How to Grow Your Practice by Moving Desktop Users to the Cloud

After tax season, many accounting professionals focus on growing their practice. A great opportunity for growth is the significant increase in small businesses that want to convert to QuickBooks® Online. In my article last month, I discussed moving your first clients from QuickBooks Desktop to QuickBooks Online. I focused on identifying which clients to convert, determining their needs and more. Now, let’s discuss preparing the desktop file for conversion.

Verify Data Integrity

Many small businesses are long-time users of QuickBooks Desktop, and many of these data files may have some data integrity problems. You should try to fix data integrity problems prior to converting the file to QuickBooks Online.

There are several signs of data integrity issues, including missing customer or vendor names, the Balance Sheet being out of balance, a high number (more than 10) of DB File Fragments, and a message about data problems every time you try to create a backup.

There are several things to help fix data integrity problems:

  • For missing customers or vendors, resort the customer and vendor lists.
  • For high number of DB File Fragments, create and restore a Portable Company File. This re-indexes the data file, and often, fixes problems. This can be done instead of rebuilding the data file multiple times (not everything is fixed on the first rebuild).
  • For a Balance Sheet that is out of balance, you’ll need to identify the problem transaction(s) and delete and re-enter it. This post can help.

In some situations, there may be some problems that cannot be fixed via creating and restoring a Portable Company File or Rebuild. In these situations, Verify Data to identify the problems in the qbwin.log file. To access the qbwin.log, click on F2 and then F3, Open File, select qbwin.log, and Open File. Scroll to the bottom and then scroll up a little, until you see the problem transactions, list items and more. You’ll need to delete and re-enter these.

Additionally, there is a File Doctor Tool that may be helpful (File > Utilities > Repair File and Network Problems). It may be helpful to watch this QB Power Hour webinar, where we covered these data integrity problems and showed how to fix them.

File Size Limitations

Another consideration, prior to converting, is the file size limitations. The tool to convert QuickBooks Desktop files to QuickBooks Online is super easy to use; however, the file needs to have less than 350,000 targets. You can check the Total Targets in the Product Information window (hit F2 to access it).

If the file has more than 350,000 targets, then you can Condense the data (File > Utilities > Condense). Actually, I recommend Condensing the data to only leave the last year or so of data in the file anyway. You don’t really want or need many years of data in QuickBooks Online.

Remember, you’ll still have the desktop file for historical purposes after you convert to QuickBooks Online. Keep QuickBooks Desktop installed on your computer so that you can access the file, as needed, in the future.

Converting Files with Inventory

Inventory in QuickBooks Desktop is valued using the average cost method, whereas QuickBooks Online Plus uses the FIFO basis (First in First Out) for inventory. When a company changes the inventory valuation method from average cost FIFO, it is considered a change in the Accounting Method. Keep in mind that Form 3115, Application for Change in Accounting Method will need to be filed with the IRS.

Also, QuickBooks Online Plus does not support Inventory Groups or Assemblies, so these Items would not convert to QuickBooks Online. There are several third-party apps that integrate with QuickBooks Online for inventory, if additional features and functionality are needed.

Converting a Desktop File to QuickBooks Online

As mentioned in the last article, the actual conversion process is really quick and easy after you have prepared the desktop file for conversion. Set up the subscription for QuickBooks Online from your QuickBooks Online Accountant dashboard (free for accounting professionals). Then, in the QuickBooks Desktop file, click on Company > Export Company File to QuickBooks Online and follow the conversion wizard prompts. Finally, you will receive an email confirmation notifying you that the data was converted. There’s a new super handy import summary report that gives you visibility to how the conversion process went and identifies which items may need additional attention. Learn more here. In addition, be sure to download the free QuickBooks Online Accountant App, which enables you to use familiar toolbars and menu options, work with keyboard shortcuts, and multitask with multiple windows. Learn more here.

That’s the basic, easy conversion process. I encourage you to take the first step – convert your own company, or your first client, to QuickBooks Online today!

Action Steps you may need to take: