Choosing a Cleanup and Archive Strategy with QuickBooks 2011
Deciding when and how you want to clean up or archive your QuickBooks 2011 company file is mostly a matter of common sense. Your first consideration should be whether you need to condense the company file at all. If QuickBooks still runs at a reasonable speed, if you don't find yourself going crazy because of many unused items on lists, or if the data file hasn't grown monstrously large (larger than 100MB or so), you may not need to condense. You achieve no benefit, in many cases, by cleaning up. And by not cleaning up, you still have complete detailed financial records at your fingertips.
Running a cleanup operation doesn't necessarily reduce the size of the QuickBooks data file. If you really must have a smaller data file, what you should do is first run a cleanup operation and then save and restore a portable QuickBooks data file.
The other part about cleaning up and archiving the QuickBooks company files is another common-sense notion: You should create an archival copy of the QuickBooks data file. It's recommended that you create an archival copy at the end of the year after you or your CPA has made any final adjustments to the year. It's a great idea to create an archival copy of the QuickBooks data file that's used to prepare your tax return and any financial statements because you can always later explain some number on a return or financial statement by looking at the archival copy of the data file.
Sometimes people intentionally or inadvertently change old transactions. This means that someone can, unfortunately, change transactions in a QuickBooks data file in a previous year. When that change occurs, someone later looking at the QuickBooks data file may not be able to explain a number on a tax return or a financial statement. For example, if someone later goes back and changes a transaction in a previous year, and that transaction is used to calculate total revenues for the year, you can no longer use the QuickBooks data to explain numbers on your tax return and your financial statements for total revenue.
Fortunately, by having an archival copy of the QuickBooks data file — the QuickBooks data file that supplied numbers to your tax return and the financial statements — you can always see which QuickBooks transactions support a particular tax return number or financial statement number.
If you're still confused about this point — and it is a little bit tricky — ask your tax advisor or your CPA about the problem. He can explain to you the danger of having a change in QuickBooks data that has been used to prepare a return or a financial statement after that return has been prepared or after those financial statements have been published and distributed.