QuickBooks ProAdvisors are frequently asked by their clients to clean up their chart of accounts. Here are a few ways that they accomplish this goal.
Deleting Accounts
You can delete accounts that you do not use. This process is accomplished by completing the following steps:
However, there are some restrictions on deleting accounts. For example, QuickBooks will not allow you to delete an account that has a subaccount, if it has items attached to it, if payroll items use it or if transactions use it. There are ways around some of these issues, such as deleting the accounts that are linked to it.
Merging Accounts
Another way that QuickBooks ProAdvisors help clean up the chart of accounts is by merging similar accounts together. This process is completed by:
Inactivating Accounts
Another way that QuickBooks ProAdvisors assist in this process is by inactivating unimportant accounts. These accounts may become obsolete from non-use, such as one account that is used to keep track of certain tax information that is not needed in a subsequent year. QuickBooks does not show accounts that are considered in active in the chart of accounts, so this helps to prevent unimportant accounts from cluttering the chart of accounts. However, this information can still be preserved and shows up in the general ledger and financial reports. This process is accomplished by:
This process is different than deleting accounts because you can make accounts inactive, even if they have transactions that are posted to them or associated subaccounts. However, business owners should be aware that doing this will also cause the subaccount to become inactivated, too.
Changing the Account Type
One common QuickBooks mistake that business owners make is associating accounts with the wrong type of account. This mistake can make financial reports contain inaccurate information because QuickBooks reports summarize information based on the type of account. To accomplish this step, go to the “Lists” menu and opt for “Chart of Accounts.” Click on the relevant account and edit it. Then, there is a drop-down list that has the different account types listed. Choose the appropriate one.