Year-End Cleanup: Organizing Your QuickBooks Online for 2025
The end of the year is the perfect time to clean up your QuickBooks Online account and ensure everything is in order for a fresh start in 2025. By reviewing your data, reconciling accounts, and organizing records, you’ll set your business up for smooth tax filing and a strong start to the new year.
Here’s a detailed step-by-step guide to organizing your QuickBooks Online for year-end.
1. Reconcile All Bank and Credit Card Accounts
Reconciliation ensures that your QuickBooks records match your bank and credit card statements, helping you catch discrepancies.
How to Do It in QuickBooks Online:
Go to the “Accounting” tab and click “Reconcile.”
Select the account you want to reconcile and enter the statement ending balance and date.
Compare the transactions in QuickBooks to your bank statement and mark them as cleared.
Why It’s Important: Reconciling ensures your records are accurate and complete, which is critical for tax preparation and financial reporting.
2. Review and Categorize All Transactions
Go through all uncategorized or miscategorized transactions to ensure they’re properly assigned in your Chart of Accounts.
Steps in QuickBooks Online:
Go to the “Banking” tab and check for transactions in the “For Review” tab.
Use rules to automatically categorize recurring transactions, such as software subscriptions or utility payments.
Assign transactions to appropriate accounts, like “Office Supplies” or “Marketing.”
Why It’s Important: Accurate categorization provides meaningful financial reports and maximizes your tax deductions.
3. Run Year-End Financial Reports
Generate key financial reports to get a clear picture of your business’s performance in 2024.
Key Reports to Run:
Profit & Loss Statement: Shows your income and expenses, highlighting your profitability.
Balance Sheet: Summarizes your assets, liabilities, and equity.
Cash Flow Statement: Tracks the money coming in and going out of your business.
Steps in QuickBooks Online:
Navigate to the “Reports” tab, select the desired report, and set the date range for 2024.
Review these reports for discrepancies or unexpected trends.
Why It’s Important: These reports help you identify financial successes, areas for improvement, and trends to guide your 2025 planning.
4. Clear Out Old or Inactive Vendors and Customers
Keeping your vendor and customer lists up to date ensures your QuickBooks data is clean and easy to navigate.
How to Do It:
Go to the “Expenses” or “Sales” tab and review your vendors and customers.
Deactivate any vendors or customers you no longer work with by editing their profile and selecting “Make Inactive.”
Why It’s Important: Reducing clutter in your account makes it easier to find relevant information and prevents accidental errors.
5. Review Accounts Receivable and Payable
Check your accounts receivable (unpaid invoices) and accounts payable (unpaid bills) to ensure everything is current.
Steps in QuickBooks Online:
Go to the “Reports” tab and run the Accounts Receivable Aging Summary and Accounts Payable Aging Summary.
Follow up on overdue invoices or make arrangements to pay outstanding bills.
Why It’s Important: Keeping these accounts up to date improves cash flow and ensures your year-end financials are accurate.
6. Write Off Bad Debts
If a customer has failed to pay and the debt is uncollectible, you can write it off as a bad debt expense.
How to Do It in QuickBooks Online:
Create a journal entry to adjust your accounts receivable and reflect the loss.
Consult with your bookkeeper or accountant if you’re unsure about the process.
Why It’s Important: Writing off bad debts reduces your taxable income, lowering your tax bill.
7. Verify 1099 Contractor Payments
If you’ve paid independent contractors $600 or more during the year, ensure their payments are properly tracked for 1099-NEC reporting.
Steps in QuickBooks Online:
Go to the “Expenses” tab and review contractor profiles to confirm W-9 forms are on file.
Use the “Prepare 1099s” tool to compile and file 1099 forms.
Why It’s Important: Tracking contractor payments throughout the year simplifies tax season and ensures compliance with IRS regulations.
8. Back Up Your Data
Although QuickBooks Online is cloud-based and automatically backs up your data, it’s wise to export key reports and data for your records.
How to Back Up in QuickBooks Online:
Export reports (e.g., P&L, Balance Sheet) as PDFs or Excel files by clicking the “Export” button in the “Reports” tab.
Why It’s Important: Having a local copy of your financial data provides peace of mind in case of technical issues or audits.
9. Review Your Budget for 2025
Use insights from your 2024 financial reports to create a realistic budget for the coming year.
Steps in QuickBooks Online:
Go to the “Reports” tab and review income and expense trends.
Create a budget under the “Planning & Budgeting” section in the “Settings” menu.
Why It’s Important: A well-thought-out budget helps you set financial goals and stay on track throughout the year.
10. Close Your Books for 2024
Finalizing your QuickBooks for the year ensures no accidental changes are made to your 2024 data.
How to Close the Books:
Go to the “Settings” menu and select “Advanced.”
Enable the “Close the Books” option and set a closing date.
Add a password to prevent unauthorized changes.
Why It’s Important: Closing your books locks in your financial data, ensuring accuracy for tax filing and future reporting.
Start 2025 Organized and Confident
Taking the time to clean up your QuickBooks Online account at year-end sets the foundation for a successful 2025. By organizing your records, reviewing financial reports, and preparing for taxes, you’ll enter the new year with clarity and confidence.
Need Help?
At DPP Bookkeeping, we specialize in helping small businesses streamline their bookkeeping and prepare for the year ahead. Contact us today or visit DPPBookkeeping.com for expert support.