Welcome back to our “Making the Switch from QuickBooks to Xero” series.  In this post, we’ll talk about what Step 2.  In case you missed it, click on Step 1 to start from the beginning.  So now that you’ve cleaned up your lists, now it’s time to look at a few financial reports and make sure your numbers look reasonable.

Step 2: Review your Balance Sheet and Profit and Loss statements for completeness

Run a Balance Sheet and Profit and Loss statements.  What you’re going to do here is use your trained eye to spot any inconsistencies.  YOU, will be able to do this much easier than any accountant as you know your business better than anyone else.  And, YOU also know what your expenses look like from month to month, so it will be easier for you to answer any future questions by your accountant.

Scan the Balance Sheet.  If there any negative numbers besides the bank balance, you may want to drill down (double click on the number) and see if there are any blatant mistakes.  Having a negative asset or liability is generally not normal and can be indicative of mistakes.  If you spot it and can fix it, go ahead and do so now.  If you see it, but don’t know how to fix it, start a list for your accountant.  If you don’t know why it is negative, just leave it and tell your accountant about it.

Next, Scan the Profit and Loss statement and do the same thing.  There should be no negative numbers on this.  If there are, repeat the steps above in reference to the balance sheet.  Also, look at the expenses accounts and make sure they look “reasonable”.   For example, if there is $20,000 in the Meals and Entertainment account, take a look and make sure something didn’t get expensed incorrectly.  Doing this will help you review what’s there, and answer any questions the accountant has when it’s tax time.

Step 2 is complete.  Stay tuned for Step 3 and more to come about switching from QuickBooks to Xero.  Have questions?  Don’t hesitate to reach out and give us a ring or shoot us an email.

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