QBO YearEnd Guide 2013

12/2013

QBO Year-End Guide

Closing the year and beginning a

new one

Introduction

The end of the fiscal year can be a busy time. In an effort to help make

year-end tasks go as smoothly and efficiently as possible, we’ve compiled

information on the most common activities that are done during the close of

one business year and the beginning of a new one.

You can go to the sections that pertain to you or read the entire guide,

whichever you find the most helpful!

Reconciling your Accounts

Sending Statements

1099 & 1096 Forms

IRS 1099K regulations

Reporting for year-end

Taxes and your accountant

Distributions

Paying Sales Tax

Closing the Books

Budgets

Payroll Year-end questions

Reconciling Your Accounts

If you haven’t been reconciling your bank accounts on a monthly basis, you’ll

need to do so now or financial reports won’t be correct when preparing your

taxes.

To get started, choose Banking > Reconcile, then select the bank or credit

card account that you need to reconcile. Fill out the Reconcile Statement

window. (If you don’t see the Reconcile Statement window, you or another

user has already begun to reconcile that account.)

If you’ve never reconciled, don’t worry. Just start with the oldest statement

you have, and consult our knowledgebase article KB 1164, Reconciling for the

entire year.

We have excellent self-help on the reconcile process if you find that you

need more help in this area. Our knowledgebase article KB 2910, Why is

my reconciliation wrong?, contains useful information on how to solve basic

reconcile issues.

Sending Customer Statements

The end of the year is a good time to remind your customers of any

outstanding balances that they owe you, or to send them a statement of

their activity throughout the year.

Customizing your statements

You have a few options when creating statements. You can add aging

information that indicates how far unpaid balances are past their due dates.

You can also choose to show each line item on the sales transaction or just

the memo.

1. Choose Company > Preferences.

Back to Table of Contents

http://support.qbo.intuit.com/support/answers.cfm?faq_id=1164




2. Click on the Form Delivery link on the left.

3. Click on the Statements link at the bottom of this section.

4. Select your options and then click Save.

Creating statements one at a time

If you only need a few statements, you can create them one at a time.

1. Choose Customers > Customer Center.

2. Highlight the customer for whom you want to create the statement.

3. Select Statement from the New Transaction menu.

4. Select the Statement Type and date. A Balance Forward

statement provides a history of all activity (invoices, payments,

credit memos, etc.) between Start and End Dates you choose. An

Open Balance statement shows only invoices that have an amount

owed. A Transaction Statement is like a balance-forward statement,

but doesn’t have a balance forward and amount due, just the total

amount and amount received for the period.

5. Click OK. Then scroll to the bottom and either Print or Send the

statement by email.

Creating statements in a batch

If you need statements for a lot of customers, you can create them all at once in a batch. You can also choose to send statements only to customers

who owe you more than a certain amount, or other criteria.

1. Choose Customers > Statements.

2. Choose Balance Forward, Open Item or Transaction Statement

and enter the statement dates.

3. (Optional) Set your additional statement criteria.

4. Click OK.

A list of customers who meet the criteria will appear. Preview or Edit the

statements one by one, or create and/or send all of the selected statements

by clicking the Create/Send Selected Statements button.


1099 and 1096 Forms

What is a 1099-MISC Form?

The IRS requires you to file a 1099-MISC form for each vendor to whom you

make certain types of payments. The form is called 1099 Miscellaneous

Income because your vendor will need to claim these payments as income.

You must mail these forms to vendors by January 31 for payments made in the previous tax year. You must also mail these forms to the IRS by

February 28 along with a Form 1096. For more information on which types

of vendors require 1099-MISC forms, consult with your accountant, or see

the IRS website (http://www.irs.gov/) and type in “1099-MISC” in the Search field. Then click on the link for Instructions for Form 1099-MISC.

You’ll need to have pre-printed 1099-MISC forms before you can create the

1099 forms in QuickBooks Online. You can purchase these forms from Intuit by calling 800.433.8810 or from other office supply stores.

Important things to remember about 1099 forms

QBO supports only the 1099-MISC form. There are many different

1099 forms, the most common being the 1099-MISC.

QBO can’t print state ID# in box 17 or additional state information;

this is not required by the IRS.

Intuit’s 1099 forms are recommended for printing. 1099 forms must

be laser-type forms; tractor-fed forms don’t work with QBO.

1099s are always active in QBO Plus with no preference setup

required.

1099s are reported on a cash basis.

http://www.irs.gov/

Income- and Equity-type accounts can’t be assigned to a box on the

1099-MISC form.

QBO can only print 50 1099s at a time.

Creating 1099s in QBO

1. Choose Vendors > Vendor List.

2. On the bottom left of the Vendor List, click Prepare 1099-MISC

Forms.

3. The Prepare 1099-MISC Forms screen will open.

4. Click Select Vendors. All vendors that you have marked for 1099

tracking will appear in the column on the right. You can add additional

vendors by using the Add button. When you’re done, click OK.

5. Click Assign Accounts.

6. Select the checkbox for the 1099 box needed.

7. Click the Account drop-down arrow and select the account you’d like

to use for that box.

IMPORTANT! If needed, you can have multiple accounts for the same box.

Use Select Multiple from the drop-down list and select the accounts you

want to use.

NOTE 1: Income and Equity accounts are not listed.

NOTE 2: Selecting a parent account will not select its subaccounts. If you

made payments made to 1099 vendors and used subaccounts, you must

also select those exact subaccounts. To include all subaccounts, you must

click Select Multiple and choose each subaccount under the parent

account.

NOTE 3: You can’t assign the same account to different boxes. You’ll need

to edit individual transactions related to that account if you need to assign

the same account.

You’ll need to obtain the advice of your accountant to determine which boxes

to use if you’re unsure; you can also consult the IRS website and find official

instructions for Form 1099-MISC.

Preview 1099 and 1096 information

1. Verify that the Tax Year field is showing the correct year.

2. The Show field is set to show vendors/contractors that meet the

threshold. Thresholds are set by the IRS, are unique to each box, and

can’t be changed.

3. The Total All Payments column shows a total of all payments you

made to each 1099 vendor. A difference between the Total 1099 Payments and the Total All Payments indicates that you used other

accounts on transactions with that particular vendor. This could mean that there may be other accounts that you should also associate with

1099-MISC form boxes.

4. You will see columns for each Box that you checked. In this screenshot we see Box #1 and Box #7. This is where you can see the

threshold amount for each box. Click What are boxes and

thresholds for more information.

5. Items in red are missing information. You can click on the red item to update from this screen.

6. Amounts in the Total 1099 Payments Excluded column are amounts that will need to be paid on a 1099-K form. See the 1099-K

Information section later in this document.

Print or E-file 1099 and 1096 Forms

The Order now or buy forms links will take you to the website where you

can buy the 1099 kit in different quantities and prices. You’ll be presented

with options similar to those pictured here.

Checking your settings as shown helps you make sure the 1099s print

properly.

Printing the forms

Click Print Information Sheet at the bottom of the Prepare 1099-MISC screen. It’s a good idea to print this although it’s not required.

Now you’re ready to print the 1099-MISC forms. You can print a sample 1099

on blank paper to check alignment before printing on blank forms; just click

Print Sample 1099 in step 3 and make sure your alignment is set correctly.

As with printing checks, your version of Acrobat can cause the alignment to

be off. Here’s what your sample might look like:

You can solve most printing problems by making sure that you have selected

the proper settings in the Print window for your printer. You can click the

Set Adobe Reader print options link in step 1 to see the proper settings

to select in the Print window for your printer.

Preparing the 1096 form

Form 1096 summarizes the information from the 1099 forms you are sending for the tax year. It’s a form that you send only to the IRS, and it

must accompany the 1099-MISC forms that you submit to the IRS. When you purchase your 1099 pre-printed packet, you’ll receive a 1096 form to fill

out.

NOTE: No Form 1096 is required when you e-file.

To prepare the 1096 form and its accompanying 1099-MISC forms, go to the

Vendor list and click Prepare 1099-MISC Forms at the bottom left. After you’ve verified that you correctly entered all the information for 1099s for

the tax year, click Print 1096; you can also print a sample 1096.

Intuit 1099 E-File Service

Intuit's 1099 E-File Service allows 1099 forms to be filed electronically.

Benefits:

The vendor information you track in QuickBooks is securely uploaded

to the Intuit e-file service. No double data entry.

You don’t need to buy special forms or postage.

You can print 1099 vendor copies on plain paper and mail them to your

vendors. Or you can email a .pdf version to them instead.

You can file with the IRS on time – even on deadline day.

No Form 1096 required when you e-file.

Deadlines: mail or email 1099’s to vendors by January 31. E-file info

with the IRS by March 31.

Fee for filing applies.

Click the Turn on Intuit E-File Service link to get started.

For more information about the 1099 E-File Service, see this web page:

http://payroll.intuit.com/support/kb/2000864.html.

If you still have questions after reading this article, you can call

866.729.2925 for further help.

IRS 1099-K regulations

For tax year 2011 and after, the IRS requires a 1099-K form requiring all Payment Settlement Entities (credit card providers including banks, PayPal,

and so on) to report all qualifying payments made to individuals during the prior calendar year (credit cards, debit cards, and stored-value cards, includ-

ing gift cards).

To prevent duplicate reporting to the IRS, the 1099-MISC form from

the small business owner must now exclude the payments types listed above; however, it must still include Cash, Check, EFT, ACH, and Di-

rect Deposit payments.

To learn about the new IRS regulations regarding filing 1099s, see knowledgebase

article KB 4785, Changes to IRS reporting requirements for 1099-MISC starting tax

year 2011.


http://payroll.intuit.com/support/kb/2000864.html




Reporting for Year-End

The end of the year is a natural time to run reports and evaluate how your

business has performed over the last year. Running reports is also an

essential part of preparing for taxes.

The two most important reports that you and your accountant will need are

the Profit & Loss and the Balance Sheet reports. Both of these reports

are available directly from the Reports tab menu.

Make sure that you customize these reports for your previous fiscal year.

For example, if your business runs on a calendar year and today is January

10th, then set the dates on the report for Last Year or manually enter the

dates in the To and From fields at the top of the report.

Profit & Loss report

IMPORTANT: Don’t worry if your Profit & Loss report is totally or

partially blank. Chances are that you’re running it for “this year-to-date”

and if today’s date is January 10th, then the report is only capturing the

last 10 days of transactions.

Profit and Loss accounts are referred to as “transitory accounts.” That is,

at the end of each fiscal year, QuickBooks Online will automatically zero

out Income and Expense accounts and transfer the net amount (the Net

Income or Loss) to the Retained Earnings account on the Balance Sheet.

This allows the new year’s Net Income account to begin to accumulate

new totals for the new year's profits.

Retained Earnings account

You will notice that your Balance Sheet has an account near the bottom

called Retained Earnings. This amount normally stays the same over the

course of your fiscal year; however, if you run your Balance Sheet report at

the beginning of a new year (dated as of the new year) the amount in the

Retained Earnings account will be different.

Retained Earnings is a special Equity account that tracks your company's

net worth, accumulated over the previous fiscal years. At the end of your

fiscal year, QuickBooks Online automatically transfers your net profit (or

net loss) to Retained Earnings.

There is no actual transaction that takes place. Net Income (income

minus expenses) from the previous year moves into the Retained

Earnings account. To find out how it was calculated, simply run a

Profit & Loss report from the previous fiscal year.


Taxes and Your Accountant

QuickBooks Online doesn’t integrate with Turbo Tax or any other tax

software, but it can create reports that help you fill out the TurboTax

Interview or a tax return. Profit & Loss as well as the Profit & Loss

Detail reports will be the most helpful.

You should consult your accountant to determine if transactions have been

accurately assigned and to confirm the amounts used for filling out tax

forms. You can give your accountant access to your QuickBooks Online

company so that he/she can either view or actually make adjustments to the

books.

1. Choose Company > Manage Users.

2. In the Accountant section, click Invite Accountant.

3. Enter your accountant's email address and first/last name (optional).

4. Your accountant will be sent an email that contains a link for signing in to your company.

5. Your accountant will be asked to create a user ID before signing in the

first time, unless they already have an account with Intuit Business Services.

6. Until your accountant signs in, their status on the Manage Users page

is "Invited." After accepting the invitation, their status changes to "Active."

Note: It’s important not to share your own user ID and password with

your accountant. If a user ID and password is shared, QuickBooks

Online won’t be able to track who makes which changes in both the

Activity Log and the Audit Trail.

What does all this really mean to you?

1. If you invite your accountant and they already have a QuickBooks

Online for Accountants subscription, they'll get a link to access your

QBO company.

2. If you invite your accountant and they don't have a QuickBooks Online

for Accountants subscription, they'll have a chance to sign up when

you send them this invitation.

3. Your accountant will have access to all of the features available in

whatever version of QBO you currently have.

Making asset depreciation entries

Fixed assets such as furniture, computers, vehicles, and buildings contribute

to the operating capacity of a business over many years. Because of their

long-term value, fixed assets are treated differently than other expenses.

Typically, business owners expense the purchase price of the fixed asset over

its useful life, not just the year in which the purchase was made. This is

referred to as depreciation.

You should depreciate assets if you want the depreciation to be reflected on

financial statements. If an accountant calculates the depreciation it would

be easiest if they make those depreciation entries by accessing the

QuickBooks Online company themselves. If you’re going to handle this

yourself, we have an article to help you. Check out our knowledgebase

article KB 2705, Recording and depreciating assets, and click the How

do I record the depreciation of my asset? link.


Distributions

It’s not mandatory, but you can choose to distribute profits (retained

earnings) to one owner’s equity account or to multiple partners at the end of

the year.

Partner Distributions

Below is an example of a General Journal Entry for distributing earnings

between two partners.

The partners’ equity accounts need to be credited and the Retained Earnings

account should be debited. There may be tax consequences for such a

distribution, so you need to check with your accountant before doing so.


Owner Distributions

Taking funds from the business and paying the owner is called an owner’s

draw. To record this draw, create a check to the owner (make them a

vendor) and select the Owner’s Equity account at the bottom. (To record a

payment to a partner, a partner’s equity account would be selected.)


Paying Sales Tax

You need to pay your sales tax at a minimum on an annual basis. The Sales

Tax Center gives you a way to view your Sales Tax Liability report, see recent sales tax payments, and record your tax payments. We have a

wonderful self-help resource that covers everything related to sales tax: see knowledgebase article KB 4731, Sales tax in QuickBooks Online.

Closing the books

Closing the books is optional. QuickBooks Online doesn’t require you to

close the books at the end of an accounting period. In fact, you don’t

need to do anything to “close” your income and expense accounts.

On the first day of the next fiscal year, QuickBooks Online will

automatically transfer net income from your Balance Sheet into your

Retained Earnings account. That way, you’ll know how much money you

made in the previous period. In addition, income and expense accounts


will be "zeroed out." This allows the new year’s Net Income account to

begin to accumulate new totals for the new year’s profits.

You’ll see a feature in QBO called Closing the Books which restricts

access to transactions in prior accounting periods. Closing the Books

doesn’t “close out” the income and an expense account since that’s done

automatically.

1. Choose Company > Preferences.

2. Click on the Company link on the left.

3. Click on the Closing the Books link on the left.

4. Select the Closing the Books checkbox and enter a date through

which your books will be closed.

5. You can select Only warn, which will warn you and any other user

when attempting to edit or delete a transaction that’s dated before

the closing date. The warning will look like this:

Or you can choose Warn and require password which requires a

password of your choosing before anyone can make a change to any

of the transactions dated prior to the closing date. Here’s what that

looks like:

6. Click Save.

IMPORTANT: Make sure you don’t set the Closing Date in the future.

This will cause you to be warned or to enter your password when


entering today’s transactions, since they will fall within the closing date

range.

Budgets

The end of the year is a perfect time to think about budgeting for next year.

The following is an overview of how budgets work in QuickBooks Online.

What is a budget and how does it work in QuickBooks Online?

QuickBooks Online budgets are used to estimate future income and

expenses. A basic budget includes a row for each income and expense

account you want to budget for. As time goes by, the Budget vs. Actuals

report compares actual income and expense activity with the “expected,” or

budgeted, income and expense amounts.

Important information about budgets:

Budgets are available in QBO Plus only

Budgets can be created from scratch or from the prior year’s data

Budgets can contain annual, quarterly, or monthly data

A budget can be subdivided for each class, location, or customer

Balance Sheet accounts can’t be budgeted in QBO

Only income and expense accounts can be included in a budget

To create a budget:

1. Choose Company > Budgets.

2. The Creating a budget interview begins. Note that this page gives you

information about checking some settings.

3. Click Next.

4. Choose between using actual amounts from a fiscal year, starting from

scratch, or copying an existing budget.

5. Click Next.

6. Choose between subdividing by customers, classes, or locations, or not

subdividing.

7. Click Next.

8. Choose the fiscal year to track for the budget and enter a budget

name.

9. Click Finish.

The new budget will now open. To make better sense of the data in the

budget, click to clear the Show Blank Rows checkbox. The budget shows

only those accounts that have data in them.

Note: Creating a budget from scratch means you must enter all the

data yourself for each month, quarter or year. You can use the Copy

Across button to repeat the same amount across all months or

quarters.

To delete an unneeded account:

1. Highlight the account.

2. Click Clear to clear all data.

3. Click Save & Next.

Running Budget Reports

When you have all the information entered in your budget, you can run a

report. Here’s how:

1. Click the Reports tab.

2. Click on the Budgets vs. Actuals report from the Budgets section.

3. Notice that you can choose the budget that appears on this report.

Click Run Report.

For more information about budgets including Budget FAQs, see our

knowledgebase article KB 2949, All about budgets.


Payroll Year-end center

If you have a payroll subscription, you may have year-end questions specific

to payroll. Below is how you’ll navigate to the payroll year-end center to get

those questions answered.

1. Choose the Employees tab.


2. Click the 2013 Year End Tasks, Tips, and Checklists banner, shown

here:

3. You’ll be presented with a screen which will show you all the payroll year-end

resources available.


Documents

QBO YearEnd Guide 2013