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Year-end Tips for QuickBooks® Users

Keep year-end requirements in mind all year long. Gather information you will need as you go along and you will find that year-end work goes faster.

Get ready and print 1099s —>
  1. You'll find Januarys easier if you always get a new vendor or subcontractor to fill out a W9 before you give them their first payment.
    1. Sometimes you can't locate a vendor months later when you need his W9 so you can issue a 1099.
    2. Sometimes, once paid, the vendor refuses to complete a W9.
  2. Check your other name list to be sure no vendors are listed there.
    1. QuickBooks 1099 reports only list vendors.
    2. Change any vendor who is listed in the other names list to a vendor type to move them to the vendor list.
  3. It's a good idea to review your employee list as well, just in case someone was misclassified when they were created.
  4. Check your customer names for anyone who might be both a customer and a vendor.
    1. If you do business with someone as both a vendor and a customer, set that individual or company up as both a vendor and customer.
      1. Name the customer "businessname_c" - c for customer type.
      2. Name the vendor "businessname_v" - v for vendor type.
    2. Do a find for any business name that might be both a vendor and customer.
      1. Once you have done the find, it is easier to click the report button and review the results in the report format.
      2. For 1099 purposes you can limit the report to the current or past year.
      3. Change the sort order of the report to Account.
      4. If you are viewing the name from the vendor list, you should see only expense accounts listed.
      5. Run the same report for the customer version of this business and change the sort order to account again. You should see only income accounts.
      6. If you find the wrong name type, now is the time to edit the individual transactions and make the change. Change the name in the transaction to businessname_v or businessname_c as appropriate.
      7. When you have completed this process for each vendor who is also a customer, you will be able to run an accurate 1099 summary.
  5. If you deal with someone who is both a vendor and a customer, do a find for the customer name. Look for any checks that were issued in the customer name and confirm that they were issued correctly to the customer. If necessary, change the name on the check to the vendor name.
  6. Run your 1099 summary.
    1. Go to Reports, Vendors and Payables, 1099 Summary.
    2. Once the report is on the screen, change the options to
      1. All vendors.
      2. All allowed accounts.
      3. Ignore thresholds.
    3. Scan down the list for duplicate names.
      1. Look for names of the same vendor in various spellings.
      2. Look for the same vendor with the name varied, such as AK Airlines and Alaska Airlines.
      3. Go to your vendor list and make corrections as needed.
    4. Review total payments.
      1. Print the 1099 Summary Report so you can make notes on it.
      2. For the first review, scan down the Total Column looking for any amount over $600.
      3. For each name over $600, check:
        1. If it is an "Inc.," you do not need to send a 1099.
        2. If it is not an "Inc.," mark the name to go back and review on the next pass.
      4. Scan down the list of names you marked.
        1. Do you have the business Tax Identification Number? If not, send them a W9 form immediately.
        2. Don't guess about their status, have them fill out the form and keep it in your files. It is up to the vendor to tell you on a signed form what their status is and if they are subject to withholding.
        3. As the W9 forms are returned, enter the updated information in each vendor's record.
      5. Edit your vendor's list by marking any vendor you marked on your hard copy as "Vendor eligible for 1099" at the Additional Info tab.
    5. Now modify your 1099 summary to show only 1099 vendors, All allowed accounts and Ignore thresholds.
      1. Do you pay rent to any of these vendors? Is the amount paid in rent in the column for rents. If yes, then your accounts are properly set up for 1099 for rents.
        1. If not, go to Preferences, Tax:1099, Company Preferences.
        2. Use the drop down menu for Box 1:Rents to select the account for rent payments.
      2. Follow the above procedure for royalties, fishing boat proceeds, and the other items in the 1099 categories list. You can view the list in Preferences, Tax:1099, Company Preferences.
      3. Most of your 1099s should likely be coded to Box 7:Nonemployee Compensation.
      4. Use the drop down menu to select the multiple accounts where you have posted nonemployee compensation.
  7. Review your revised 1099 summary.
    1. Be sure your 1099 options set at the top of the report are Only 1099 vendors, All allowed accounts and Ignore thresholds.
    2. If your Uncategorized column is zero, you have correctly set up your preferences for 1099 forms for this year.
    3. If you have amounts showing as uncategorized, there is either an error in your 1099 preferences or you have paid this vendor for something that is reportable for 1099 purposes.
      1. Double click the uncategorized amounts for each vendor.
        1. Review the individual payments and determine if the payment is reportable for 1099 purposes.
        2. Change your 1099 preferences to include any accounts that were previously excluded so that the individual payments you determine reportable are now categorized on the 1099 summary report.
        3. If you determine an amount in the uncategorized column is not reportable, just leave it uncategorized and it will not show on the 1099 forms when you print them.
    4. It is fine for a vendor to have amounts under more than one column, for example, if you pay rent and purchase services from a single vendor, that vendor will have two totals printed on his 1099, one for each category.
  8. When you get back all the W9 forms, update your vendor accounts.
    1. Uncheck Vendor eligible for 1099 if the returned 1099 so indicates.
    2. Double check the name and vendor address.
      1. You may have been making your checks payable to the vendor name. If the tax id number is a social security number, be certain that you fill in the first and last name of the vendor.
  9. Review your final 1099 summary.
    1. Change your report options to Only 1099 vendors, Only 1099 accounts, Use thresholds.
      1. Compare your final report with the hard copy you printed above to be sure no business has been left out from the final cut.
  10. There are new rules that relate to the method of payment. If you paid your vendor by credit card, be sure to review the rules since it may not be appropriate for you to report payments made by credit card.
  11. QuickBooks can print your 1099 and summary 1099 on preprinted stock.
    1. You can order preprinted forms from Intuit.
    2. You can purchase preprinted forms online from many office supply sites.
    3. You can purchase preprinted forms from Office Depot and Office Max, don't wait they sell out early every year.
    4. You can order preprinted forms from the IRS at no charge. You should order your forms by June to be certain to receive them on time. They will be set up to print with an impact printer. You can remove the side binding and print each sheet individually. Plan to order extras as you can expect frequent printer jams.
Get ready for W2s - Reconcile your 941s, 940 and W3 —>
  1. Your reports will be reconciled by the IRS.
    1. Remember that the IRS will compare W3 totals with the totals of your 941 quarterly reports for the year and with your 940 annual report.
    2. Your 940 annual report will be compared with a report that your state submits to the IRS summarizing your quarterly unemployment tax reports.
  2. Be certain that you do not mail any of your year end payroll reports until all of the reports are reconciled to your payroll records.
  3. It is easier to make sure your reports for the year balance before submitting them.
    1. You can start work on your year-end reports any time after your final payroll.
    2. Be sure that nothing can come up that would require another paycheck. If you have frequently employee turnover, remember that you must issue a final paycheck within 3 days under some circumstances.
  4. Complete your 4th quarter 941, your annual 940 and your 4th quarter state unemployment return in draft form.
  5. Print a payroll summary from QuickBooks for the year by quarter.
    1. Go to Reports, Employees and Payroll, Payroll Summary. Set the columns to quarterly. Modify the report to exclude Hours and Rate from the report.
  6. Compare your Adjusted Gross on the QuickBooks report to the quarterly 941 reports.
    1. Your 941 report Line 2 should match the Adjusted Gross for each quarter.
    2. Compare Line 3 with the Federal Withholding line on the QuickBooks Payroll Summary.
    3. If your employees receive tips, compare Line 5b.
  7. The amounts should match exactly.
    1. If a payroll check was modified or deleted, the amounts will not match.
    2. You may have filed a 941c during the year. If so, be sure to include these amounts as appropriate when matching your numbers.
  8. Make corrections as needed.
    1. You may have to reenter any deleted paychecks or fix any modified paychecks.
    2. You may have to create a 941c to correct the 941 report totals for the year.
  9. Compare the state unemployment quarterly reports with the QuickBooks Payroll Summary by quarter.
    1. Match the total payroll numbers, not the adjusted totals after the total taxable for state unemployment purposes.
  10. If you have special circumstances such as payroll deductions for insurance or retirement, it is a good idea to review these items. Check anything you are uncertain about with your CPA or tax preparer.
  11. Once your reports balance, you can print your final returns and your W2s and W3.
Food and beverage establishments - Do you need to allocate tips? —>
If you have more than 10 employees on an typical business day, you may be required to file Form 8027. The filing requirement (more than 10 employees) is based on the total of all employees who provided services in connection with the provision of food and beverages at the establishment, not just the number of directly tipped employees. Include employees such as wait staff, bussers, bartenders, seat persons, wine stewards, cooks, and kitchen help.
You can find an Excel worksheet here to help you with the determination calculations.
Look here at IRS.gov for the complete instruction booklet.
Protect prior years —>
QuickBooks does not require any special action at year end to close the books.
  1. You should protect prior year's information from accidental or other modifications.
  2. Go to Edit, Preferences, Accounting, Company Preferences.
    1. Choose Set/Date Password at the bottom of the window.
    2. Set the date for last day of the prior year or a prior period.
    3. Only Admin can access or change the password. Don't use the same password used for Admin
    4. Only the owner of the business or a trusted employee should have either the Admin or Closing Date passwords.
  3. Setting a closing date password protects the data file two ways.
    1. From accidentally typing 2008 when it is really January 2009.
    2. From a malicious attempt to hide activity by dating it in prior years so that it will not show on current year reports.
  4. If a closing date password has been set and no one remembers it, Admin can reset the closing date password.
  5. This is a good time for the business owner to review the QuickBooks users set up. The owner should be the only one with access to the QuickBooks Admin password and closing date password. Other users can be set up with their own user names and permissions.
Review your payment to subcontractors —>
  • State and Federal Laws define who a business can treat as a subcontractor and who must be treated as as employee.
  • Links to subcontractor/employee guidelines can be found here.
  • This pdf provides a useful test to use in determining if you should be treating someone as an employee in Alaska.
  • This is the start of a new year and a good time to make changes.
Advice and tips provided on the Fathom Graphics website are not a substitute for advice from your CPA, tax preparer or attorney. We are not CPAs or attorneys and do not provide legal or tax advice.