The new year is already well underway. That doesn’t mean it’s too late to start implementing some new best practices for 2024, though. When it comes to your accounting, employing a few tools and keeping key facts in mind can make your life a whole lot easier. That’s true for this year and when the time comes to handle your 2024 tax filings.
Whether you want to optimize your accounting to realize more tax savings this year or you just want to avoid unwelcome surprises, we can help. Our team of accountants has some recommendations for your tech startup. Use these three tips to stay on top of your accounting and ahead of upcoming changes in 2024.
Be ready to transition away from QuickBooks desktop
QuickBooks has long been a leader in accounting software — and for good reason. This robust solution offers a suite of tools that can support businesses of all types and sizes.
And historically, companies have had the option to either use the online, subscription-based QuickBooks or to buy a desktop version. The latter option had the upside of a single purchase price: you buy the desktop version, download it, and can continue using the software indefinitely without monthly costs.
At least, that used to be the option. But QuickBooks is in the process of discontinuing its historic desktop version. You can still buy an Enterprise version of the desktop version of the software, but it now comes with an annual subscription fee (right now, that’s $1,830). QuickBooks plans to stop selling the following desktop software on July 31, 2024:
- QuickBooks Desktop Pro Plus
- QuickBooks Desktop Premier Plus
- QuickBooks Desktop Mac Plus
- QuickBooks Desktop Enhanced Payroll
Existing desktop users won’t lose access to their software overnight. Generally, though, QuickBooks recommends moving away from the desktop version to QuickBooks Online. While you don’t necessarily need to make this transition tomorrow, you should be aware of what’s coming.
On May 31, 2024, QuickBooks plans to officially discontinue its QuickBooks Desktop 2021 software. At that point, unless you upgrade, you won’t have access to technical support and your desktop software will stop integrating with QuickBooks Desktop Payroll, QuickBooks Desktop Payments, and online bank feeds. QuickBooks will also stop making security upgrades to the desktop software on May 31.
One quick note: if you’re using QuickBooks Desktop Point of Sale 19.0, the company plans to continue supporting that tool until October 3, 2024.
Here’s the good news: while QuickBooks online does require a monthly subscription, its feature set is incredibly similar to the desktop version. Plus, moving your company’s books over shouldn’t be overly difficult. QuickBooks says most companies can do it in less than an hour.
If you want to protect yourself against future QuickBooks desktop software discontinuations, our team can help you make the transition to QuickBooks online. You’ll get the benefits of remote accessibility and real-time collaboration opportunities. Plus, QuickBooks says all future innovations in its software will go straight to the Online version. So that’s your best option if you want to maintain access to leading-edge accounting tools.
Stay up on lease accounting requirements
Lease accounting has changed a lot in the last five years. With new changes to generally accepted accounting principles (GAAP) from the Financial Accounting Standards Board, companies have had to adjust how they report their leases.
Starting in 2022, for example, all companies needed to report all leases over 12 months on their balance sheet under ASC 842.
Changes don’t stop there and don’t just impact the equipment and real estate leases you may expect, either. GASB 96, which is effective for all fiscal years starting after June 2022, governs reporting for subscription-based information technology arrangements (SBITAs). Now, all assets and liabilities resulting from SBITAs have to be recognized in the balance sheets of government end users.
Ultimately, a lot has shifted in the lease accounting requirements over the last half-decade. As a result, it’s best practice to report all equipment, real estate, and other leases on your balance sheet. Your accountant can provide guidance here.
There’s one area you should definitely discuss with your CPA in the world of lease accounting: equipment leases. Under new guidelines, these leases can be categorized as operating leases or finance leases. Each comes with its own perks and drawbacks and some equipment leases can be categorized either way. Discuss your equipment leases with your accountant to ensure you’re using the right lease category for your specific business.
Implement recordkeeping best practices now
All too often, we work with companies that have to dig through their archives to get the information they need when tax filing season rolls around. Not only does this mean a mountain of work for your team each spring, but it could mean missing out on tax savings.
If, for example, you weren’t on top of recordkeeping for your R&D tax credit, things can slip through the cracks. You might not have the documentation you need to pass the four-part test, for example. Had you filed away a copy of the relevant debugging report, though, you would be in better shape.
As you go through the process of filing your 2023 taxes this spring, make a note of what paperwork your accountant asks for. Then, go back to your team and develop a plan for collecting and organizing that documentation throughout the year. This way, your 2024 tax filings will be much easier — and potentially yield even more tax savings.
These are just a few suggestions to help set you up for accounting success in 2024. We also have some tips for bookkeeping best practices and a list of deadlines to help you navigate your tax filings this spring.
These are all very general, though. If you want guidance tailored to your unique tech company, talk with our team. As accountants who specialize in supporting startups, we can offer personalized tips paired with the expertise you need. For bookkeeping, accounting, and tax filing services that support your tech company’s success in 2024 and beyond, contact us. Our team of experienced accountants is standing by to help your startup.