Navigating the Mess: Cleanup of QuickBooks Online for a Food Truck Business Turned Brick-and-Mortar
Taking on the task of cleaning up a business’s financial records can often feel like embarking on a journey without a map. This rings true for my first client, whose financials have turned into a labyrinth of confusion and chaos. The situation emerged when they transitioned from running a food truck in 2022 to establishing a brick-and-mortar location by 2023. The QuickBooks Online general ledger has ballooned to approximately 16,000 entries as of June 2024, and that’s even before factoring in unentered credit card transactions, which could add an estimated 3,000 more entries.
Before we approach the certified public accountant (CPA), it’s crucial to understand both the scope of the work needed and the costs involved. It’s become apparent that a tax re-filing for the years 2022 and 2023 is inevitable, but a thorough cleanup is essential to determine the exact figures.
Estimating Time and Cost
There’s an exhausting array of issues within their QuickBooks system, and addressing these will require both time and diligence. Below is a brief overview of the major problems identified, though this is by no means exhaustive.
Key Issues Identified:
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Sales Records Chaos: Daily sales journals have been incorrectly posting every day through the POS system. Alarmingly, sales have been recorded under Cost of Goods Sold (COGS), and customer deposits are inaccurately treated as sales.
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Double-Counting Expenses: An unfortunate mishap has bills and bill payments being recorded twice under COGS, inaccurately inflating expenses.
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Incorrect Owner Compensation: The owner’s payment, not taxed because they lacked W-2s, was misclassified as labor costs. This oversight needs rectification to ensure compliance and accuracy.
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Inventory Oversights: The balance sheet is glaringly missing any entries for food, alcohol, or merchandise inventory and their necessary adjustments.
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Credit Card Mishandling: Purchases via credit cards were never logged correctly. They were mistakenly entered as “Short-term Business Loans” in liabilities, complicating the financial picture significantly.
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Loan Oversights: Initial loan balances and their respective interest have gone unrecorded, which could lead to future discrepancies in financial statements.
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Asset Record Mismanagement: Only the original food truck has been recorded in the
One response
Cleaning up a QuickBooks Online (QBO) file with as many issues as you’ve described can indeed be a daunting task, but with a structured approach, it’s certainly manageable. Estimating the time and cost involved is inherently variable, depending on several factors including your familiarity with the client’s business operations, specific details of the issues at hand, and how quickly information can be verified and corrected. However, I can provide a general framework and some practical tips to help guide you through this process.
Estimated Time and Costs
Create a comprehensive plan noting each specific correction needed.
Correction Phase (40-80 hours): This is the heavy lifting part, where you actually make the corrections.
Inventory Adjustments and Asset Additions: Given that inventory adjustments and asset additions have been neglected, you’ll need to allocate around 10-15 hours to set up these accounts correctly.
Review and Refinement (10-15 hours): Once the corrections are made, the accounts need another review to ensure accuracy and readiness for tax preparation and filing. This can prevent future rework post-CPA review.
Consultation with CPA (5-10 hours): After the cleanup, plan for discussions with the CPA. This includes time for providing explanations, answering questions, and ensuring that the records align with tax filing requirements.
Financial Consideration
Given this workload, costs will largely depend on your billing rate. If your rate is $75/hour, for example, you’re looking at an estimated cost range between $4,500 and $9,750.