Cleaning Up an Old QuickBooks File or Starting Over: A Hartford County Owner's Guide

Should you clean up the old file or start a new one?

Clean it up, most of the time. The question that decides it is simple: when did the books last match the bank statement? If you can name that month, the file has a known good starting point and everything after it can be fixed forward. If nobody can name it, a fresh file may be less work.

Starting over feels cleaner, but it doesn't make the old months go away. If this year's numbers live in the old file, they still need to be right, and the old file still has to be kept.

Which situation are you in?

Old files tend to fall into one of four situations. Find yours in the table, then read the section that goes with it.

What does cleaning up the old file involve?

It's reconciliation, done in order. IRS Publication 583 says you should reconcile your checking account each month, and a cleanup is that same job done for every month that was skipped. A typical order of work:

1. Find the last month where the ending balance in the books matched the bank statement.
2. Reconcile each month after it against the statement, the bank account first and then any business credit cards.
3. Remove the duplicates the bank feed created and put every remaining line in the right category.
4. Check the balances that drift without anyone noticing, such as loans, money the owner put in or took out, and payroll amounts held for later payment.
5. Treat each reconciled month as closed and only change it with a written note of what changed and why.

If you'd rather hand this over, Brittany offers a bookkeeping cleanup and catch-up service, and what it covers for your file is agreed with her first. A cleanup is only as good as the paperwork behind it. If statements are missing, getting copies from the bank comes first.

When is starting over the better call?

In two cases. The first is a file that never reconciled, where opening balances were typed in as guesses and years of entries sit on top of them. Fixing forward needs a month you trust, and this file doesn't have one. A new file that starts at a clean date, such as the first day of a year or quarter, with opening balances taken from bank statements, gives you that month.

The second is a change to the business itself. The IRS page on when to get a new EIN says a sole proprietor gets a new one on incorporating or forming a partnership. A new EIN means a new business on paper, and its books should start on their own day with their own opening balances.

A new name isn't one of those cases. The same IRS page says a sole proprietor doesn't need a new EIN to change the business name or location, so rename the company in the file and carry on.

What happens to the old file if you start fresh?

You keep it. Publication 583 says that if you use a computerized system, you must keep all machine-sensible records and a complete description of the computerized part of your recordkeeping system, including the chart of accounts and detailed account descriptions. Closing the old subscription or recycling the old computer without a copy is how those records get lost.

As for how long, the IRS page on how long to keep records gives 3 years as the general case, at least 4 years for employment tax records, and says records relating to property should generally be kept until the period of limitations expires for the year you dispose of it. It also notes that an insurer or creditor may want them kept longer. Equipment bought five years ago and still in use is the reason an old file can outlast the business's current software.

Why does a Hartford County business need the old file's equipment list?

Because the town assessor asks for it every year. The Connecticut State Library says the state's eight counties have existed only as geographical names from 1960 on, so there is no county office to deal with. The personal property declaration goes to the assessor of your town.

Connecticut General Statutes section 12-40 ties the declaration to the personal property you own on October 1, and section 12-41 says it includes furniture and fixtures of offices and stores and is due on or before November 1. Section 12-42 moves that to the next business day when November 1 falls on a weekend. Section 12-41 also sets a penalty of 25 percent of the assessment on property left off a declaration that was otherwise filed on time.

In Wethersfield, Brittany's base, the Assessor's personal property page says equipment, furniture, fixtures, computers and similar items must be declared annually with costs and acquisition dates. A new file usually starts with one opening balance for equipment. The declaration needs the list behind that number, and that list lives in the old file.

So before a new file goes live, pull every equipment purchase out of the old one with its date and cost, and keep it with the declaration paperwork. If you're deciding in the autumn, do that list first. More on Brittany's bookkeeping for Hartford County owners is on her Hartford County bookkeeping page.

What can Brittany take on, and what stays with you?

Brittany is a Certified QuickBooks ProAdvisor based in Wethersfield who serves Hartford County. Her services include cleanup and catch-up, bookkeeping in QuickBooks Online, and bank and credit card reconciliations. Which pieces she takes on, including any work on a new file, is agreed with her before work begins. Questions about how equipment is written off over time, or anything else to do with tax, stay with you and your tax professional.