Do you have too many Inventory Adjustments in QuickBooks?

In recent months, I have noticed several new clients had a HUGE number of inventory adjustments.  Some even had a couple dozen a day.  Large numbers of inventory adjustments are a warning sign that this feature is not being used correctly or that there is an internal control issue.

Inventory adjustments are used to correct quantities on hand, value, and/or Lot/Serial numbers.  Usually inventory adjustments are made after a full physical inventory or cycle counts. If numerous errors are detected during the counting of inventory, it’s possible that transactions are not entered properly, or it may be a sign of internal control issues, or theft.

Inventory adjustments should not be used to create assemblies or transfer inventory from one site to another.

  1. If you create inventory assembly items you can build assemblies.  Using this feature in Pro, Premier, and Enterprise finished goods are added to inventory and the raw materials used to make the finished goods are subtracted from inventory.
  2. If you have multiple warehouses, using Advanced Inventory on QuickBooks Enterprise gives the user an option to transfer inventory without affecting the value or lot/serial number.

If you have any questions or need assistance, please let me know.

QuickBooks Webinar Schedule

Ilene Eisen has scheduled webinars to be broadcast from May 2015 – December 2015.

Each webinar is two hours and will qualify for Continuing Professional Education (CPE).  All webinars will be scheduled at either 1 PM Eastern or 4 PM Eastern

The webinars will include

  • QB15 – QuickBooks 2015:New Features that Improve Reports & Save Time
  • QBBK – QuickBooks: Saving Time with Bank Feeds
  • QBBS – QuickBooks: Systematic Approach to Reconcile Balance Sheet Accounts
  • QBCR – QuickBooks: Customized Reports – Getting Information You Need Quickly
  • QBDR – QuickBooks: Client Data Review- Tools to Easily Correct Errors
  • QBES – QuickBooks: Getting the Most Out of Enterprise Solutions
  • QBIC – QuickBooks: Improving Security and Internal Controls
  • QBTK – QuickBooks: Tips & Tricks for Accountants
  • QBIN – QuickBooks: Inventory Fundamentals to Improve Efficiency and Reporting

Dates are listed on the ie-Solutions website http://ie-solutions.biz/seminars-and-webinars/

Do I Really Need to Update My Accounting Software?

Many clients that I work with are skeptical about updating their accounting software on a regular basis.  I believe that if you plan to stay in business you need accounting software.  If you plan to continue using your current software you should update it regularly and if you plan on changing or upgrading to another version, make the change as soon as possible.

If you are interested or currently using a cloud application upgrading is not an issue and the publisher will install updates for you.  Keep in mind that some applications with limited functionality are free.  My personal preference is to use applications that do not  limit functionality like QuickBooks Online (QBO) where you can expect to pay an annual or monthly fee.

Accounting software is changing at a rapid pace and so is the way we pay for it.  Many firms are going to a subscription model that requires monthly or annual payments in order for you to continue to use the software.

This year QuickBooks Enterprise Solutions (QBES) moved from a purchase model to a subscription model.  If you are currently using QBES, and paying for the annual Full Service Plan (FSP) make sure you look at the new subscription levels to evaluate your costs and functionality using either method, if you choose to stay with the FSP rather than subscription, you must continue to pay on an annual basis to remain in this discontinued plan.

If your software requires an annual payment to receive updates and  you do not pay the fee you will not receive new features, your software may not work with new operating systems, and security issues will not be addressed.  All these items will cost money, time, and reduce productivity.

If your software does not have an annual plan and you must re-purchase the software, evaluate the new features each year to identify changes.  Also consult with the vendor to identify how long they “support” a version and will continue to issue free updates.  I recommend only using supported versions.

Intuit supports QuickBooks Desktop products for a little more than three years.  After that period the technical support staff cannot answer questions, free updates for minor changes are not created, and connected services like payroll may not be supported.

Many clients are concerned about installing updates and fear that it will “break” the software and do not want to make any changes.  I understand your concern.  My suggestion is that you wait on installing  software updates for 1 – 2 months for annual updates, in this time software publishers will generally be made aware of any issues and correct as much as possible, or warn users regarding known issues.  If your software is updated less regularly, I would wait longer and consult to reseller to determine when it is advisable to update.

This article was inspired by the following article Accounting Software Updates: Are they Necessary?

If you have any questions regarding this article, or would like further information,  please contact Ilene Eisen, CPA.CITP at ilene.eisen@ie-solutions.biz

Ilene Eisen to Speak at Inuit Virtual Conference

Ilene will be speaking that the Intuit Virtual Conference , Wednesday December 10, 2014  she will be presenting:

QuickBooks Desktop Accountant: Your Friend at Year End (Part 1 of 2)

This course has been designed to introduce the accounting professional to strategies for working with your clients’ QuickBooks company files at month‐end or year‐end. It provides an overview of  the tools and features that streamline the process of evaluating and correcting your client’s QuickBooks data as well as those tools and features that enable you to work efficiently and directly with your client on month‐end and year‐end accounting processes & financial reporting. These tools are available with your QuickBooks Accountant Desktop Plus 2015 subscription or QuickBooks Accountant Desktop 2015 software, and QuickBooks Enterprise Accountant 15.0 software

QuickBooks Desktop Accountant: Your Friend at Year End (Part 2 of 2)

Your clients’ QuickBooks data is seldom clean enough or complete enough for you to use when preparing their year‐end financial statements and / or income tax returns. In this session, we will “walk through the Balance Sheet” using the tools and features covered in the previous session (QuickBooks Desktop Accountant: Your Friend at Year End ‐ Part 1) to quickly find AND correct mistakes, allowing you to confidently use the QuickBooks trial balance to prepare your clients’ returns. You will also learn proactive steps you can take with your clients to keep their data accurate throughout the year – to streamline both income tax return preparation and periodic financial statement preparation.

 

New QuickBooks Enterprise Solutions Subscription Plans

This month Intuit changed the way they sell NEW versions QuickBooks Enterprise Solutions (QBES), it is now sold on an annual subscription and will no longer function if the subscription is not renewed.  In addition to the Subscription, there are three packages that a customer chooses from, Silver includes Advanced Reporting, Gold includes advanced Reporting and Enhanced Payroll, and Platinum which includes advanced Reporting, Enhanced Payroll, Advanced Inventory, and Advanced Pricing.  Customers who currently own QBES will not be affected by this change.

Selling QBES on a subscription basis is a major change in the relationship between Intuit and the end user.  In the past a customer would purchase the software and had the option of purchasing the Full Service Plan (FSP) after the first year to keep the software current, if you did not purchase the FSP plan annually the software would continue to work, however you no longer receive product updates, online backup and technical support services.

The advantage of the subscription plan is that it is less expensive to add Enhanced Payroll and Advanced Inventory especially for customers with fewer users. The new price structure is also easier for customers to understand without having to price add-ons like payroll, Advanced Inventory and Advanced Pricing.  If the new structure reduces your cost, you can contact Intuit to switch to the subscription model, however this would be a non-revocable decision.

The disadvantage is that if you do not renew the subscription on an annual basis you will lose the ability to use or access your accounting software.

Creating a QuickBooks Period Copy

There are times when you may need to send someone a copy of your QuickBooks company file but you do not want to give them access to all transactions.  This could be in response to the Internal Revenue Service, a subpoena, lawsuit, etc.  Once the decision has been made to supply specific information, you can use a utility available in the Accountant version of QuickBooks or QuickBooks Enterprise Solutions Accountant  to create a “Period Copy” of your data file.

I recommend that you make a backup of your file, Restore the backup to your computer using a different file name, and then make a period copy from this backup.  Therefore you will not be affecting the company file.  Keep in mind that creating the period copy can take several minutes to several hours depending on the size of the company file, I generally run this overnight.  Below are the instructions for how to make the period copy using the newly created data file

File Menu – Utilities – Condense Data

In the Condense Data screen select the third option “Transactions outside a date range (to prepare a period copy of the company file),  Enter your Date Range , Select Next

Select create one summary journal entry (recommended), Select Next

Select Summarize Inventory Transactions (recommended), Select Next

Select all the listed in the next two screens, Select Next

Select Begin Condense

After the utility runs verify that the balances are correct !

Printing 1099 Forms from QuickBooks Company Files

One of the tasks that many businesses struggle with in January is issuing 1099s and completing the reports.  I advise my clients to use the QuickBooks procedure for creating 1099’s rather than the timely and costly option of sending the information to an outside service to prepare the reports.   Many clients actually work with a tax preparer the first time to set-up the company file for 1099s, which is a great idea and allows you to learn the process for the next year. Here’s a short summary of the process you’ll need to follow to process your 1099’s and 1096:

Select Vendors from the top menu – Select Print /E-File 1099 – Select 1099 Wizard

You will see a listing of the activities that you will be guided thru in order to complete the task – Select the Get Started button.

Step 1 Select your 1099 Vendors – Vendors are subject to receiving a 1099 if they meet the income and statutory requirements based on business entity.  In this step we will only consider the statutory requirements based on business entity. 

Select all vendors that qualify for 1099s. Do not consider the vendor income requirements at this point, just select individuals, sole proprietors, partnerships, and anyone else who qualifies for a 1099 reporting. If you are not familiar with the requirements, check with your Tax Preparer for more information.  When you are done select Continue.

Step 2 Verify your 1099 Vendor’s Information –You will need the address and tax ID number for each 1099 vendor who will receive a 1099.  To save time, skip this step for now and we’ll complete the process in Step 4. Select continue and we will go back to complete this process later.

Step 3 Map Vendor Payment Accounts –Not all payments to vendors will qualify for 1099s, usually accounts that qualify are Cost of Goods Sold, Expense, and Other Expense accounts and most payments will be entered on Box 7. You should consult your tax preparer if you are not sure about reporting requirements.

 Step 4 Review Payments for Exclusions – This step gives you the opportunity to review both payments included and payments excluded based on the criteria defined in the previous steps.  Also QuickBooks will exclude all payments made by credit/debit cards, gift cards or PayPal in accordance with the IRS requirements. View both reports to verify that you have completed the set-up properly. When done select Continue.

Step 5 Confirm Entries – This step gives you the opportunity to confirm entries and on this screen you will see who needs additional information such as a Social Security number or Federal ID.  I usually wait until I get to this screen to research tax ID and addresses.  Any Vendors with incomplete information, can be edited in the vendor record.  If after calling a vendor you are informed that they do not meet the requirement for a 1099. Uncheck the 1099 vendor box in their vendor record or on Screen 1 of the wizard. You can now print the 1099 and 1096 forms, if you are not confident in the process ask your tax preparer to review your work.  When done, select Continue

Step 6 Choose Filing gives you the opportunity to print forms or e-file.  Please note that if you print forms you can reprint specific vendors or all forms at any time without changing your settings in Step 2.

Year End Strategy to Reduce Taxes and Increase Profitability

Many companies will be closing their books for the year at the end of December.  Although many folks feel the year end activities start in early January with bank and account reconciliations, I believe the process should begin in the fall.   If management and the accounting staff takes the time to review the books 2 -3 months before year end and make any necessary adjustments and corrections, they can give their tax advisor a better idea of the annual income.  Doing this before year end gives the company a chance to estimate taxes, purchase fixed assets, make plans for funding retirement programs, and plan for cash needed in the next year.

I see too many companies go to their tax preparer just before the tax deadline and pay tax when there were purchases that they could have made to reduce the tax burden and increase productivity.  I also find companies that are unhappy with their accounting software and wait until the beginning of the year to replace it or begin the search for a better product.   Keep in mind that before year end is the time to purchase the tools and equipment that will help you achieve or maintain your profitability in the future.  Also this is the time to work with your financial advisor and tax preparer to plan for the best year ever.