Archives for May 2023

Causes Of The Bank Reconciliation Issues

• While working on your business accounting in QuickBooks you could have problems with reconciling the bank or credit card account
•  The main causes of the bank reconciliation issues are:
  • Missing checks or transactions
  • Some incorrect adjustments
  • Mistakes when entering the transactions’ data
  • Changes made to past transactions

What Should You Verify When Doing Your Bank Reconciliation?

• In the QuickBooks reconciliation screen, check that you entered the correct ending balance and statement ending date so that they match the information on the bank or credit card statement
• Verify each transaction’s information (vendor name, amount, date, description) you see in the QuickBooks reconciliation module with the information on the bank or credit card statement
• The reconciliation difference should be zero, otherwise look after new, changed or deleted transactions
• After you arrived to zero reconciliation difference, if there are any transactions in the reconciliation module left unmarked, check that these are true outstanding transactions, meaning checks that you have written, but did not clear the bank or amounts that you deposited, but did not clear the bank
• After you finish the reconciliation, check that your register balance on the reconciliation report matches the bank balance shown on the balance sheet report for the respective date

What Can You Do If You Have Issues?

Print Reconciliation Discrepancy Reports

• If you have problems with the beginning balance when trying to reconcile, you can print some reports to help you fix the reconciliation:
  • If you use QuickBooks desktop, you should be able to print a “Reconciliation Discrepancy” report to see what changes were made since your last reconciliation
  • For QuickBooks online you should be able to see the amount or amounts that changed:
    • From the “Accounting” tab:
      • choose Reconciliation
      • then choose the account you want to reconcile
      • go to History by account on the right top corner of the page

Undo Previous Reconciliations

• If you’re unable to find any issues in your accounts, you may need to undo the previous reconciliation until the opening balance is correct
• If someone edited or deleted a transaction from years ago, you may need to undo your reconciliations for the past few years to get to where the opening balance is correct
• To undo the reconciliation:
  • Go to the Accounting menu
  • Select History by account on the top right corner
  • Select the account you want to undo the reconciliation for
  • On the right part of the page, under “Action”, click on the “View Report” arrow and select “Undo”

Change The Transactions’ Status

• Instead of undoing so many reconciliations and create so much work, you can:
  • try to find the problem transactions in your bank register; to do that:
    • go to the Accounting menu
    • select Chart of Accounts
    • find the account you want and select View register
  • once you identified the problem transactions, verify that their status is correct (R = reconciled, C = cleared, Blank = outstanding/uncleared); if it is not, you can change their status by double clicking on the status box until you obtain the desired status, so that you can fix your beginning bank balance in the reconciliation module

In some cases, users make journal entries to force their QuickBooks balance to match the bank statement ending balance, but we recommend you ask an accountant for guidance in this case, because an adjustment may create other problems.

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This material is for informational purposes only. It does not constitute tax, legal or accounting advice.

Automobiles

• In the previous blog we talked about the standard mileage rate method, in this blog we will discuss the actual expense method
• Instead of using the standard mileage rate method for computing business automobile expenses, you can use the actual expense method
• If you choose the actual expense method you should know that this method is based on calculating all the money that you actually spent operating your vehicle multiplied by the business use percentage
• If you chose the actual expense method for the first year the vehicle is used, you must use the actual expense method for all subsequent years

Records you should keep

• In addition to mileage records, which should include the business purpose and destination of the trips, you should also keep records showing the exact amounts paid, as well as the dates of the expenses for:
  • the automobile (the purchasing documents)
  • any improvements and repairs
  • gasoline, insurance, registration fees, maintenance, and any other vehicle related expenses

Costs included in the actual expenses

• The costs included in the actual expenses are:
  • Depreciation
  • Licenses
  • Gas
  • Oil
  • Lease payment
  • Insurance
  • Garage rent
  • Registration fees
  • Repairs
  • Tires
  • Interest on loan
• You can also claim tolls and parking fees, in addition to the above expenses; these expenses can be claimed regardless if you use the standard mileage rate method or the actual expense method

Business percentage

• If you use the actual expense method, you should:
  • calculate the business use percentage of the vehicle
  • keep records of the total miles driven and the business miles driven to determine the business use percentage

Five or more cars

• If you own or lease five or more cars that are used for business at the same time, you can’t use the standard mileage rate for the business use of any car
• However, you may be able to deduct your actual expenses for operating each of the cars in your business
• You aren’t using five or more cars for business at the same time if you alternate using (use at different times) the cars for business
• For example:
  • You own a car and four vans that are used in your housecleaning business
  • Your employees use the vans, and you use the car to travel to various customers
  • You can’t use the standard mileage rate for the car or the vans
  • This is because all five vehicles are used in your business at the same time
  • You must use the actual expense method for all vehicles

You must select the option to use either the standard mileage rate method or the actual expense method considering all the conditions and choosing the most advantageous method for you.

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This material is for informational purposes only. It does not constitute tax, legal or accounting advice.