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QuickBooks Tips – Year End Tasks for Filing Taxes

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buried in yearend paperworkThe end of the year always adds even more tasks to your already busy schedule, and sometimes it is simply overwhelming and I’ve often been asked – “What do I need to do?”

Intuit has built a very good “QuickBooks Year-End Guide/Checklist” and it’s included right in your QuickBooks program by going to the Help Menu and choosing Year-End Guide.  Over the next few days, we’ll cover each topic listed in the Year-End Guide, and offer some additional tips on each of the three sections: Tasks to prepare for filing taxes, Tasks to do if you use subcontractors, Tasks to do if you have employees and some Tips for the upcoming year.

Tasks to prepare for filing taxes:

Reconcile all bank and credit card accounts – now really you should have been doing this every month…but if for some reason it’s been several months since these accounts were reconciled here’s a quick way to reconcile multiple months all at once – accurately.

  1. Determine which month was the last month that was reconciled.
  2. Gather all of your bank or credit card statements and put them in order; oldest on top and most recent on the bottom.  If you don’t have all the statements, please don’t be tempted to just “skip” that month, contact the bank and ask for a copy, or if you have on-line banking capabilities get a copy off the internet.
  3. In QuickBooks go to the Banking Menu and choose Reconcile.
  4. In the Begin Reconciliation window
    • Choose the Account you wish to reconcile (you can choose either your bank account or your credit card account) from the drop down Account List.
    • The Statement Date should be the ending date of your most recent statement.
    • The Beginning Balance should be the same as the Beginning Balance of your oldest statement.  If for some reason the amounts are not the same, click the link that says “What if my beginning balance doesn’t match my statement?” and follow the instructions in the QuickBooks Help file to determine what is wrong and how to correct the problem.
    • The Ending Balance should be the amount shown as the ending balance on your most recent bank statement.
    • Enter any Service Charge for the most current statement only – (we’ll put the rest in manually), please don’t be tempted to “add them all up” and put that amount here.
    • Enter any Interest Earned for the most current statement only – (we’ll put the rest in manually), please don’t be tempted to “add them all up” and put that amount here.
    • Click the Continue button which will bring you to the Reconciliation window.
    • To enter Service Charges and/or Interest Earned for additional months, leaving the reconciliation window open, from the Banking Menu – choose Use Register and enter the transactions individually using the closing date of the statement as the date of the entry.  Additionally you might want to create “Other Names” called Bank Service Charge and Interest to use in the Payee Field when recording these transactions, just to make reconciling easier.
  5. Working from the statements, oldest one first, just go through and check off each deposit and check until you are finished.
  6. If you find checks or deposits on the statements that are not in your QuickBooks file, go to the Banking Menu and choose Use Register, record the transaction with its original date, assigning the amount to either Ucategorized Income or Uncategorized Expenses – so that later you can run a Year to Date Profit and Loss Report, zoom in on those accounts and find the hard copy of the original transaction and correct the entry or entries.

Verify petty cash entries for the tax year – again, this is something that you should be doing every month, but if you have several months that you need to reconcile, it can be accomplished following the instructions above.

Make year-end accrual adjustments and corrections – I usually suggest that you work with your accountant on these matters.

Close your books – I usually suggest that you close your books for the fiscal year with a password – only the QuickBooks Administrator can do this, but it does prevent accidental changes to already reconciled transactions by others.  Of course, the QuickBooks Administrator can make changes to transactions as required and a closing date exception report can be generated by going to the Reports Menu, choosing Accountant & Taxes, and then selecting the Closing Date Exception Report.  With QuickBooks 2011 you don’t need to worry about this effecting Non-Posting transactions such as Estimates & Purchase Orders.

Adjust Retained Earning – QuickBooks does this automatically, so there should be no need for you to have to do this manually.

Review details of all new equipment purchased during the year – if you are using QuickBooks Premier (including Premier Contractor, Manufacturing, etc.) you should and can enter details about your fixed asset purchases by going to the Lists Menu and choosing Fixed Asset Item List – otherwise you will have to track these items on an Excel Worksheet, a Word Document, or in QuickBooks itself by adding Sub-Accounts to your main Fixed Asset account for each piece of Equipment that was purchased and adding as much detail as possible in the Name, Description, and Notes boxes.

Make all asset depreciation entries and adjustments – I usually suggest that you work with your accountant on these matters.

Review fringe benefits that need to be reported on Form W-2 – Fringe benefits can include Health and Life insurance, public transportation subsidies, moving expense reimbursements, employer provided vehicles, educational reimbursements plans, group-term life insurance, employee loans that are forgiven, and Union Fringe Benefits.  If you aren’t sure if any of the benefits that you offer your employees should be included on their W-2’s consult your accountant.

Take a physical inventory and reconcile with book inventory – it is important that you take a year end physical inventory; I usually suggest that you include a copy of that physical inventory sheet for your accountant and let them give you the appropriate adjusting entries to record in QuickBooks.

Print financial reports – from the QuickBooks Year-End Guide/Checklist click on this topic for reports to print.  Keep in mind that these reports will not have adjusting entries from your accountant and that amounts will change.  I would recommend that when you create the suggested reports that you modify them and add a report subtitle called “Prior to Adjusting Entries”.  After you have entered the adjusting entries from your accountant, rerun these same reports adding a new subtitle called “After Adjusting Entries”.

Print income tax reports to verify tax tracking – from the QuickBooks Year-End Guide/Checklist click on this topic for an explanation of what is involved for this action item.  You should ask your accountant for help in setting up the correct tax tracking for each item on your Chart of Accounts.

Import your tax-related data to Turbo Tax or ProSeries – from the QuickBooks Year-End Guide/Checklist click on this topic for an explanation.  If you do not prepare your own tax returns you can definitely skip this section.

Print and mail forms W-2, W-3, 1099, 940, 941, and 1096 – remember you no longer need to buy pre-printed W-2 and W-3 forms as QuickBooks will print these forms on plain paper; you will still need to purchase preprinted 1099 and 1096 forms.

Archive and back up your data – backing up your data is something that you should be doing on a very regular basis as part of a disaster recovery plan in the event of computer virus, computer failure, etc.

Archiving your data is something that you should do if your file is large – contains more than 3 years of data – although some businesses will have extremely large files after only 2 years.  Creating a new company file each year is not necessary and not recommended for contractors; you probably have jobs that span over the course of 2 calendar years or more and you will want access to complete details relating to those jobs for job costing reports.  There are, however, times when creating a new file is appropriate, such as you have several years of data with early years containing lots of data entry errors, or your data file has become damaged and cannot be repaired.

3 Responses to QuickBooks Tips – Year End Tasks for Filing Taxes

  • Stephanie
    Thanks for stopping by and taking the time to post this valuable piece of information regarding the Canadian version. I was not aware that Archive & Condense was not recommended for the Canadian version – how odd. Could you/would you be willing to provide a little more detail as to why it is not recommended.

    I am aware, that with the US version, the ability to use the Archive & Condense (or Clean Up Company Data) option only seems to work correctly if the QuickBooks file is in pristine condition to begin with. I was able to successfully perform the task with our own company file – archiving data from 2000-2006, while leaving full data for 2007-present recently.

    Many data files are large and become corrupt making this an impossible task – in situations such as this; it is often best to send the file out to an experienced company who performs these types of data recovery/data transfer services. Two very good companies are:

    QB or Not QB – https://www.qbornotqb.com/
    Accounting Users.com – https://www.quickbooksusers.com/datarepair.htm

  • Please check with QuickBooks tech support regarding use of the Archive and Condense function.

    It is not recommended to be used, at least in the Canadian version.

  • Pingback: Adjusting entries and additional help!?

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About Your Host:

Nancy Smyth, Certified QuickBooks ProAdvisor

Nancy Smyth, Sunburst Software Solutions, Inc.
QuickBooks Construction & Payroll Expert


I've been using and supporting QuickBooks products since the early 1990's. I've worked with thousands of contractors, assisting them with QuickBooks setup, Certified Payroll Reporting requirements, AIA Billing and Weighted-Average Overtime.


QuickBooks is a powerful product, but learning how to use it in your construction business can be difficult. I hope you find resources available here to be helpful.

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