Tips/Tricks to roll accounting system?

March 03, 2021

by a searcher in Los Angeles, CA, USA

I am working towards a close and wanted to see how operators have rolled the accounting records in an asset purchase? Currently, the company uses quick books and I am likely also going to end up using QB.

On Day 1 post-close, do you continue to book entries in the old system and then migrate to the new accounting system in the future? Book in parallel in both systems for a period of time? Basically, what's the best way to ensure continuity but also not be bogged down by previous operator accounting processes?

Any tips/tricks for tactical issues like these would be highly appreciated.

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Reply by a professional
from Harvard University in Boston, MA, USA

Hi Sarim, many layers to your questions and you'll want to come up with a comprehensive finance & accounting plan to set the stage for tight controls and great reporting for you and your stakeholders. You'll want to have separate books, a QBO instance for each EIN. But to answer your specific question, we generally recommend a new, clean QBO instance, migrate customers, vendors and book transactions in the new instance from closing forward. You'll certainly want to overhaul the chart of accounts to enable the reporting you'll need to inform your decision making. You can technically do that before or after you start booking new transaction the new instance (some advantages/drawbacks to sequencing), but either way you'll want to take a thoughtful look at your informational needs. But I agree with Max on the getting a backup of oldco's QBO file as of close. And building on the QBDT v. QBO decision point Max raises, if the seller's books are in QuickBooks Desktop and don't have inventory or other needs not best managed in QuickBooks Online we generally recommend QBO.

Reply by a professional
from University of Illinois at Chicago in Deerfield, IL, USA

First way: Start a new file: You would input an opening balance sheet; import chart of accounts, customer/ vendor contact data, and AR/ AP; and upload monthly historical trail balance amounts for comparatives. Assuming you have access to both instances of QuickBooks, the safest path would be to book in parallel in both systems for some short period of time.

Second way: Continue the old file: Close out Oldco balance sheet accounts and its P&L to “Other income.” For reports to include Newco activity only, you would enter the closing date as the first day of the period you would like to present. However, some attorneys believe maintaining Oldco data may create exposure to seller state/ local tax liabilities in the event of audit, despite an asset deal, so you might want to check on that.

I'm happy as always to discuss further. Please contact me at redacted Have a great weekend.

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