they're looking at it.

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Mm.

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And so you wanna, you want

to minimize their questions.

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Erica: Mm.

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Lee: And because it causes

you to go back and forth.

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So if you're able to clean

something up, it can avoid

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this unnecessary communication.

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Erica: Absolutely.

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So what if accounts receivable

says customers owe me money

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that I know they don't owe me?

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What should you look at there?

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Lee: Yeah, that would be an issue

because on the accrual basis,

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accounts receivable adds to income.

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Because when you run your reports on

the accrual basis, it's gonna take that

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accounts receivable and put that number.

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Mm.

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So again, you wanna minimize that issue.

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You wanna get that accounts

receivable cleaned off- Mm

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before you start running your reports.

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Now, to be fair, most CPAs are

gonna run the report when they

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do your taxes on the cash basis.

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But generally, you're gonna look at

your cash planning on the accrual basis.

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Mm.

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Okay?

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And that becomes an issue when

you sit down with your accountant.

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If you're cash planning on the

accrual basis and your income is

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too high, you wanna definitely get

that in line with what you would

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expect to collect for the year.

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Erica: Mm, okay.

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So good.

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So what about negative balances

that don't make sense, Papa?

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What should you do with those?

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Lee: Yeah, you should definitely

look at those and research them.

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Mm.

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Because that's a good structural

issue that could tell you that

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something is not being recorded

correctly- In your chart of accounts.

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Erica: Okay.

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What about loans?

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Talk about loans for a bit.

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Lee: Yeah, if you have loans, you

need to reconcile those loan balances-

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Erica: Mm-hmm

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… Lee: to make sure that they

equal what the bank says.

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Mm-hmm.

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That again, while they're not

checking accounts, they are incredibly

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important when it comes to breaking

down principal and interest.

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Erica: Mm.

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Lee: That you wanna get that

interest deduction, and you

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wanna get that principal recorded

correctly against the loan.

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So I mean, I have one client who has

maybe 12 to 15 loans, okay, that every

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month that need- Mm … to get reconciled.

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Yeah.

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And so it's a good way to keep up to

date on what the loan payment is and- Mm

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how it's broken down

principal and interest.

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Erica: Yeah.

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Absolutely.

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You know, and I want all of our listeners

to just remember, you know, the goal is

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not to be able to exactly know what to do

with every single item that we listed off.

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Uh, I think the goal is that you just need

to understand that there is something that

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deserves investigation, that if you see a

red flag, you just need to look into it.

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You don't need to go around clicking

and making changes right away,

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but you do need to investigate.

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So good.

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Okay, so what's actually different if

I find one of those problems now versus

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discovering it in January or February?

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What's the difference, Papa?

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Where, where does that help me

when I think about my taxes?

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Lee: Really, the difference is

if you wait till January, you may

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have missed your opportunity to

make any meaningful tax planning.

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You know, you'll also have a deadline for

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It may require that you work with your

payroll provider to make- Mm … sure

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that all your employees' information,

especially your new hires, are correct.

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Because, you know, most payroll

companies are gonna run W-2s

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the first week in January.

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Erica: Mm.

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Lee: And if they're not accurate,

then you could be in a problem

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with your payroll company, 'cause

they may have to rerun them again.

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Erica: Yeah.

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Lee: And you also need to

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So you want- Mm … your W-9s.

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Um, complete.

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So it's really important, you know, W-4s,

your current employees, and W-9s- Mm-hmm

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… for your, uh, independent contractors.

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Yeah.

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It's a lot of alphabet soup, and

if you deal with it when you have

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your new hires or when you bring on

a contractor, then it's important

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to get those W-4 forms scanned.

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Mm.

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Mm.

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Get those W-9 forms scanned-

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Erica: Yeah

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Lee: so that you have all of

your information up to date.

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Yeah.

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And I can't stress the

importance of tax planning, that-

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Erica: Mm

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… Lee: so you, I mean, payroll is

one of your biggest expenses.

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Erica: Yeah, absolutely.

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To

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Lee: be up to date with your bank feed

and payroll and anything that might be in

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the bucket that's gotta be accounted for-

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Erica: Yeah

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Lee: is important for your small business.

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Erica: It makes such a difference.

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You know, and is part of the

problem simply memory, Papa?

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Am I just, as Shiloh points out, I'm

getting a lot of gray hair, so is it

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just because I'm getting older and my

memory is not as good as it once was?

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Is that simply the problem,

or is it something else there?

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Lee: Well, the problem is your

papa has completely gray hair,

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so- And he has for a lot of years.

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Yeah, true.

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So I think the gray hair doesn't

really have anything to do with memory.

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Yeah.

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It has everything to do with understanding

that, you know, you're overwhelmed.

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Erica: Mm.

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Yeah.

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Lee: Yep And so that you need to be able

to take care of things as things come up

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Erica: As they happen, yes.

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Lee: And-

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Erica: Absolutely

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… Lee: have, have a to-do list,

right, that you get done.

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Erica: Yeah, I know.

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If you have a transaction that was

for $4,700 from two weeks ago, I can

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probably tell you exactly what that

was for, but if I wait till February,

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I'm probably not gonna remember exactly

what that $4,700 transaction was for.

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That is just the honest truth.

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Mm-hmm.

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And that is so true about, you

know, I got a lot on my plate these

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days, and actually, one of the kids

reminded me about something apparently

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that I promised from two weeks ago,

and I can't quite remember what…

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If I actually promised a

thing from two weeks ago.

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I probably shouldn't say this

out loud because they could just

401

start saying, "Well, Erica, you

promised us to do this thing."

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Mm-hmm.

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And I'll probably just say, "Okay,"

'cause I just can't remember.

404

So right now I've decided when this

happened that I'm gonna start writing

405

these things down in my calendar, so

if I said I was gonna do this thing,

406

now it's, it's gonna get into my

calendar, and it's in my calendar.

407

If they say I did the thing,

well, if it's not on my calendar,

408

I didn't say the thing, so yeah.

409

Lee: Mm-hmm.

410

No, that's probably a good step.

411

Mm-hmm.

412

For small businesses, they need

to make sure they have copies of

413

bills and to support expenses.

414

Yeah.

415

So if you made a purchase six

or nine months ago and you're

416

wondering what it's for-

417

Erica: Yeah

418

… Lee: it's best to get that bill

or have that receipt and scan it.

419

Erica: Mm-hmm.

420

Lee: Or, you know, rather

have files, paper- Yeah

421

all over your desk.

422

Erica: Yeah.

423

You

424

Lee: know, get into a system where you can

click on that transaction and there's no

425

question what that- Mm … $4,700 was for.

426

Erica: Yeah.

427

Absolutely.

428

That's so good.

429

And presumably, there are also things

that you may actually still have time.

430

We're not at the end of the year yet, so

there is still time to actually take time

431

to do something before December 31st,

whereas after the year closes, you're

432

dealing with what already happened.

433

Isn't that true, Papa?

434

Lee: Yeah.

435

I think a couple things

you wanna keep in mind.

436

You want distinguish between cleaning

up, you know, bookkeeping cleanup-

437

Erica: Mm-hmm

438

… Lee: and, and so that you can

get the correct tax advice.

439

Yeah.

440

So if you're cleaning up your books

when you should be seeking tax advice-

441

Erica: Mm

442

… Lee: um, the tax professionals

and your accountants, it's

443

important to get the information

to them to meet their deadlines.

444

Um, some tax professionals, for some

of my clients, will schedule meetings

445

in November and December to review-

Mm … the company's performance

446

and help prepare their tax returns.

447

So you don't want your accountant or tax

professional cleaning up your QuickBooks.

448

And first of all, they're

probably not gonna do that.

449

They're gonna just tell

you to get it done.

450

Right.

451

And meanwhile, you're

behind the power curve.

452

Erica: Yeah.

453

Lee: So their job is to

maximize your tax savings.

454

Erica: Yeah, absolutely.

455

Okay, I wanna shift our

focus just a little bit.

456

I want to talk about the CPA side of this,

because I think business owners sometimes

457

assume, "Well, my accountant will just

fix everything when they do my taxes."

458

If you think your accountant or your

tax professional will audit your

459

QuickBooks, you are very mistaken.

460

It's your job to make sure all the work

has been done so that your professional

461

can minimize your tax liability and

complete your tax return timely.

462

So what should we actually be

handing our CPA at tax time, Papa?

463

Lee: Yeah.

464

They'll have a checklist.

465

Erica: Yeah.

466

Lee: Okay?

467

And they will have a list of

documents that they're going

468

to want you to provide them.

469

Mm-hmm.

470

And they're gonna want you to

hand them a clean QuickBooks file.

471

Yeah.

472

So many CPAs are listed as your

tax preparer in QuickBooks.

473

Yeah,

474

Erica: yeah.

475

Lee: And so what they'll wanna

do is just be able to click

476

on the QuickBooks software and

upload it into their tax system.

477

Erica: Yeah.

478

Lee: And they wanna

check out any red flags.

479

Yeah.

480

Comparing from last year, and they

wanna see your completed documents.

481

And particularly if you've had any

changes in the year, you're gonna wanna

482

outline for them clearly so that they

can give their input and see if you

483

have all the necessary information.

484

Erica: Absolutely.

485

You know, what happens when instead

of getting clean financials, the

486

CPA has to spend time figuring

out what happened all year, Papa?

487

Like, I'm sure that has got

to be frustrating for a CPA.

488

Will they even- Yeah … look at it?

489

Will they even handle it?

490

I don't even know.

491

Um- Probably not, right?

492

Lee: Some cases, no.

493

Yeah.

494

They just hand it back

and say, "You know what?

495

With all the volume of work, I don't

have time to go through your QuickBooks."

496

Erica: Right.

497

" Lee: And talk with your bookkeeper or

find somebody who can help you, and then

498

get your QuickBooks back to me so I can

continue on with your tax preparation."

499

Uh, or- Right … they will

charge you significantly.

500

Yeah.

501

You know, if they're gonna

charge you at $250 an hour-

502

Erica: Mm-hmm, yeah

503

… Lee: then you very well may wanna

consider- uh, before you hand it

504

over that you've got the work done.

505

Erica: Yeah.

506

Absolutely.

507

There's so much there.

508

'Cause, you know, it's kind

of like what you put into your

509

body is what you get out, right?

510

If you're putting in good fuel,

you're gonna get a great outcome,

511

but if you're putting lousy fuel,

you're gonna get a lousy outcome.

512

Same thing with your CPA.

513

Right.

514

If you give them great bones, if you

give them all the correct information,

515

you're gonna get out of it something

that's higher quality than if you just

516

give them garbage and- Mm-hmm … stuff

that doesn't make sense, and this

517

is your taxes, so super important.

518

Okay, so really, we don't want

to pay our tax professional to

519

become our forensic bookkeeper.

520

Your tax professional has not only

your work, but many other clients

521

to, to make sure your work is done

timely, give them everything they need.

522

I think this is what we're saying.

523

Absolutely.

524

Okay.

525

Hmm.

526

Let's make this really practical, Papa.

527

Someone is listening in the car right now.

528

They get back to their office, open

QuickBooks, and they're willing to

529

spend 15 minutes looking around.

530

Where do you want them to look, Papa?

531

Lee: Well, I think they could

start with the bank feed.

532

Okay, I think that's a good place

to start to make sure- Yeah … that

533

they don't have any old transactions

sitting in their bank feed.

534

Um, they could, in fact,

look at their balance sheet.

535

Erica: Mm.

536

Lee: Start with your balance sheet.

537

Yeah.

538

Erica: Yes.

539

And

540

Lee: then look at your profit and loss.

541

Check on your bank reconciliations.

542

Erica: Yeah.

543

Lee: Look at your accounts receivable

and your accounts payable, and are

544

there any uncategorized transactions?

545

What would make you stop and say,

"Oh, I need somebody to look at this"?

546

That somebody is you, right?

547

Erica: Right.

548

Lee: To talk with your

bookkeeper about it.

549

Erica: Yeah,

550

Lee: yeah.

551

Or this is really just a very

practical approach to say, in some

552

ways, you're creating a checklist.

553

Erica: Yeah.

554

Lee: To say, "Here are the things

that I need to make sure line up."

555

with what I will be reporting as income

and what I'll be claiming as expenses.

556

Yeah.

557

And run a comparative profit

and loss from last year.

558

Yeah.

559

And that's a good place.

560

And, you know, in some cases

I tell people, "Pull out

561

your last year's tax return."

562

Erica: Mm-hmm.

563

Lee: And, you know, just go down it,

because you'll find a lot of things

564

that maybe you need to research.

565

Erica: Yeah.

566

Yeah, absolutely.

567

Okay, so let's say I do that

15-minute check and I find six

568

things that don't look right.

569

What's my next move, Papa?

570

Because I can imagine somebody deciding,

"I'm going to clean up my QuickBooks,"

571

spending four hours in there changing

a bunch of transactions and potentially

572

making the situation worse, Papa.

573

So what would you say to that person?

574

What would they do?

575

So, you know, 'cause we're not telling

people to start deleting transactions or

576

changing things they don't understand.

577

We're telling them to start identifying

the questions, aren't we, Papa?

578

Yeah.

579

Lee: No.

580

The first piece is just make a

list and start investigating, okay?

581

Don't think you've got to get it all done.

582

You've got plenty of time now

to look at two to three items-

583

Mm-hmm … in 15 minutes, half an hour.

584

All right?

585

Yeah.

586

And particularly if you're looking

at last year's tax return and

587

you've got some questions about

what's happening this year.

588

Erica: Yeah.

589

Lee: Um, and you may want to be looking,

too, at your estimated payments.

590

Mm-hmm.

591

You know, how are things looking,

uh, comparative to last year?

592

Um, these are questions that your CPA can

help you with, or your tax professional,

593

but you wanna be able to anticipate those

and have those answers, and understand

594

your tax planning options this year.

595

Erica: Yeah, absolutely.

596

You know, I think this ties into

something we've been talking

597

a lot about on this podcast.

598

There's a big difference between

having someone do your bookkeeping

599

and actually understanding what

your numbers are telling you.

600

You don't necessarily need to be the

person entering every transaction,

601

but if you're running the business,

you should be able to look at your

602

QuickBooks and have some idea whether

what you're seeing makes sense.

603

So Papa, what do you think a

business owner should understand

604

about their books even if they

have a really good bookkeeper?

605

Lee: They should be able to really

look at their profit and loss.

606

Erica: Mm.

607

Lee: Okay?

608

And look at their balance sheet,

and look at some key numbers-

609

Erica: Yeah

610

… Lee: on it, and just to be able to zoom

in and see if those numbers make sense.

611

Erica: Yeah.

612

Yes, absolutely.

613

Okay, so if you're listening to

this in September, currently the

614

message isn't, "Panic, tax season is

coming," it's actually the opposite.

615

The message is, "You have time."

616

This is the time to start asking,

"Are my accounts reconciled?

617

Are there transactions sitting somewhere

that nobody knows what to do with?

618

Does my accounts receivable

reflect who actually owes me money?

619

Do my loan balances make sense?

620

Are there strange numbers

sitting on my balance sheet?"

621

And most importantly, "Do I trust

the numbers I'm looking at?"

622

Because if the answer is no, you don't

want to discover that when your accountant

623

is asking for your year-end financials.

624

You want to discover it now.

625

And if you're listening to all of

this and thinking, "I actually don't

626

know whether my QuickBooks is in good

shape," that's exactly why we created

627

the QuickBooks Clarity Scorecard.

628

It's a free assessment designed to help

you identify where you have clarity

629

in your QuickBooks and where you may

have gaps that need your attention.

630

We will link it in the show

notes, and you can also go to our

631

website at leedavisandcompany.com

632

and you can check it out there.

633

And once you know where the problems are,

you can start dealing with them one at a

634

time instead of waiting until tax season

and trying to fix an entire year at once.

635

Lee: I did some practical tax planning.

636

Erica: Yeah.

637

Lee: Some areas that they need

to understand what is deductible.

638

Erica: Yeah.

639

Lee: And what should be looked at.

640

Erica: Yeah.

641

Lee: For tax purposes.

642

Erica: Okay, you guys, so stay tuned.

643

Episode 43, we're gonna get really

practical, and you just heard what

644

our episode 43 is gonna be all about.

645

And I just wanna add a quick plug here.

646

We do have a QuickBooks course that is

coming, and we have seen you guys have

647

been on our website searching for it.

648

I am going to put more prominent

on our website a link, a signup

649

link, that you can get on our

waiting list for the course.

650

And when we do launch it, you will

be the first to know when it is

651

available, 'cause we are revamping this.

652

It is going to be amazing.

653

It is going to be such a dynamic course

that will answer all of your questions,

654

that are gonna help you through everything

that you have been struggling with when

655

it comes to QuickBooks and your business.

656

So stay tuned.

657

It is coming.

658

So if you're excited for that, if

you're looking for that, go to our

659

website, Lee Davis and Company, and sign

up to get on our wait list for that.

660

So Papa, is there anything else

you want business owners to think

661

about before we wrap this one up?

662

Lee: I'd like them to think about the fact

that clearly their tax time is upon us.

663

Erica: Yeah.

664

Lee: So don't wait.

665

Begin to get the work done now.

666

Mm-hmm.

667

And it'll relieve stress.

668

Erica: Yes,

669

Lee: absolutely.

670

And so, you know, if, I think

that's what I'd like them to just

671

remember that, you know, we have

some tools that will help them.

672

Erica: Yes.

673

Lee: Just, you know, just take

this podcast and run with it.

674

Erica: Yeah.

675

You know, and you're not alone.

676

If you need help, we are here.

677

Reach out to us directly at

[email protected],

678

and we'll get back to you.

679

We will help you out in

whatever way we possibly can.

680

We're just so grateful for this journey,

and you guys are just along for this

681

ride, and we know that if you do the

work, your business is going to skyrocket.

682

It is just going to, to grow to

whatever means you possibly could want

683

it to grow to, and QuickBooks is such

a great tool to help you get there.

684

It is a tool, and it's a powerful tool.

685

When you use it right, it will

make a difference in your business.

686

That is absolutely what we're here for.

687

So love it, you guys.

688

Thank you so much for listening.

689

You guys, if you found value in

this, we would love for you to

690

tag us on Instagram or Facebook.

691

Screenshot this episode, tag us, and

we'll feature you next week in episode 43.

692

So we'll see you next week.

693

Bye for now.

694

Thanks for tuning in to QuickBooks

Mastery for Small Business Success.

695

Lee: If you enjoyed this episode,

hit Subscribe and stay connected

696

with us at leedavisoncompany.com.

697

Erica: We know QuickBooks can

be overwhelming, so we've put

698

together a free resource to

help you get started right away.

699

Grab your copy at leedavisoncompany.com,

700

and when you do, you'll also get

access to our VIP email list, where

701

we share exclusive QuickBooks tips,

business strategies, and support.

702

Lee: And we'd love to hear from you.

703

If you have a QuickBooks question

or a business challenge, send it our

704

way at [email protected].

705

We might feature it in a future episode.

706

Erica: We're here to help you

simplify QuickBooks and grow your

707

business, one step at a time.

708

See you next time.