I was hired as the new office manager/bookkeeper at my company. We are a small company, and until I came on board, the owner was doing the books. He has absolutely no accounting knowledge whatsoever, so suffice to say, things were pretty messy when I came on board. He was not using inventory before I came along, so he had all of our products set up as "services". I have since changed everything over into inventory items, and I've been working hard on getting purchase orders and bills into the system, as well as changing over all of the items sold on invoices over to their corresponding inventory items so that our inventory counts would be correct. However, at this point, I've put in every purchase order I can find, and we still have alot of items with a negative quantity on hand. My boss was not good about keeping records of our purchases from previous years, so there are lots of items I simply cannot find any records for. There are many items we have bought in large quantities during previous years that we have kept in stock and have been selling from, so there may be some items we haven't bought since about 2015 or so. My question is, exactly how bad is it for me to just go ahead and manually adjust the quantity on hand? Does that cause issues as far as the IRS goes? I'm comfortable with the accounting side of things, but I'm not super knowledgeable as far as tax implications go, and I have never had to deal with an audit before, god forbid we have to go through that.
Good day, Britta_Peterson.
I can provide you with some information about adjusting inventories via QuickBooks Desktop.
Adjusting the quantity on hand will not cause issues to the IRS and will not affect your taxes since adjustments are for your internal records. Taxes will only take effect when you create transactions with taxable items.
You can get more insights in this article: Adjust inventory quantity or value.
If you require more information about inventories, you can reach out to our QuickBooks Desktop Support. To reach us, please follow these steps:
Should you need help with adjusting your inventories, don't hesitate to let me know.