6. As tax season approached, we worked closely with the tax accountant to ensure that both tax returns were completed correctly. 

  • We imported invoices from QBO into QBD for the current year, applied payments and CORRECTED the deposits made by the accountant to include customer payments, rather than being coded to “revenue”.  This is an important step.  Having deposits coded to revenue AND applying customer payments (but not “depositing” them) creates DOUBLE income!

If you feel that your accounting system is confusing or inefficient, then it probably is!  It never hurts to get a second opinion.  Reach out to the Balanced Books team for assistance with implementing accounting improvements!

2. Having accounting transactions in two different systems is inefficient because transactions are essentially entered twice.  In this case, customer invoices and payments are entered into QBO and bank deposits are entered into QBD.  Both systems show valid transactions, but neither system is as accurate as it could be if only one system was used.  In addition to inefficiency, having two accounting systems is extremely confusing!  Which system would you trust if neither has all the information available?


1. Working with Bling’s tax accountant, Balance Books set the ‘transition date’ to start at the beginning of the next calendar quarter.  We wanted to make a smooth transition, while considering payroll and sales tax reporting dates. 

Balanced Books, LLP: Case Studies

Case Study #2

Managing the bookkeeping when changing business entities

Changing business entities from a Sole Proprietor to an LLC or S Corp (or any change in entity status) often comes with advantages and is a great way to protect your personal assets.  In fact, we see these changes quite often!  Knowing how to handle the bookkeeping during the transition to a new entity is essential.  Balanced Books (BB) had been providing bookkeeping services to a jeweler (we’ll call them “Bling”) for several years when they decided to incorporate.  We met with Bling to discuss the details of the bookkeeping transition and the options available.  Below is a summary of the steps taken to ensure a successful transition.


1. How to maintain accurate accounting records during a change in business entity.


Maintaining proper accounting records during a change in entity can be confusing, but with the help of Balanced Books, you won’t have to stress over all the details.  We’ll work with you through every step of the process!  Need some help?  Call us today!


1. The BB team worked with Great Ads to obtain access to the QBO and QBD files and merged the two files, however merging two accounting systems isn’t as easy as “pushing a button”.

2. BB updated the QBD file by reconciling the current year and ensuring the accuracy of both the Balance Sheet and the Income Statement.

Bookkeeping Case Studies Turlock CA
  • BB started with the QBD file from the accountant since this file supported the prior year’s tax returns. 
Case Studies

2. Balanced Books and Bling worked together to determine that the bookkeeping for the new entity will be maintained in QuickBooks Online (QBO) since it is easily accessible by everyone involved.

  • It is imperative that the accounting records of the two entities (old and new) remain entirely separate.  The ‘transition date’ can be flexible, however once it is decided and the new business moves forward, it can be difficult to change. For example, if your incorporation documents are stamped with a date of 3/15, you can choose to ‘start’ the corporation at the beginning of the next quarter, such as 4/1 OR you can choose to ‘start’ the corporation immediately.  It is always best to consult with your bookkeeper AND tax accountant to set this date!
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  •  The accountant for Great Ads was recording all accounting transactions and reconciling accounts in QBD (QuickBooks Desktop).  Deposits to the business checking account were coded to “revenue” without corresponding customers or services being identified (Great Ads had all this detail in QBO).  The accountant was using their QBD bookkeeping to prepare tax returns for Great Ads each year.  The accountant sporadically provided Great Ads with a financial update, which was helpful, however it was not frequent enough to assist with day-to-day decision making.
  • Great Ads was invoicing customers using QBO (QuickBooks Online) because the program is easily accessible and convenient.  They could invoice customers as needed to maintain positive cash flow.  However, this was not a complete and accurate set of books, so Great Ads could not see the big picture of their accounting work.  In addition, Customer payments were being recorded, but not “deposited” in QBO, so there were numerous old transactions just “floating” in the accounting system.

Balanced Books, LLP can help improve your accounting processes, including transaction automation!  Whether you have identified a process gap that needs revamping or just want to evaluate your current accounting system, we can provide you with tools and support to enhance your business.  We also provide software support for all versions of QuickBooks, including staff training. Think of us as your local bookkeeping resource!

3. BB created a new QBO file, added all the necessary users and began accounting for the new entity by linking their new bank account.  BB also imported vendors, customers, items and the appropriate chart of accounts to ensure that the look and feel were the same as the old company.  Daily operations of the company didn’t change – only the entity status, so we wanted to make the transition as seamless as possible.

3. After establishing an accurate set of books, we converted the QuickBooks Desktop file BACK to QuickBooks Online – essentially overwriting the existing QBO file that Great Ads was using.  This will allow Great Ads AND their accountant (now Balanced Books!) to access the SAME accounting system.

5. Within 3 months, the old business entity was no longer active and we moved forward with the new business entity. 

  • When the entity change officially takes place on the ‘transition date’, banking transactions often lag.  For example, State Board of Equalization payment for sales tax might be scheduled to be paid for the last month that the old entity was operating, but it will be paid out of the new entity checking account.  These types of transactions should be accounted for in the correct set of books, which in this case would be the old entity.

Case Study #1

Working in two accounting systems is inefficient and confusing 

Balanced Books (BB) was recently approached by a leading advertising agency (we'll call them "Great Ads") to assist with their bookkeeping strategy. Great Ads described their current bookkeeping situation as inefficient and confusing. In addition, Great Ads was concerned that they never really knew how much money they were making. Balanced Books identified their problems and implemented solutions! 


1. Great Ads was maintaining their bookkeeping in two different accounting systems.  They had not been properly set up to work in the same accounting system as their accountant was using, so they were maintaining two different sets of books.


4. BB continued to complete the accounting for the old entity, while monitoring both entities to ensure that transactions are recorded in the correct set of books.