QuickBooks can have hundreds of recorded transactions and still not be ready for tax preparation. Before using year-end reports, it's a good idea to review the balances, categories, and reconciliations to ensure they accurately reflect what happened.

1. Check that banks and cards are reconciled

Start by comparing each QuickBooks account with its statement. If an account isn't reconciled through the last month of the period, there may be missing, duplicate, or incorrectly dated transactions.

2. Look for duplicate transactions

Duplicates can appear when a transaction is automatically imported and then manually recorded again. Before deleting them, it's important to confirm that they actually represent the same transaction.

3. Review the categories

Look for expenses recorded in overly broad categories or transactions that still appear as pending classification. The goal isn't to recategorize everything indiscriminately, but to identify accounts that need review before using the reports.

4. Check accounts receivable and payable

Open invoices and outstanding bills should be reviewed to confirm they are still valid. A payment already received but not properly applied can cause an invoice to remain outstanding even after the customer has paid.

5. Review the Profit & Loss

Compare the income and expenses with what you know about the business. If a very high expense, a negative account, or a category with unusual behavior appears, it's worth investigating before assuming the report is accurate.

6. Review the Balance Sheet

Pay attention to bank accounts, credit cards, loans, accounts receivable, and other important balances. A balance sheet with outdated accounts or incorrect balances usually indicates that there's still cleanup work to be done.

7. Organize the documentation

In addition to QuickBooks, keep bank statements and tax documents you received throughout the year. The required documents vary depending on the individual and the type of business.

What happens if QuickBooks is behind?

In that case, it's usually advisable to do a cleanup before using the final reports. The process may include overdue reconciliations, correction of duplicates, review of categories, and adjustment of balances that do not reflect the account statements.

You can check my QuickBooks and bookkeeping services or consult the page of tax preparation in Spanish to learn about the process.

The information required for a tax return depends on each taxpayer and entity. This content is general and does not replace an individual review.