The QuickBooks Accountant Copy is a great concept on paper, but a hindrance in real life. Nowadays, there are much more elegant and efficient  ways to coordinate your work with your CPA, tax adviser or bookkeeper. If your CPA asks you for an Accountant Copy, I recommend that you push back. Luckily, fewer and fewer CPAs ask for an Accountant Copy.

Quick primer on the QuickBooks Account Copy. It is a feature in all desktop versions of QuickBooks that allows you to keep working in QuickBooks, while your accountant can make edits to the historical data. Typically, it is used at tax time to let your CPA work on the previous year, while you can keep on working on the current year. Here’s how it works:

• You define a “dividing date”, typically December 31 of the previous year.
• QuickBooks creates a copy of your file: the Accountant Copy of your company file.
• Both files now have the same data, but you can only add or change data after the dividing date in your regular copy and your CPA can only add or change data before the dividing date in the Accountant Copy.
• Your CPA can then work on her copy of the file and make all the changes she wants. Once the CPA is done, a file is created with all the changes made by the CPA.
• You can then import all the changes into your regular company file and your file gets back to normal, meaning that you can now add and edit data before and after the dividing date. In other words, the dividing date goes away.

Clever, no? I agree. It’s a great concept, but it has major drawbacks:

• Data imports into QuickBooks are always risky. All too frequently, the process of importing the accountant’s changes breaks. QuickBooks freezes and you have no idea at which point it froze. Has all the data been imported, part of it or none of it? There are ways to tell, but this not a reassuring process. Too much of a black box for my taste.
• The import process has a log system that alerts you to problems that may have occurred during the import. This means that you have to scour the log to identify the issues and potentially address them.
• In 95% of the cases, the process of exporting and importing the Accountant Copy is more labor intensive for both you and your CPA than simply entering an adjusting journal entry provided by your CPA in PDF format.

There are safer and more cost effective ways to address this.

The most basic one (and the recommended one) is to send a regular copy of your QuickBooks file to your CPA and make it very clear to your CPA that the one she has is not the official one. The CPA can then do whatever she wants with this copy: pull reports out of it, edit it or import it into another accounting or tax system. The CPA can then send you a journal entry to be entered into your copy of QuickBooks to make the proper adjustments. Typically, it will take just a few minutes for you or your bookkeeper to enter this journal entry manually and it is perfectly safe. You get 100% visibility into the change you made and you can undo it if necessary.

Traditionally, CPAs would ask you to send them a backup or a portable copy of your file because it decreases the file size and it can be emailed. This is no longer necessary and it actually creates extra work for both you and your CPA to convert the files. Nowadays, with systems like www.yousendit.com or www.sendthisfile.com, you can communicate the file by just emailing a URL to your accountant. The file gets uploaded from your PC or Mac to a server and when the CPA clicks on the link you sent to her, the files gets downloaded on the CPA’s computer. With this technique, you are not restricted by the size of the file that can be sent by email. Another benefit is that you can send the regular QuickBooks company file (extension *.QBW) instead of a backup or a portable copy. It will save everybody a few extra minutes because not backup or restore is needed. Another benefit of this approach is that email servers have a tendency of corrupting QuickBooks files. The chances that your QuickBooks file will make it intact to your CPA when using system like http://www.yousendit.com/ or http://www.sendthisfile.com/ are much greater. Both services offer free accounts.

An alternative to sending a copy of your QuickBooks file to the CPA is to host your QuickBooks file on a server that your CPA can then access remotely. You set the QuickBooks file in multi-user mode, create a user login for your CPA and you can then let your CPA work in the same company file as you. See my other blog on hosting QuickBooks.

This could appear to be the most elegant solution, but in reality, CPAs don’t like it too much. Typically, the time when they need to see your QuickBooks file is right in the middle of their busy tax season. At that time, the CPAs are scrambling for every precious minute of their day. They don’t need the added complexity of having to learn how to log onto your server and having to manage yet another set of credentials.

My recommendation is to keep it simple. Send your CPA a regular copy of your company file (*.QBW) and once she’s done reviewing or preparing your taxes, ask her to send you an adjusting journal entry in PDF format for you or your bookkeeper to manually enter into your official version of your company file: simpler, faster, cheaper and safer.