QuickBooks Online Cleanup: Estimating Time and Cost

A Challenging First Client Experience

I recently began working with my first client, and it’s clear their financial records are in total disarray. They launched a food truck business in 2022 and expanded to a brick-and-mortar location in 2023. Consequently, their general ledger contains approximately 16,000 entries through June 2024 in QuickBooks Online. To complicate matters, their credit card transactions were never set up, which I estimate will add another 3,000 entries once processed. Given these issues, it’s likely that they’ll need to re-file their taxes for 2022 and 2023. However, it’s crucial to straighten out their accounts before consulting the CPA involved in this situation.

Estimating the Cleanup

The pressing question is: how much time and money will it take to clean this up?

Here are some of the key challenges we’ve identified, with many more likely lurking beneath the surface:

The POS system logs a sales journal daily, incorrectly posting sales to the Cost of Goods Sold (COGS) and deposits as sales.
Bills and bill payments are erroneously increasing COGS twice.
Owner’s pay is inaccurately recorded as labor costs and remains untaxed, as they haven’t issued a W-2.
The balance sheet shows no food, alcohol, or merchandise inventory adjustments.
Credit card purchases are unaccounted for, with all payments misclassified as “Short Term Business Loans” in the liability account.
There are no set beginning balances for loans, and no interest has been recorded against them.
Only one asset, namely the food truck, has been recorded in the Furniture, Fixtures, and Equipment (FFE) account.
Major purchases related to the transition to a brick-and-mortar establishment are missing from the FFE account.

With such a complex situation, I’d appreciate any insights or estimates from those with experience in similar QuickBooks Online cleanups. How long do you think it will take, and what should we budget for this extensive cleanup effort?

Cleaning up an extensive mess like the one described in your client’s QuickBooks Online can be an overwhelming task, especially with multiple issues to address. The time and cost involved can vary significantly based on the complexity of the transactions and the extent of the errors. Here’s a breakdown to help estimate the time and effort required for the cleanup:

Estimated Time for Cleanup

Initial Assessment (5-10 hours):
Conduct a thorough review of the current books to understand the full extent of the issues.
Identify all discrepancies and errors not mentioned.
Create a plan or checklist for addressing each issue.
Correcting POS Posting Errors (10-15 hours):
Review and correct the sales journal entries.
Properly categorize sales and COGS.
Ensure deposits are accurately reflected.
Fixing Duplicate Entries (5-10 hours):
Identify and correct double entries for bills and payments affecting COGS.
Payroll and Owner Pay Adjustments (5-10 hours):
Correctly categorize owner payments and adjust labor costs.
Ensure all necessary payroll forms are correctly filed or amended.
Inventory Adjustments (10-15 hours):
Set up an inventory system if not already in place.
Update the balance sheet with correct inventory levels and adjustments.
Credit Card and Loan Adjustments (15-20 hours):
Enter all missing credit card transactions.
Correctly re-categorize credit card payments.
Set up loans with correct beginning balances and interest.
Fixed Assets and Depreciation (10-20 hours):
Add all missing assets purchased for the brick and mortar location.
Update the FFE account.
Calculate and adjust depreciation schedules as necessary.
Verification and Reconciliation (10-15 hours):
Reconcile all accounts to ensure accuracy once adjustments are made.
Review and ensure all transactions are accurately categorized and entered.

Total Estimated Time: 70-115 Hours

Cost Estimate

The cost will depend on your billing rate. For instance:

Hourly Rate: $75 – $150
Lower Range Estimate: $5,250 – $8,625
Higher Range Estimate: $10,500 – $17,250

These estimates assume no additional complications are found during the cleanup. Always account

One response

APAdmin

26 February 2025 at 2:14 PM
Cleaning up an extensive mess like the one described in your client’s QuickBooks Online can be an overwhelming task, especially with multiple issues to address. The time and cost involved can vary significantly based on the complexity of the transactions and the extent of the errors. Here’s a breakdown to help estimate the time and effort required for the cleanup:

Estimated Time for Cleanup
1. Initial Assessment (5-10 hours):
2. Conduct a thorough review of the current books to understand the full extent of the issues.
3. Identify all discrepancies and errors not mentioned.
4. Create a plan or checklist for addressing each issue.
5. Correcting POS Posting Errors (10-15 hours):
6. Review and correct the sales journal entries.
7. Properly categorize sales and COGS.
8. Ensure deposits are accurately reflected.
9. Fixing Duplicate Entries (5-10 hours):
10. Identify and correct double entries for bills and payments affecting COGS.
11. Payroll and Owner Pay Adjustments (5-10 hours):
12. Correctly categorize owner payments and adjust labor costs.
13. Ensure all necessary payroll forms are correctly filed or amended.
14. Inventory Adjustments (10-15 hours):
15. Set up an inventory system if not already in place.
16. Update the balance sheet with correct inventory levels and adjustments.
17. Credit Card and Loan Adjustments (15-20 hours):
18. Enter all missing credit card transactions.
19. Correctly re-categorize credit card payments.
20. Set up loans with correct beginning balances and interest.
21. Fixed Assets and Depreciation (10-20 hours):
22. Add all missing assets purchased for the brick and mortar location.
23. Update the FFE account.
24. Calculate and adjust depreciation schedules as necessary.
25. Verification and Reconciliation (10-15 hours):
26. Reconcile all accounts to ensure accuracy once adjustments are made.
27. Review and ensure all transactions are accurately categorized and entered.
Total Estimated Time: 70-115 Hours

Cost Estimate

The cost will depend on your billing rate. For instance:
- Hourly Rate: $75 – $150
- Lower Range Estimate: $5,250 – $8,625
- Higher Range Estimate: $10,500 – $17,250
These estimates assume no additional complications are found during the cleanup. Always account
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