How much and how long on Quickbooks Online cleanup?

Untangling a Chaotic QuickBooks Online: A Comprehensive Guide to Cleanup

Navigating through financial disarray can be daunting, especially when dealing with complicated Bookkeeping issues in QuickBooks Online. Encountering such problems is not uncommon, particularly for businesses that have experienced rapid growth, as was the case with one of my clients, who expanded from a mobile food truck business in 2022 to a full-fledged brick-and-mortar restaurant in 2023.

By mid-2024, their general ledger had amassed an overwhelming 16,000 entries, up to June, in QuickBooks Online. But the situation was even more complicated; their credit card transactions were never integrated, suggesting an additional 3,000 entries still need to be accounted for. Sadly, it became clear that they might need to re-file their tax returns for 2022 and 2023, necessitating a thorough cleanup before consulting their CPA.

Estimating Time and Cost for the Cleanup

Addressing such a complex and multifaceted issue requires a strategic approach and can involve significant time and expense. While it’s challenging to provide an exact estimate without a meticulous review, here are some critical factors and their corresponding complications that highlight the extent of the work needed:

Key Problem Areas

Sales Misallocation: Their Point of Sale system chronically misposted sales as part of Cost of Goods Sold (COGS) and wrongly categorized deposits as sales. This misclassification wreaks havoc on the financial accuracy.
Duplication in COGS: Bills and Bill Payments were inadvertently counted twice, further inflating the COGS account.
Miscalculated Owner Pay: Payments to the business owner were mistakenly recorded under labor costs but were not taxed, with no W-2 forms issued.
Inventory Oversight: No entries were made for food, alcohol, or merchandise inventories, nor were there any adjustments reflected on the balance sheet.
Credit Card Oversights: Transactions made with credit cards were posted under “Short Term Business Loans,” resulting in a misstatement of liabilities.
Loan Mismanagement: Loans lacked initial balances, and no interest accrual was recorded, leading to incomplete financial statements.
Incomplete Asset Records: Only one asset, the original food truck, was added to the Furniture, Fixtures, and Equipment account, omitting significant purchases when transitioning to the brick-and-mortar site.

Cleaning Up the Financial Mess

Addressing

Cleaning up QuickBooks Online (QBO) for a business with such entangled issues can be both time-intensive and costly, particularly when the client has experienced significant changes in operations, like transitioning from a food truck to a brick-and-mortar establishment. Given the complexity and volume of the issues you’ve highlighted, a thorough cleanup is essential, not only for ensuring accurate financial reporting but also for complying with tax regulations.

Estimated Timeframe and Cost:

The time required for cleanup can vary significantly based on several factors, including the complexity of the transactions, the level of detail needed, and your familiarity with QuickBooks Online. However, based on the information provided, here’s a rough estimate:

Comprehensive Review and Planning: Initial assessment and planning can take about 10–15 hours. This includes meetings with the client to understand the business operations, reviewing previous records, and setting up a structured plan for tackling the cleanup.
Data Entry and Error Correction: Given that there are already 16,000 lines, plus an estimated 3,000 more from credit cards, expect approximately 50–100 hours. This step involves restructuring the general ledger, re-classifying transactions appropriately, and ensuring all journal entries are accurate. Considering the errors and misclassifications (e.g., POS, COGS, owner pay), this becomes quite detailed.
Inventory and Asset Management Adjustments: Allocating time to create accurate opening balances for inventory and fixed assets, possibly another 15–20 hours. Given that zero inventory adjustments were made, a precise setup of your inventory and asset tracking from scratch is crucial, particularly for the newer assets purchased for the brick-and-mortar expansion.
Reconciliation and Verification: Reconciling bank and credit card transactions to ensure all entries are corroborated takes another 20–30 hours. This stage includes confirming that beginning balances align and corrections have been applied properly.
Communication and Collaboration with CPA: Plan for at least 5–10 hours to draft summaries of changes, collaborate with the CPA for tax refiling, and address any additional inquiries.

Cost Expectation:

Given these estimations, if you or your firm charges around $50-$150 per hour for Bookkeeping services (this rate can vary significantly based on location and expertise), total cleanup costs might range from $5,000 to $22,500.

Practical Tips for Efficient Cleanup:

**Break Down

One response

APAdmin

3 March 2025 at 8:26 AM
Cleaning up QuickBooks Online (QBO) for a business with such entangled issues can be both time-intensive and costly, particularly when the client has experienced significant changes in operations, like transitioning from a food truck to a brick-and-mortar establishment. Given the complexity and volume of the issues you’ve highlighted, a thorough cleanup is essential, not only for ensuring accurate financial reporting but also for complying with tax regulations.

Estimated Timeframe and Cost:

The time required for cleanup can vary significantly based on several factors, including the complexity of the transactions, the level of detail needed, and your familiarity with QuickBooks Online. However, based on the information provided, here’s a rough estimate:
1. Comprehensive Review and Planning: Initial assessment and planning can take about 10–15 hours. This includes meetings with the client to understand the business operations, reviewing previous records, and setting up a structured plan for tackling the cleanup.
2. Data Entry and Error Correction: Given that there are already 16,000 lines, plus an estimated 3,000 more from credit cards, expect approximately 50–100 hours. This step involves restructuring the general ledger, re-classifying transactions appropriately, and ensuring all journal entries are accurate. Considering the errors and misclassifications (e.g., POS, COGS, owner pay), this becomes quite detailed.
3. Inventory and Asset Management Adjustments: Allocating time to create accurate opening balances for inventory and fixed assets, possibly another 15–20 hours. Given that zero inventory adjustments were made, a precise setup of your inventory and asset tracking from scratch is crucial, particularly for the newer assets purchased for the brick-and-mortar expansion.
4. Reconciliation and Verification: Reconciling bank and credit card transactions to ensure all entries are corroborated takes another 20–30 hours. This stage includes confirming that beginning balances align and corrections have been applied properly.
5. Communication and Collaboration with CPA: Plan for at least 5–10 hours to draft summaries of changes, collaborate with the CPA for tax refiling, and address any additional inquiries.
Cost Expectation:

Given these estimations, if you or your firm charges around $50-$150 per hour for Bookkeeping services (this rate can vary significantly based on location and expertise), total cleanup costs might range from $5,000 to $22,500.

Practical Tips for Efficient Cleanup:
- **Break Down
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