QuickBooks clean up
The QuickBooks clean up company data utility is a free and is included within QuickBooks that you purchased. This QuickBooks clean up company data utility may be able to help you, if your QuickBooks accounting data files are being requested by the IRS,an attorney,a court proceeding or if you just want to save a little file space and improve your computer’s performance then you should consider using the QuickBooks clean up company data utility. When you clean up your data file, QuickBooks deletes transactions that you no longer need. I will replace the deleted transactions with new general journal transactions that summarize, by month, the transactions that were just deleted. An example of this procedure is shown in my video. You can also choose to have QuickBooks clean up data by removing list items that you no longer need. By way of an example, if an invoice has been paid and no amounts are due for that invoice, QuickBooks deletes the details and includes the amount in a summary transaction showing income accounts.The customer information and item information is deleted. As far as reports, you are able to generate reports that summarize financial activity for the period of time you cleaned up. In this regard,QuickBooks provides a summary of transactions in your company file so that you are able to review to ending account balances. For example, if you clean up last year’s data, you can produce an income statements that compares the prior years information to the current year.
Set forth below are some high level QuickBooks clean up company data utility data points:
- The QuickBooks clean up company data utility removes detail from unneeded years or periods. However, all years summary data remain intact in a monthly format when using the QuickBooks clean up company data utility
- There are some serious drawbacks to using the QuickBooks clean up company data utility which are discussed in my video(s), which you should be aware of them. Click here to go to the Intuit website to learn more about these drawbacks.
- The QuickBooks clean up company data utility removes unneeded list items
- The QuickBooks clean up company data utility reduces risk of using wrong list item after item is removed
- The QuickBooks clean up company data utility may improve(emphasis added) performance somewhat by reducing file size 10%-15%
For more information concerning the QuickBooks clean up company data utility please see my video’s entitled on the right panel:
1. How the QuickBooks clean up company data utility or condense data company file utility can help you ?
2. Demonstration of the QuickBooks clean up company data utility process
The following is an interesting post, that appeared in a February 2011 thread within a QuickBooks Linked-in group, that presents the Intuit’s view concerning the IRS :
Rich Walker • Hello, this is Rich Walker from Intuit. Thanks for sharing the various methods and processes that you’re using to deal with the IRS agents’ requests. It appears that some of the agents are being overzealous, particularly in asking for Admin passwords.
A small group of Intuit employees met with the IRS in January, and they indicated that they plan to access electronic records and data during audits from multiple commercial financial software products, including Peachtree and other small business accounting applications.
According to the IRS, the legal authority for requesting a taxpayer’s electronic accounting software backup files and accounting records in electronic format is based on IRC Section 6001, Regulation 1.6001-1(a) and -1(e), Revenue Ruling 71-20 and Revenue Procedure 98-25. The approaches that this group has proposed are helpful in complying with the IRS’ demand for information, without providing the full electronic file upon first request.
As we learn more, we’ll keep you posted
The QuickBooks clean up company data utility may work in some circumstances. If the free QuickBooks clean up company data utility provided by Intuit doesn’t work to your satisfaction, there are some alternatives that can permanently remove prior year history. The alternatives include purchasing the software or hiring someone that has the software who is able to perform the QuickBooks clean up services on a hourly basis or agreed upon fee basis.
AICPA Calls for Safeguards for Electronic Data Provided for IRS Exams
The AICPA called on the IRS to start a dialogue to fix what it views as an important problem for some small businesses under audit examination: providing electronic records to the IRS while protecting confidential information that is not relevant to the IRS’ request.
The IRS maintains that the electronic data review will lead to quicker audit resolution due to fewer requests for follow-up information and will also reduce taxpayer burden. Agents may not request the electronic data file in every case where the taxpayer uses electronic records, but tax professionals are concerned that, when one is required, the cost of an audit representation could increase substantially if considerable resources are needed to ensure only the relevant information is provided.
In a letter to the commissioner of the IRS’s Small Business/Self-Employed Division, Patricia Thompson, chair of the AICPA’s Tax Executive Committee, noted that the separation of data on records prepared with software such as QuickBooks or Peachtree is a real issue for smaller businesses. “[B]ecause the small business taxpayer often maintains his own accounting software file and is not a trained bookkeeper or accountant, the data in the software file is not necessarily directly relevant to the IRS examination,” she stated. In some cases, that data may include nontax information such as a customer list or confidential taxpayer records related to years not subject to the audit.
While the software companies are working to make it easier to segregate data, precautions are needed in the meantime, she observed. Thompson proposed launching a dialogue between the AICPA and the IRS to examine ways that small businesses can provide the IRS with the records it needs while maintaining appropriate safeguards.
Working with the QuickBooks clean up utility may be challenging, so feel free to contact us.