I work for a very small business. I took over the books a few years ago. The last person made quite a few mistakes, and I’ve been cleaning up what I can. But the balance sheet is still a mess. I’ve spent so many hours pulling reports, pouring over the chart of accounts, pulling audit logs, checking years of tax returns, and cross checking EVERYTHING.
It’s not entirely the last person’s fault. This goes way back to the 80’s when the business started. This is a software business, and we had a proprietary accounting program (that we no longer sell or support) that was used for decades. They switched to Quickbooks online a few years before I started working there.
Main issues I’m having:
1. They switched to QBO mid-year.
2. So many things were entered incorrectly, though I don’t even know for sure how many. I don’t have sufficient documentation from the previous software. But from what I’ve looked through, it’s not been done correctly for years. I’ve fixed everything I can figure out for certain.
3. They left everything from the initial set-up in the Opening Balance Equity Account.
4. Simply moving OBE to retained earnings doesn’t make retained earnings account accurate (as it is on our tax return) because of the questionable beginning balances. Also, I have just now figured out that they entered some invoices and vendor bills back-dated several years before the QB start date (one invoice going back 7 years.) This created a small amount of retained earnings and net income going back 4 years before QB start date.
5. Is the issue of random invoices and bills entered before the QB start date actually a problem, or am I overthinking this? If it is a problem, how do I fix it?
6. If I had my way, I’d start all over and create a new company profile in QB. I honestly think it would be easier that the literal years I have spent trying to make sense of this mess. I’m mostly concerned with making the books line up with tax returns. We have to file a balance sheet with our return, and every year it drives me insane that the QB balance sheet doesn’t match up.
Any advice for practical ways to clean this up? Is starting over with a clean slate a better option? I’m so afraid of making adjustments or removing things that I suspect are wrong, but I can’t be sure because there’s no documentation. I’m talking about random liability and asset accounts that aren’t used and no one knows why they’re there. Just the initial opening balance. All of currently used assets, loans and liabilities are all accounted for and entered correctly into QB. It’s all the clutter is driving me insane!
