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I hope this helps you. Drop me an email with your comments.

Doug Sleeter



Mid-Year Setup Issues

If you’re setting up a new company file and your start date is somewhere in the middle of the year, you’ll need to include a few extra steps in your setup. In the following example, assume you are setting up a calendar year company but you’re using 4/30 as the start date.

Mid-Year Balance Sheet Setup

Start by setting up the balance sheet using 4/30 balances. If you use a journal entry for your balance sheet setup, make sure you don’t include A/R, A/P, or Inventory.

Year-to-Date Adjustment for Income and Expenses

To record the total income and expenses so far during the year, use a journal entry like the one shown below.

Notice that the journal entry above does not record details of sales or expenses (by Customer, Vendor, or Item). It is not possible to affect Items with Journal Entries, but you can allocate income and expenses by Customer or Vendor.

To allocate the year-to-date income and expenses to individual Customers and Vendors, prepare the journal entry as shown below.

Allocating Year-to-Date Expenses to 1099 Vendors

When you enter year-to-date income and expenses, you’ll need to allocate all relevant expenses to your 1099 Vendors by using splits in the year-to-date adjusting journal entry as shown above. This is necessary so that QuickBooks has the information it needs to print the correct amounts on the 1099’s at the end of the year.

Note: The setup shown above is the first step in making your 1099’s work. You also need to set up the 1099 preferences and set the "Vendor eligible for 1099" field on each 1099 Vendor’s record.

 

Checklists for Setting up a Fiscal Year Company

The table below details three scenarios for setting up a fiscal year company for different Start Dates. In this example, assume your fiscal year ends on April 30. The table shows the steps you must complete given three possible Start Dates.

Checklist for Setting up a Fiscal Year Company
If Start Date is:
Fiscal Year End
Mid-Fiscal Year
End of Calendar Year
 
30-Apr
30-Sep
31-Dec
Balance Sheet Accounts Setup Enter Account Opening Balances per 4/30 Trial Balance Enter Account Opening Balances per 9/30 Trial Balance Enter Account Opening Balances per 12/31 Trial Balance
Income and Expense Accounts Setup No P&L adjustment necessary May-Sept P&L Adjusting journal entry. Include totals for Payroll accounts. Use Splits to allocate 1099 vendors May-Dec P&L Adjusting journal entry. Include totals for Payroll accounts
Payroll Setup Setup YTD Amounts by Employee for Jan-Apr. Do not affect accounts Setup YTD Amounts by Employee for Jan-Sept. Do not affect accounts No Payroll detail necessary
1099 Setup Zero Dollar 1099 Adjustment for Jan-Apr totals Zero Dollar 1099 Adjustment for Jan-Apr totals No 1099 detail necessary

The next section covers each of these checklists in detail.

End of Fiscal Year (Middle of Calendar Year)

If your fiscal year ends in the middle of the calendar year, and your Start Date is the end of your fiscal year (for example April 30), use this checklist for your setup.

Checklist for Setup - End of Fiscal Year
  • Enter the opening balances in all Balance Sheet accounts using the amounts from the 4/30 after-closing Balance Sheet.
  • Enter Year-to-Date payroll information for each employee using Setup YTD Amounts. Important: Make sure you don’t affect accounts when entering the year-to-date amounts. Also, its best to set up payroll after setting up your opening balances in your balance sheet accounts.
  • Enter a zero-dollar journal entry to "plug" the 1099s for the total payments made to 1099 vendors between January 1 and your fiscal year end.

1099 Setup - End of Fiscal Year (Middle of Calendar Year)

If your Start Date is in the middle of a calendar year, you must ensure that your 1099 vendor records have proper calendar-year-to-date amounts so the 1099’s print correctly at the end of the first calendar year.

To set up the year-to-date amounts for your 1099 vendors, use a zero-dollar journal entry as shown below. Notice that Subcontractors Expense is debited and credited for the same amount, which makes it zero out. Enter the year-to-date total of payments to each 1099 vendor in the Debit column, and enter the Vendor in the Name field. Leave the Name field blank on the Credit line.

Middle of Fiscal Year (Middle of Calendar Year)

If your fiscal year ends in the middle of the calendar year, and your Start Date is in the middle of the fiscal year (for example June 30), use this checklist for your setup.

Checklist for Setup - Middle of Fiscal Year (not Dec. 31)
  • Enter the opening balances in all Balance Sheet accounts using the amounts from the 6/30 Trial Balance.
  • Year-to-Date adjusting journal entry for income and expense accounts using year-to-date totals through 6/30 for each account. Use split lines to allocate any expenses that relate to 1099 Vendors.
  • Enter Year-to-Date payroll information for each employee using Setup YTD Amounts. Important: Make sure you don’t affect accounts when entering the year-to-date amounts. Also, its best to set up payroll after setting up your opening balances in your balance sheet accounts.
  • Enter a zero-dollar journal entry to "plug" the 1099s for the total payments made to 1099 vendors between January 1 and your fiscal year end.

Year-to-Date Adjusting Journal Entry for Income and Expenses

To record the total income and expenses so far during the fiscal year, use a journal entry like the one shown below. In this example, the Start Date is June 30 for a company whose fiscal year end is April 30. The amounts in the journal entry are totals of income and expenses for May and June.

Notice that the journal entry above does not record details of sales or expenses (by Customer, Vendor, or Item). It is not possible to affect Items with Journal Entries, but you can allocate income and expenses by Customer or Vendor.

To allocate the year-to-date income and expenses to individual Customers and Vendors, prepare the journal entry as shown below. Notice the Customer and Vendor names in the name field.

1099 Setup - Middle of Fiscal Year (Middle of Calendar Year)

For a Mid-Fiscal Year setup, you’ll do two things to set up your 1099s. Enter a zero-dollar journal entry to "plug" the 1099s for the period between January 1 and your fiscal year end. Also, to record the 1099 amounts for this fiscal year-to-date, enter split lines on your Year-to-Date adjusting journal entry for each of your 1099 vendors.

To record the amounts for the January 1 through your fiscal year end, use a zero-dollar journal entry as shown below. Notice that Subcontractors Expense is debited and credited for the same amount, which makes it zero out. Enter the year-to-date total of payments to each 1099 vendor in the Debit column, and enter the Vendor in the Name field. Leave the Name field blank on the Credit line.

To allocate the year-to-date income and expenses to individual Customers and Vendors, prepare the journal entry as shown below. Notice the Customer and Vendor names in the name field.

Middle of Fiscal Year (December 31)

If your fiscal year ends in the middle of the calendar year, but you are setting up on December 31, use this checklist for your setup.

Checklist for Setup - Middle of Fiscal Year (December 31)
  • Enter the opening balances in all Balance Sheet accounts using the amounts from the 12/31 Trial Balance.
  • Enter a year-to-date adjusting journal entry for income and expense accounts using year-to-date totals for each account.
  • No payroll or 1099 detail is necessary.

Entering Outstanding Checks and Deposits

For each of your bank accounts and credit cards, you’ll need to enter all the outstanding items. Each outstanding check and deposit should be entered directly into the register using the actual date of the transaction (this date should be before your Start Date).

Use the opening balance per the bank statement for your setup balance. Then, record each outstanding item directly in the register. This will bring your account into balance with the trial balance for your Start Date.

Important: You must enter the outstanding checks and deposits, and make sure the Opening Balance transaction is marked "cleared" as shown here. This ensures that the first bank reconciliation goes smoothly.

Entering Historical Transactions

If you’re setting up sometime after the beginning of the year, you have to enter every transaction from your Start Date through the current date.

Make sure you enter your old transactions in the following order:

  1. Purchase transactions (Purchase Orders, Bills, Vendor Credits, Bill Payments, Checks, Credit Card Charges)
  2. Sales transactions (Invoices, Credit Memos, Cash Sales, Payment Receipts from customers, Deposits)
  3. Sales Tax payments
  4. Payroll transactions (Paychecks, Liability Payments)
  5. Adjustments to your bank account (Transfers, Bank Charges, Journal Entries)

Note: You don’t have to enter these historical transactions right away. You can start using QuickBooks before entering previous transactions, but your balances won’t be accurate, and your reports will be wrong until you bring your file up to date.

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