So how important is getting your QuickBooks Data correct?

In this week’s NSAlert published by the National Society of Accountants, they reported that the IRS recently purchased 1,100 copies of QuickBooks® Accounting Software for some of their revenue agents. The purpose, according to the article, is that it will allow IRS Revenue Agents to more quickly audit a taxpayer since they will be able to review records maintained in QuickBooks.

This could cause some concern for taxpayers who have been using QuickBooks for several years since all of the records are maintained in one QuickBooks data file. In other words, the IRS agent may have access to financial records for years which are not under audit and that may not be such a good thing. Also many audits are done just on specific lines of a tax return. Again, taxpayers may feel uneasy about providing ALL financial records during that time period instead of just the financial records for the tax return lines which are being audited. I will tell you that there are ways to limit the dates of a data file but if you are not an advanced QuickBooks user you may not want to try this on your own.

So as you can see, the correct answer to the question, “How important is getting your QuickBooks Data correct”  is,  very important. It could cost you in a big way if it’s not. In addition to making sure your financial transaction are recorded accurately, it is also important to make sure any adjusting entries that your tax return preparer has done are also entered into your QuickBooks data file. The bottom line, pun intended, is that financial records in QuickBooks need to support what is being reported on your tax return.

Here is my suggestion as a preventative measure. Get a QuickBooks data file review. This can be done by most Certified QuickBooks ProAdvisors® as well as accountants who have expertise in working with clients who use QuickBooks.

The moral of this story is, it’s better to be safe than sorry.