QuickBooks Desktop to Online Conversions (Part 1)

QuickBooks Desktop to Online Conversions (Part 1)

Warning: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding!

Hector Garcia: Welcome to the unofficial QuickBooks accountants podcast. I am joined by my good friend Alicia Katz Pollock, the original, the one and only Qbo Rockstar CEO and founder of Royal White Solutions.

Alicia Katz Pollock: And I have the privilege of collaborating with Hector Garcia, CPA, the founder of Right Tool for QuickBooks.

Hector Garcia: In this episode of the unofficial QuickBooks accountants podcast, we're [00:00:30] going to talk about how much should a professionally done accountant bookkeeper ProAdvisor conversion from QuickBooks desktop to QuickBooks online cost. And as we discussed, the potential variability of what could go wrong or what happens during the conversion process, how can that affect essentially the job or the price of the job? Alicia, we are actually going to talk about this because you have an internal document that you followed for years. You've been building this for probably over [00:01:00] a decade. Uh, that is that is your internal SOP document for you and your team to follow when converting from desktop to online? I looked at this document. It's incredible. Thank you for sharing it with me. I know it's internal use only, uh, but I've been learning a lot from it. And in this podcast, we're kind of going to walk you through probably 80% of the document. We're going to kind of just verbally discuss and maybe even I'll add something to it. And essentially, Alicia is thinking about turning this document into potentially like a mini book or a course or something like that. So that's going to be [00:01:30] very exciting. So, Alicia, tell us about the, uh, the posting in Facebook that inspired us to talk about this topic.

Alicia Katz Pollock: Yeah, there was a post in Facebook a couple days ago from a business owner who their accountant quoted them $5,000 for a migration from desktop to online, and they couldn't fathom why it could possibly take that cost that much. And so she came to the group and said, well, is this reasonable? And it was an interesting conversation watching everybody's [00:02:00] reaction to that. And the reactions ranged from, no way would it ever cost that much. You're being gouged to my reaction, which is, I'm on a $40,000 conversion right now. And so it was a really great conversation with a lot of different input about what could make. A conversion cost a lot because the truth is, a conversion could just be running it through the converter and you're [00:02:30] done in three hours and it could only cost you 500 bucks. Or you could be in a situation like, I'm in with this one client where it necessitates an entire overhaul of their entire accounting system. So all the answers are right.

Hector Garcia: Actually, if you don't mind, um, I want to walk you through the whole spectrum and range of potential, um, situations. Right. So in the simplest form, someone [00:03:00] comes to you and says, I just want my customers, my vendors and my chart, my chart of accounts and my item list in QuickBooks online. Can you help me convert? And there is with the built in process, with the built in tools in QuickBooks desktop, there's a process where you pick, hey, just bring me a list and that's it, okay. Scenario number two, let's take a one little notch further. Somebody can say, hey, I want to bring the list and I just want to bring the 1231 [00:03:30] 2023 balances so I can start doing everything in QuickBooks cleanly in 2024, for example. And that could be scenario number two. And quite possibly it might take you the exact same time to press the same sequence of buttons in QuickBooks desktop to do the conversion. Only caveat is because you're bringing data or bringing balances. You might have the situation where that ending balance could vary a little bit, because certain transaction types don't transfer, or [00:04:00] if there's any inventory, inventory valuation methods and desktop and online are different. And we're going to get well, we'll go down that rabbit hole, okay. They're different. And your cost of goods sold and your inventory balance will be off. And then you might just have to make a journal entry to just make it fit. Make it make it fit the tax return or whatever it is.

Hector Garcia: So you can start over cleanly. And these two are probably about the same, let's say scope. Essentially, as an accountant you would be verifying the ending balances on the list and all that stuff. Anyway, now we'll take a one step further [00:04:30] where somebody will say, I want I want to bring all the data from QuickBooks desktop to QuickBooks online. I don't want to exclude anything. I don't want to extract anything. And then after I bring it, I want you to make sure that the balance sheets match for the last ten years, that the PNL is match for the last ten years, or the NHL's match in a monthly basis for the past 24 months. And after you do that conversion, if you have an issue or a change in the in the numbers, [00:05:00] you might have to now do 12 journal entries, not just one journal entry, 24 journal entries, not just one. Furthermore, if your customer is nitpicky about I don't want a journal entry, I want true transaction tracking to exactly that number. You're going to have to literally print your entire invoice, register your entire bill, register on on on on QuickBooks online, and then go, sorry in QuickBooks desktop and go through and QuickBooks online and see what what was missed. And then you have to make individual entries to make that work. That's that [00:05:30] gets a little more hairy. And that's a worst case scenario.

Alicia Katz Pollock: Yeah.

Hector Garcia: Yeah. But but that's still using the built in conversion tool. And then there's an interesting uh hybrid. And we'll discuss the very last one at the end. But there's a hybrid between using the uh, the desktop tool and then using a manual process, which is you bring all the lists in and then you make a decision in terms of what transactions or what balances you want to manually bring in into QuickBooks online. Classic example [00:06:00] is you bring in all the lists and then your QuickBooks, your your client says, I just want the open invoices. That's it. I just just bring 1231 2023 however, for the for the accounts receivable, I just don't want a journal entry to accounts receivable. I want that individually by invoice. Okay. So then at that point you have to go into QuickBooks desktop, export your open invoice list. You have to export the open balance from each individual invoice. You might need to export, uh, credit [00:06:30] memos or journal entries or other transactions that are not open, invoices that essentially affect the end balance of that of that accounts receivable, export that to Excel, maybe massage it a little bit and then use SaaStr or Transaction Pro to bring that in. Now a lighter version of that, a customer may say, no, no, no, Hector, don't bring every single invoice, but do bring the customer balances by customer. So then it will be a little bit easier because it's just one single invoice per customer. You would bring in on the manual [00:07:00] import process. So as you can start hearing us like sort of progressively getting into this, it could get really complex and you can go from 500 to $30,000 pretty quickly.

Hector Garcia: And then there is, uh, sort of the mother of all types of conversions, which I assume is what you're dealing with. Alicia. And then I want to pick your brain about what that $30,000 conversion looks like. Or was it 40,000? Whatever. Whatever. It was a big number. Okay? It's it's a car. Like somebody somebody gave you a car, and in exchange, you gave him a QuickBooks file. [00:07:30] Okay, well, but. Yeah, exactly, exactly. So the mother of all conversions would be. No, the stuff in QuickBooks desktop is a hot mess. There's tons of transaction types in QuickBooks desktop that are not going to come over, you know, um, just just assemblies or something complex like that. And when I bring it to QuickBooks online, there's a very specific workflow I'm going to follow, which is replacing workflows that [00:08:00] was following with desktop, which required the transactions to be entered in a very specific way, maybe with custom fields, you know, so you have to make a lot of manual decisions and or and this could be part of the process too. You have to go into QuickBooks desktop, do major cleanup, major reorganization, major, um, setup. And then use the conversion tool and cross your fingers and hope for the best, so that the clean up process in QuickBooks online is a lot lighter. Did I miss something, Alicia? Or [00:08:30] and or walk us through what you're doing with this big client?

Alicia Katz Pollock: Sure. I mean, for me, when I sit down with a client who's going from desktop to online is the very first conversation is, how's your data? Is it clean? Because moving to Qbo is your perfect opportunity for a fresh start, that if you look at your desktop and you read your reports and they don't make any sense to you, and you've got tons of old vendors and your chart of accounts has has categories that haven't been used for years, [00:09:00] then I usually actually recommend a fresh start. And that's when we get into that whole list of considerations that you just gave. But sometimes actually importing the data and then doing a clean up on the data from there is the way to go. So that's always the very, very first conversation is do you have good data or do you want to just start over from scratch. And usually that's a breath of fresh air for most customers. And so we start with the conversation about, well, what do you want your data [00:09:30] to look like? What do you want to see on your reports? Not what have you been looking at, but what do you want to see moving forward? And then once we make that decision, if they are importing, then there's a whole list of considerations. How are they using their data and what are their workflows. And do those workflows convert or not. And if those particular workflows that they're using don't convert. Then again, sometimes it's like we should just [00:10:00] start over again and do what you said. Like, you know, put in just the open invoices and carry forward from our starting date.

Hector Garcia: So I think this is a perfect segue to discussing. Let's go through the list of all the things that don't convert. And by the way. They don't convert means that if you click on the conversion process, they don't transfer over. However, you as the consultant doing the quote conversion, if you want to bring that over, you have to. Then after you do the desktop conversion, [00:10:30] manually, bring stuff into QuickBooks online. Probably the most biggest, potentially tedious one would be attachments. You cannot transfer. Attach documents to every single transaction in QuickBooks desktop into QuickBooks online. You would literally need to either make peace with the fact that the attachments don't come. You can back up. There's a little folder in your QuickBooks desktop for attachments. You can back that up, but it's not easy to know what transaction it [00:11:00] belongs to, because the naming system on these folders are just like a bunch of code, right? So, so so let's start with that attachment. So what how do you manage that that Alicia somebody says I want my attachments.

Alicia Katz Pollock: So if they want their attachments there's not really anything that you can do. And so in that case we just go into their QuickBooks desktop file on their computer and go find the attachments folder and then go save the attachments and just rename it, you know, attachments to from the state to 2024 [00:11:30] and call it good. And if they ever get audited, the information is there, but they're not going to be able to see the the attachment when they look at the transaction themselves. But you know, honestly, that's pretty rare that you're using it as a reference, at least rare enough that it's not any big deal. Or if you did want, maybe you have a contract with a client, or maybe there's certain transactions that you need. The reference material going back in and attaching [00:12:00] those is a worthwhile task in some situations. But in general, I found that most of my clients aren't even using attachments. Some of them live by it and require it and others don't. And so this is one of those factors that goes into your pricing on the conversion.

Hector Garcia: Now I want to just comment on something you said if they ever get audited they're there. Right. So we're making the assumption that people are keeping their QuickBooks desktop file [00:12:30] in their computer somewhere. We're also making the assumption that they're working on 2021 or older, where they bought a one time license, that they could always go back to it. Slash, making the assumption that if they are, if they are in a 2022 license or newer or enterprise where you have to pay annually, that they'll continue to pay that, that fee, um, until they get audited so they can access the file. Because QuickBooks desktop, when you start paying the subscription, it only stays. It only gives you access, read [00:13:00] only access for one more year. And then the subscription lapses. And most, most audits are in arrears or 2 or 3 years in arrears. So the likeliness of somebody is fully converted to QuickBooks desktop. And also continuing to pay for their QuickBooks desktop subscription is very low. So so if you if you stop paying for the subscription and then fast forward to the future is after July 2024, you can no longer buy a new QuickBooks desktop license. That means the data is there, but [00:13:30] it's not there. Like it's not trackable, right?

Alicia Katz Pollock: So if you have an emergency and you have to get back into your data, you know, subscribing for a month can be worth it. But this is not after.

Hector Garcia: Not after July, not after July 2024. You cannot subscribe.

Alicia Katz Pollock: To the enterprise and will cost you $1,000 to do so. Good point. Right? Right. So if you want to make sure that you have access to your historic data, you know you're doing a fresh start and you only have the current year in this file, then I do recommend actually [00:14:00] turning to old fashioned paper and go through your QuickBooks desktop and create a binder and export every single report in every which way that you can literally go through all the reports and print them out for your history so that you have a binder of everything. And then that way, if you have to look something up, you don't even have to turn to the computer and figure out how to get back into your QuickBooks. You can just head to your history binder. And there you go. Or, [00:14:30] you know, create a set of PDFs that you can search through is great. I mean, command, command F or control F on a PDF is glorious because you can find anything in it without having to actually read anything.

Hector Garcia: Uh, if the PDF. So that's a good point. But that's if the PDF had OCR in it, because if you actually scan the receipt without OCR tools in the scanning process and it's a flat file control, F won't help you find it. Like you can't put Home Depot [00:15:00] and it'll find it unless you run again. We're getting we're getting deep into like tech world. Yeah.

Alicia Katz Pollock: No. So that's going a little far out into into off topic. But I do want to let you know that there are certain software apps that will search even handwriting or search JPEGs for text like Evernote would do it. So you could open up Evernote and import it into Evernote and search that way. Right.

Hector Garcia: Um, so so that's it. So like, probably not a good solution to even try to figure out how to do historical attachments [00:15:30] in Qbo. Done. Okay. Let's talk about budgets. What about budgets?

Alicia Katz Pollock: Budgets don't convert. That's it. Okay. You just have to go make new ones.

Hector Garcia: So you got to make new ones. Okay. And uh, there is a in in QuickBooks Desktop Plus and Advanced. There's a mechanism to import your PNL budgets via CSV file. But anything you can export in QuickBooks desktop is not going to be on the same format that QuickBooks online can import. So there won't be like an easy mechanism to, like, quote, export, um, [00:16:00] your budgets from desktop into online unless you literally export a desktop report and budget and then you massage it in Excel, make sure that it matches and all the accounts have the, you know, the proper, um, column structure for subaccounts and that sort of thing. Right.

Alicia Katz Pollock: Well, there's a use case here for spreadsheet sync that because spreadsheet sync can build budgets. If you export your budget out of QuickBooks desktop, then you can open it up in QuickBooks in spreadsheet sync, and then just copy paste all the things into the new places. [00:16:30] So there are some ways you can expedite the process.

Hector Garcia: Right? But remember, when you export a report in QuickBooks desktop and an account has subaccounts, it comes in with like a separate like space separation. It doesn't come in with a full path like account name, sub account name, sub account name, and in spreadsheet sync. The accounts need to have the full path. Okay, so account names, columns Subaccount names. So yeah, you can copy and paste, but there'll be a lot of manual cleanup process for those of matching those accounts.

Alicia Katz Pollock: Exactly. [00:17:00]

Hector Garcia: Okay. Uh, inventory is Fifo. What does that mean? And, you know, I'll add something to that as well. Okay.

Alicia Katz Pollock: Sure. So QuickBooks desktop calculates inventory through average cost method, meaning all the purchases you've ever made. It adds it up, it finds out what the mid price point is and then it does all your costing at that mid price point. Quickbooks online is Fifo first in first out, which is actually way more accurate because the order that you bought the [00:17:30] items and the price that you paid at the time is the order that you sell the items. So that way your oldest items at your cheapest price are the ones that are sold first at that cost. So when you do a conversion, the very first thing you do after converting is to run your PNL and your balance sheet for all dates accrual so that you have a complete, comprehensive report, and then you compare it in desktop and compare it online and look for the differences. And you absolutely, 100% will have a difference [00:18:00] on both. Because if you are running inventory, because the inventory asset and the cost of goods, materials accounts will not be the same. So if you're running inventory, you absolutely 100% have to a make an adjusting entry. And B know that they're going to be different. Or maybe you don't make the adjusting entry and you just know that they're different. That's okay to most companies will just kind of decide what they want to do, because I'm not a fan of journal entries in your [00:18:30] inventory asset because they're permanent and then they never get adjusted for sales. So most of the time my business owners are like, yeah, it's okay, I know that I'm off by $1,000. No biggie. Let's keep going. And we.

Hector Garcia: Could probably consider getting back to this, or maybe doing a whole different episode on.

Alicia Katz Pollock: This topic. Yeah, this.

Hector Garcia: Is a whole. Yeah, because inventory is pretty heavy. But when you do when you go through the conversion process with with QuickBooks desktop, it will ask you, do you want to track inventory or do you not want to track inventory like it's actually [00:19:00] part of the, of the of the workflow for you to choose which path you want to go to. And if you say, yes, I want to track inventory. There's a Fifo conversion date where it says, hey, as of what point do you want QuickBooks to make the switch from average cost to Fifo? And if you've already filed your 2023 tax return, for example, then you're going to pick starting date one one 2024. That way you don't mess with the historicals and then starting one, one, [00:19:30] 20, 24. What QuickBooks does, which is really interesting, is it takes the average cost of the inventory that you have on hand, and that becomes the first layer of your Fifo. And then as you purchase more, uh, more inventory in the future, then it follows the Fifo layering, uh, mechanism. You also have a choice not to track inventory or not to move inventory. And then what ends up happening is every single transaction in Qbo is going to have a non-inventory item for the sales, [00:20:00] and then a non inventory item for the cost of goods sold. So basically it does like a manual posting into cost of goods sold based on the historical that QuickBooks has and it doesn't have QuickBooks recalculate inventory cost for you. A quick side note if you don't mind a quick side quest here, and I don't want to get too much deep into it. Like, let.

Alicia Katz Pollock: Me say one more thing about your inventory before you side with me. Uh, the the time when you might go from inventory to non inventory is if you're deciding to use a third party inventory [00:20:30] management system, either you're moving to e-commerce and you're going to integrate your qbo with e-commerce, or you're using Asos inventory or another inventory solution, then in that case, you're actually turning your Qbo inventory off. So during some conversions, we're actually changing from Qbo or QuickBooks desktop, managing the inventory to Qbo, managing the inventory and using a third party app. So that's the scenario that Hector is addressing.

Hector Garcia: Yeah, I don't want to do a sort of a side scenario to that, which is in your QuickBooks desktop. [00:21:00] You had inventory at some point, but you stopped using inventory, and maybe you're no longer track inventory, but there's historical inventory in the conversion. So it could be a situation where you're not using a third party app for inventory. You're just not tracking inventory, period. Or inventory was such a hot mess in the first place that you're going to choose not to convert the inventory. And then when you're in Qbo, you will track inventory, but you'll sort of start over with new items, fresh items, that sort of thing. So this is where again, this is why, [00:21:30] you know, the conversion could be 500 bucks or it could be $30,000. There's just tons of stuff to consider. Okay. And as I forgot the sidequest, I was going to go, oh yeah, the sidequest that was going to go on is, um, that QuickBooks Recalculates your inventory cost in real time. Okay. There's actually it's interesting, QuickBooks doesn't have a fixed ledger for inventory. Any transaction that you modify or change will retroactively. [00:22:00] Of the potentially change your inventory. So for example, let's say I go back to a bill that I, that I received, let's say two years ago. And that bill contains an inventory part that I still have in stock. Okay. And then I didn't sell that that part again until, let's say, this year, if I go back to years ago, change the bill, where I changed the item cost of that bill, my cost of goods sold is now going to be modified moving forward because of [00:22:30] something I changed in the past.

Hector Garcia: So QuickBooks is consistently recalculating a Fifo for you, which is a really important consideration to make. Because when you when you tell QuickBooks not to bring inventory that's fixed, like whatever, whatever QuickBooks says, inventory was, it was and it stays there forever at the average cost. You don't even have to worry about Fifo. Um, and then if you do bring in, if you do move the inventory, a QuickBooks online is subject to the same, uh, issues that you have with QuickBooks desktop, where, again, [00:23:00] transactions in the future will be recalculated based on changes that you make in the past of inventory costs when you receive it or adjust it going backwards. So that's probably as much as you want to do of inventory without getting people to like, be bored to death. Um, I do want to add, if we have time, uh, a little note at the end if we talk about items and subitems and item categories and cuvio, because that's a whole nother potential hot mess. But let's move on to the next thing Multicurrency tell us about that.

Alicia Katz Pollock: Okay. Now this is pretty unusual because there's [00:23:30] not a whole lot of people who are in this situation. But if you have three or more currencies, multi-currency doesn't come over. If you have just one level of multi-currency at one currency, you're fine. But if you're doing international business in multiple countries and you have bank accounts there and you're using multi-currency now, multi-currency doesn't mean that you have, you know, clients in other countries who buy things on PayPal. Don't turn on multi-currency for that. This is really when you have bank accounts in other countries [00:24:00] and major clients in those countries.

Hector Garcia: And this is if your QuickBooks desktop file at any point in time had more than two currencies. Right. So it's not like, oh, I don't use two currencies anymore or three currencies anymore, or I don't use multi-currency anymore like I used to do it, but not anymore. If that file ever had any transactions with more than two currencies, that's it. It's completely opted out for converting using the internal conversion process. Right? Okay. Next one payroll. [00:24:30] Oh my god. Okay. That's a different episode.

Alicia Katz Pollock: So when when if you had if we had recorded this a year ago, they would have said payroll doesn't convert. Payroll does now convert, which is great, but it puts all of the history just in payroll liabilities and payroll expenses. It doesn't break it down into the level of detail that QuickBooks online does. And QuickBooks handles its own liability categories and expense categories [00:25:00] for payroll. So all you do is you get these giant lump sums that then you have to decide if you're going to go through and parse them out to the appropriate subcategories or not. I'm a big stickler for reconciling my payroll liabilities, and so this one kind of becomes a hullabaloo. Ideally, the only balance you have is what's currently pending for your current month anyway, or current year anyway. [00:25:30] But then you have to decide, okay, am I going to take the time to go take the general payroll liabilities and parse that out into my 940, my 941, my health insurance and garnishments and all of the other ones. So generally, what I wind up doing with payroll is I do the conversion and then take a look at the balances that should be in each of the new brand new [00:26:00] sub accounts created by CBO's payroll. I wind up merging together the old system and the new system and then move the balances. So if there's payroll, it's it does it and it works. But if you are really highly detail oriented on the balance sheet, you're going to want to do some extra surgery.

Hector Garcia: Help me understand something, Alicia. I actually don't understand what you're saying. Okay. And then maybe you help me clarify. Sure. So there there are [00:26:30] two challenges here when it comes to like making something like payroll does come over. Like that's just a very generic statement that that most of the times it's a total landmine. So when we talk about payroll does coming over, there's two issues here. One is historical paychecks. Historical paychecks contain payroll items. Those payroll items are mapped to accounts. And then the historical paychecks with payroll items are mapped to accounts, have historical postings into our PNL [00:27:00] and our balance sheet. And those historical postings could come into a PNL account. Payroll expenses, Subaccount payroll taxes, sub account payroll wages over time, sub account X, Y, z. And then we can have payroll liabilities broken down into sub accounts and the balance sheet. Are you saying that it's after I convert that the payroll items are not mapped to the accounts? Or are my historicals in my balance sheet and PNL going [00:27:30] to be modified? Um, a post conversion? So that's the part I didn't understand from what you were saying.

Alicia Katz Pollock: Sure. So it's a little tricky because this is still kind of new, and they're probably modifying it the process as we speak. But the first issue is that the balance sheet and chart of accounts, the chart of accounts structure that desktop makes and qbo makes, are slightly different. I believe that the conversion they [00:28:00] they map it between their default accounts. What that what the software sets up. But if you have manually gone into your desktop and manipulated those, then you've kind of thrown a wrench into the conversion system. So there may be changes. Generally what it does in the conversion is it just gives you historical data. It doesn't bring over all of the historical transactions like the every paycheck and all of its different, um, category [00:28:30] distribution doesn't, doesn't convert. It's just lump sum. Here was your net pay and it doesn't bring over every single. You know, 940 transaction from every paycheck.

Hector Garcia: So actually actually that that's that might be something that recently changed. We should we.

Alicia Katz Pollock: Should actually do some research on that. I don't want to I don't want to misspeak. And it changes. Now that's a caveat that we should have actually given in the very, very beginning of this episode [00:29:00] is that while we're talking about things that don't convert, this list changes. And I actually go to Intuit's article every time I do a conversion, I go check their article and I compare my list and I see, oh, this converts now. Fantastic. Or you know, and so my, my list of what doesn't convert is actually getting shorter and shorter.

Hector Garcia: Yeah. So is it. And this may be a situation where like this just recently changed. Like I just did a conversion this morning before, uh, doing our, uh, our call. And I did it from a sample file that has [00:29:30] payroll and the, the, the paychecks. Still, they don't come in as a paycheck transaction type. They come in as a regular check transaction type. Probably an important caveat to because what you're saying, what you were saying, it could it it could vary whether whether they're going to start coming as a paycheck transaction type or a regular check transaction type. But it looks like when it comes in with a regular check transaction type, so it doesn't come in as a paycheck, it comes in as a check. This actually, um, the payroll items [00:30:00] don't come in, but every single, uh, journal line that was hit in that paycheck comes in as a regular category or a regular account. And in fact, I see a situation here where we have, you know, two types of payroll liabilities and are broken down properly on the check. So it looks like even though they're not coming in as a paycheck, they are coming in as a check. And QuickBooks does like a mini journal entry on each of those. I mean, the checks are super confusing. Of course. You know, like like, uh, somebody looks [00:30:30] at this, they don't understand what they're looking at. And it's, it's for the net amount, uh, but, uh, but but at the same time, um, it's sort of like a mini journal entry that's exposed in the check. Okay.

Alicia Katz Pollock: So, um, since people can't actually see the, the one that he has items for health insurance and federal withholding and Social Security and Medicare, but they don't have each of those going to a specific general ledger category. All of the taxes are just going to payroll taxes payable. And all [00:31:00] of the wages are just going to wage categories. It's not breaking it down into what we normally see of Medicare in in its own and unemployment in its own. So it's kind of a crossover best of both worlds you don't have. Every line item in every transaction there in bulk header categories summary categories instead. There you go. Yeah.

Hector Garcia: And and to be fair, you know we're trying to make a podcast episode that's not a webinar or [00:31:30] uh, or a tutorial. I mean, this could potentially vary whether it was set up like that in QuickBooks desktop in the first place, or just sort all sorts of things to discover. I think that the payroll one is one that whatever we talk about in this episode will be dated next month and it'll be dated next month. So like actually QuickBooks needs to needs to do a much better job at having its own separate article that just deals with all the intricacies of payroll conversion. Because even even even [00:32:00] if they stated in a certain way, like even like their document says, previous year payroll details don't come. Well, they do come. I mean, they don't come as a paycheck item and then then a paycheck transaction type and potentially even within the, uh, the check that it comes in, some of the, uh, expense accounts or some of the liability accounts might not be broken correctly. So, like, there's all sorts of nuance on, on the payroll conversion that I don't think any of the documentation that QuickBooks gives you and even the stuff that you're putting together, Alicia, [00:32:30] could give us justice, especially at the speed that is being, um, transformed. Because for the last ten years, I've been dealing with with QuickBooks, I've never met like a task force that just deals with desktop to online payroll conversion. And now we know 2 or 3 of those people that are actively in the Facebook groups. They're actively doing webinars, just discussing the improvements on payroll conversion and payroll, item account mapping and all sorts of things. Um, so, like [00:33:00] just in that world, um, we might not even, like, be able to even accurately tell you exactly. You know, how payroll converts. It doesn't convert because this this stuff changes all the time. So maybe that's the most we could say about that. Um, let's move on to the next topic.

Alicia Katz Pollock: Uh, next topic is price levels. Uh, price levels don't convert. I don't even know how much detail we need to go into that because, like five people use price levels. I love price levels, but nobody uses them. And in fact, because nobody has been using them, they are actually moving them out [00:33:30] of the weeds in a setting that nobody turns on, and they're actually actively putting them in products and services moving into the future. So we'll talk about that some other time.

Hector Garcia: Right? Right. I mean, the idea is that when you actually create an item that the price level information is inside the item, so it's front and center and you can manipulate it having price rule, price levels or price rules being this obscure place that kind of works like bank feeds. It just that's why people don't use it. But bottom line, there is price levels in QuickBooks [00:34:00] desktop. There is price rules in QuickBooks online. There is some sort of feature parity even though they work differently. But none of that data converts over. What about, uh, some customer and vendor details? What did you mean by that?

Alicia Katz Pollock: Um, at this point, I don't remember exactly what that was referring to, but basically, oh yes, I do. There are some fields in QuickBooks desktop for your customers and your vendors that are not available in QuickBooks online. So for example, um, [00:34:30] customer status or job progress, there's certain fields like that that aren't in Qbo. So if you were using those fields, they're not there.

Hector Garcia: Yeah, I can tell you the ones that I know offhand. Oh please. So we have so we have a job status, job name, job date, expected date, all that stuff. Basically that's all stuff that they're adding into the projects module in Qbo. Right. But that doesn't transfer over if you have notes inside the customer, like you have historical notes inside the customer, [00:35:00] a notes do not come over if you have, um, uh, well, not in the customer but in the vendor. So let's talk about the vendor. In the vendor there's something called like default expense account or something like that, which is the expense account that shows up automatically when you create a check or a bill manually. That piece of information doesn't come over.

Alicia Katz Pollock: Are you sure about that? Because they just added that feature in Qbo maybe a year ago. So I'm wondering if that has changed.

Hector Garcia: No, [00:35:30] actually that feature has been in Qbo for like ten years. It just never worked. I think they just made it work. They made it functional to work. But as far as I know, that account doesn't transfer over. And I could double check that because okay, maybe, maybe possibly. Um, and um, and, and custom fields like there are custom fields that go straight to the customer and custom fields that go straight to the vendor. Those do not convert. Uh, yet the only custom fields that convert are the first three custom fields [00:36:00] in the header of transactions. I don't know if you even have a custom field note in here. Maybe we should build a custom field. Uh, note for that, but yeah, but that's that's as far as I can tell you. Um, high level. And I'm sure there's more stuff that we're missing, but I think that's good enough to cover, uh, cover our bases.

Alicia Katz Pollock: Okay. Um, if you have any reminders set up in desktop, those reminders don't come over. You have to start over again because it's a whole different structure of notifications, workflows and [00:36:30] tasks and reminders, so you'll have to reset those up.

Hector Garcia: I never use reminders. So yeah, I it doesn't matter to me okay. Let's talk about progress invoicing.

Alicia Katz Pollock: All right. This one's huge I'm every time I convert I'm praying that this gets fixed. And they really have faith that it will. But right now if you were using progress invoicing. And so that means that you're starting with an estimate and then you're turning your estimate into invoices in stages. Those do not [00:37:00] directly connect. So you will still have the estimate and you will still have the invoices. But the estimate is um, I can't remember if it comes over open or it might even come over as closed. And if you still need that, you actually have to open up the estimate and then pull it back on to all of the invoices manually. So it's kind of I've had some clients that that's a deal breaker for because they have so much intricacy. And I've had others [00:37:30] that were like, okay, don't worry about it. And then I've had customers who are like, okay, go ahead and just do it. So just know that that is a change. There's also one thing that's kind of a deal breaker for some of my clients is that if you are the progress, invoicing in Qbo only works by percentage or flat amount, it does not work by quantity. So if you had ten units and your progress invoicing at five units, Qbo does not do that. And so that's actually [00:38:00] one of my disqualifiers for some of my manufacturing clients, for example, or retail clients that Cuba was going to have to Intuit's going to have to address before they can get rid of desktop.

Hector Garcia: Okay. That's that's a great point. Um, that this this might be one that could also get dated, uh, because there's a special team in QuickBooks desktop, sorry, QuickBooks Online Advanced that's addressing the whip reports and the, um, and the estimate, the estimate [00:38:30] versus inventory progress reports in QuickBooks advance. So this might be one that they're like sort of tackling as we speak. And we don't you know, we we don't even know about um, so just uh, keep in mind that there's a possibility that we could potentially be sort of off on this one, uh, very soon. Like, it could be sort of outdated pretty soon.

Alicia Katz Pollock: I'm happy to be obsolete on that one.

Hector Garcia: Yeah, absolutely. Okay. Um, Openpose don't link to bills. What does that mean?

Alicia Katz Pollock: Exact same [00:39:00] thing, but on AP instead of R, if you have purchase orders that were turned into bills in multiple stages, you have you you have purchase orders, you have bills, but they don't talk to each other. So you'll have to either give up or relink them.

Hector Garcia: And you're talking about the historical, the historical nature of that. Not not I mean, like your POS will come your your bills will come. That's going to be fine. But the historical link between them will not come. Right?

Alicia Katz Pollock: And usually what my clients elect to do is [00:39:30] only read only manually relink the ones that are currently open, and if it's closed, they don't even bother.

Hector Garcia: Okay, okay. Which which means that if I have partially received POS, I also don't have the history as to like what bills were used for partially received POS either.

Alicia Katz Pollock: Yeah, and this is actually one of the issues on the job that I'm currently in. That really big one is that we have to go through all of their POS and manually recreate them. [00:40:00] Um, and. And then manually go through and adjust all the balances, and it's actually been a huge part of the job.

Hector Garcia: Help me understand something that customer hates QuickBooks desktop so much, or loves QuickBooks online so much that they will pay $40,000 to recreate something that was already working well in QuickBooks desktop.

Alicia Katz Pollock: Um, well, the the owner has another company where he's using Qbo, and he loved it. And so that was [00:40:30] one of the originally they just wanted to they weren't even talking about Qbo. They just wanted to revamp their whole QuickBooks desktop experience. And then I showed them the project center and the fact that they could look at each of their grants and their restricted funds as a project to see how much was left on each one. And then the fact that they had, you know, 17 employees in it and they were just delighted. And they've been thrilled with all the new things that Qbo brings to the table for them. That desktop didn't [00:41:00] do. There was nothing wrong with what they were doing in desktop. I mean, there were some structural issues that were correcting, but when they saw the possibilities, they were totally jazzed.

Hector Garcia: That's interesting. The next line you have here is journal entries used for AR or AP. Still not pair. What does that mean?

Alicia Katz Pollock: So this one I'm actually digging back into the recesses of my brain. But I had a client that was a chamber of commerce, and their software did all of their [00:41:30] imports through journal entries instead of sales receipts. And then the journal entry for the A for the, the AR, and then when the pledge was paid came in and they didn't close each other out. And so we literally had to go through all of the invoices and the separate payments and pair them up so that the payments actually close the invoices. So it was weird because every donor showed a zero balance. But when you ran an [00:42:00] AR and an AR report, every single one was on it, but with a $0. And whenever you run an AR aging summary and the client has a zero, it means that there is an invoice and there is a payment, but the payment is not applied to the invoice. So you see a zero, but you have open transactions.

Hector Garcia: So have you used AR or AP in a journal entry to reduce the open balance of a invoice or a bill. The customer open balance will be correct on the balance sheet, but [00:42:30] it won't be applied to it. Exactly. You have to manually go back and apply it. I wonder, and I don't know if you have the answer to this. Is it the same case? If you have a check or a deposit hitting AP or AR, and then you're applying those to an invoice or a bill if those also don't link.

Alicia Katz Pollock: Um, I'm supposing that they probably do. And this is one of the reasons why classically trained accountants have trouble with QuickBooks in general, is because they're used to thinking about everything in terms of journal entry, debits and credits. And so when they want to put [00:43:00] something in QuickBooks, they do it through a journal entry instead of using the forms. And this is where that breaks down.

Hector Garcia: Make sense? Okay. Now assemblies. What is it that, uh, what is it about assemblies that we need to know?

Alicia Katz Pollock: Okay, so assemblies and QuickBooks Desktop Inventory mean that you're taking multiple component parts and cobbling them together into one unit in order to sell it? You know, like if you're building a computer, you've got your nuts and bolts and processors [00:43:30] and wires and motherboards and all of that. And so you buy all the components, you build the computer, you sell the you sell one computer. Qbo cannot do that natively. If that's what you're doing, then you do need a third party software like SOS Inventory or Sin seven. There's lots of fantastic ones out there. When you move over to Qbo, there is no assembly. There is a bundle, but a bundle doesn't work exactly the same as an assembly. It's close, but it's [00:44:00] not exactly the same thing. So they become bundles. But it's and bundles still do manage inventory, but it's more of a grouping than it is a single product.

Hector Garcia: And then the last one is other names converts as vendors. Yeah.

Alicia Katz Pollock: So in QuickBooks desktop, not only do you have customers and vendors and employees, but you also have another mysterious category called Other Names that I still can't wrap my head around. I don't quite know why. So, um, other names [00:44:30] comes in as vendors because other usually it's people you are paying, not people who pay you.

Hector Garcia: And that's I think that's a net good thing. So, Alicia, we went over our 45 minute budget for recording part one. We're going to call this part one of QuickBooks desktop to QuickBooks online conversion. We're going to record another episode, right? Right after which we're going to go over the rest of the document and maybe two more parts to go over the document. Because [00:45:00] because it's quite a bit. So at least I think at least this gives you the audience, a good general idea to like all all of us that do conversions, the challenges that we go, that we go through and how variable, how how potentially variable these conversion processes can be. Because there's so much to be thinking about. Right? So, Alicia.

Alicia Katz Pollock: Let me let me just put in one conclusion on that. So going back to that initial conversation of how much does it cost? This is the first thing that I go through in my needs assessment [00:45:30] are, is the company using any one of these things? And if they're not using any of them, if they're simple then a conversion could just be, you know, press the button and open the file connect the bank feeds, reconcile and you're done. But if any one of these is an issue, boom, right there, you get to start bumping up your your bid, your quote.

Hector Garcia: I love that. Thank you so much for adding that. So with that being said, um, thank you very much, Alicia. I'll see you in the next one.

Alicia Katz Pollock: See you in the next one. [00:46:00]

Creators and Guests

Alicia Katz Pollock, MAT
Alicia Katz Pollock, MAT
Alicia Katz Pollock, MAT is the CEO at Royalwise Solutions, Inc.. As a Top 50 Women in Accounting, Top 10 ProAdvisor, and member of the Intuit Trainer/Writer Network, Alicia is a popular speaker at QuickBooks Connect and Scaling New Heights. She has a Master of Arts in Teaching, with several QuickBooks books on Amazon. Her Royalwise OWLS (On-Demand Web-based Learning Solutions) at learn.royalwise.com is a NASBA CPE-approved QBO and Apple training portal for accounting firms, bookkeepers, and business owners.
Hector Garcia, CPA
Hector Garcia, CPA
Hector Garcia,CPA is the Principal Accountant Quick Bookkeeping & Accounting LLC, a globally-serving Technology-Accounting firm based in Miami, FL (USA), specializing in QuickBooks Consulting, but also providing traditional accounting services such as: Bookkeeping, Payroll Processing, Tax Return Preparation, and General Business Advisory. He has over 10 years of experience working with small business finance and accounting, along with 3 Post-graduate degrees from Florida International University (FIU) in Accounting, Finance and Taxation.