Here is your complimentary copy of The Desktop Accountant, our periodic newsletter with tips and tricks for using QuickBooks and QuickBooks Pro.

News

The Sleeter Group has been very busy the past several months developing a number of new products and services. The first of these, we are pleased to announce, is an exciting new software program to automate those time consuming state payroll tax reports (see details below).

The second of these, which will be announced and released soon is a college textbook, introduction to QuickBooks written by Doug Sleeter for Glencoe/McGraw-Hill. If you're a QuickBooks teacher this promises to be the best classroom material you'll find. In addition, we are in the process of redesigning our web site and will be introducing a number of new features and services to better support you and your clients. Watch our Web Site for announcements (www.sleeter.com).

Last but not least, your success is what we are all about. Please feel free to drop us a line and let us know how we can be of greater service to you (newsletter@sleeter.com)

Automating Your CA - State Payroll Tax Reports

This month, I'm happy to announce the release of our new software utility for automating the California State Payroll Tax Reports (other states coming soon). This new program, called QB Payroll Reporter, works with QuickBooks and QuickBooks Pro (Windows). It will, in 3 easy steps, extract payroll data from your QuickBooks file and automatically complete your DE-6 and DE-7 reports that must be filed with the California State Employment Development Department. These reports have been designed according to strict layout guidelines by the EDD. They were tested and approved by the EDD to ensure that the forms could be automatically scanned by their equipment. Click here for details or to order the software.

Reports Included:

The DE-6 and DE-7 reports - Must be filed with the California Employment Development Department (EDD) each and show the state payroll tax information for all employees during the quarter/year. These reports calculate unemployment tax, and ETT tax using state payroll tax rates.
Payroll Journal Detail – Shows the details of each paycheck, sorted by employee for the period you choose. Shows columns for each of the withholding amounts and net pay.
Payroll Journal Summary by Name – Shows the total payroll (by payroll item) for each employee. Sorted by employee and totaled at the end.

This Month's Newsletter Topic Is "Assessing The Health of The Data File".

I hope this helps you. Drop me an e-mail with your comments.

Doug Sleeter

Newsletter Contents:

---

Assessing the "Health" of the Data File

When you first engage a new client, it’s important to familiarize yourself with their data file before you do any work for them. Also, it’s important for you to know if the data file has any "fatal flaws" that make it a better decision to start over rather than fix the file.

To perform a QuickBooks data file diagnosis, first, assess what the client knows about QuickBooks. Probe as to their level of computer, QuickBooks, and accounting sophistication prior to inspecting their company file. This background will help you to quickly zero in on areas of potential problems.

The following is a list of things to do to help you familiarize yourself with the "health" of the data file. Don’t enter or fix any data during this process, just look at it and take notes.

1. Open the company file and Press Ctrl-1. Look at the file size, number of transactions, and the release level of their QuickBooks file. If the file is larger than 10% of the size of the hard disk, it’s probably time to condense or start a new file.
2. Look at the Chart of Accounts. It should generally have 70 or fewer accounts with relatively high-level account names like "Product Sales" or "Services Income" or "Subcontractors Expense". If you see an income account for every product, service, or customer, it’s a bad sign. If you see expense accounts with names of vendors, it’s a bad sign.
3. Create a Balance Sheet. Is there a balance in Opening Balance Equity? If so, it’s a bad sign. The balance of Opening Balance Equity should have been closed to Retained Earnings (or Owner’s Equity) at the end of setup. Find out why there is a balance in Opening Balance Equity. Does the balance sheet balance? Check that Total Assets is equal to Total Liabilities and Equity. If they don’t match, the file is probably corrupted.
4. Create an Open Invoices report. Does the total match with A/R on the Balance Sheet? It should. Are there negative amounts due on the Open Invoices report? There should not be. Check for unapplied credits, misapplied credits or payments received when no invoices were entered. These are easy to fix, but might cost you lots of time since each transaction needs to be edited.
5. Create an Unpaid Bills report. Does the total match with A/P on the Balance Sheet? It should. Are there negative amounts showing on the report? There should not be. Check for unapplied vendor credits, checks coded to A/P (instead of Bill Payments). These are easy to fix, but might cost you lots of time since each transaction needs to be edited.
6. Display the Item List. How many items are there? It’s best if this list has fewer than 100 or so. Are there any Inventory Parts? If so, is Inventory appropriate for this business? Are there any sales tax items in the list? Are the names of the items appropriate for this business? Are the items hooked to the appropriate accounts in the chart of accounts?
7. If sales tax is collected, create a Sales Tax Liability report. Does the total on the report match with Sales Tax Payable on the Balance Sheet? Check the Sales Tax preferences and verify the correct setting of when sales tax is due (on invoice date, or on receipt of payment). If the total due on the report does not match the balance sheet, check for liability payments made with checks instead of sales tax liability payments.
8. If payroll is being used, run a Payroll Liabilities report. Does the total liability match with the total liabilities on the Balance Sheet? If not, check for liability payments made using checks instead of payroll liability payments.
9. Check each payroll liability payment and verify the amounts and the date in the "Payment for payroll liabilities through" field. This field is critical to some reports.
10. If Inventory is being used, spot check some of the Inventory parts to verify the average cost calculated by QuickBooks. If the average cost isn’t correct, it’s because data was entered inconsistently or incorrectly.
11. Look at Undeposited Funds on the Balance Sheet. Does it have a balance? If so, verify that it matches with the undeposited checks, cash and credit cards. If not, the data entry person might misunderstand how Undeposited Funds works.
12. Create a Profit & Loss report. Does it look reasonable? Are the accounts appropriate? Does it give management the information they want?
13. Create a Sales by Item Summary report. Does the total at the bottom match with the Total Income on the P&L? If not, can you explain why? You might have to include "other income" and "discounts" from the P&L to match the numbers.
14. Is the client attempting to import data into QuickBooks from other applications? If so, it’s a major warning sign that the file may have corrupted or inaccurate data. Look at what gets imported, and verify that things are working correctly.
15. How is the client entering data? Are they using all of the features of the software or only certain parts of it? It’s a warning sign if they are only using parts of QuickBooks. For example, if they only use it for A/R, but they don’t reconcile the bank account, you will have lots of work if you want to start using it for everything.
16. Choose About Tax Table from the Help menu. Is the current tax table installed?
17. Has the client ever run this file over a network with Version 5.0 or less? If so, the data file is likely to be corrupted. Verify the data file.
18. Does the client have a recent backup? If not make one.
19. When was the last time the bank account(s) were reconciled?

After you’ve completed your assessment, you need to decide if you can work with the file, or if you’ll recommend a new setup. In a very large number of cases, we recommend a new setup. That’s definitely bad news to the client, because it means all their data is thrown away (actually, it’s never thrown away, just archived), and they have to pay you to set up all over. However, if you’re going to work on a client’s file, you are taking on a responsibility not only for the data you enter, but also for the data that was there before you became involved. If you’re not comfortable with what they have and you determine that fixing it would take longer than the client can afford, you have no choice but to recommend a new setup. In any case, discuss your findings with the client and make sure you have agreement on the "health" of the data file and what your recommendation is for fixing it.

---

Details on our Web Site at http://www.sleeter.com or call
Toll Free 1 (888) 484-5484

©1999 The Sleeter Group, Inc. May be photocopied and shared with your associates and clients.