The pre-migration cleanup list: what to fix in Desktop before you convert to Online

Every converted file I've remediated had one thing in common: the problems in the Online file were already in the Desktop file. The converter just carried them across and, in a few cases, made them harder to see. The cleanup list below is the work I do on a Desktop file in the two weeks before a conversion. It's the difference between a tie-out that takes an afternoon and one that takes a month.

First, though: decide whether to convert at all. There's no deadline forcing it. If you're going, this is the prep.

Phase 1 Reconcile everything, through the conversion date

An unreconciled account converts as an unverified balance, and the reconciliation history itself doesn't come across in a usable form. So the Desktop file is your last chance to prove the balances.

• Every bank account reconciled through the most recent statement
• Every credit card account reconciled through the most recent statement
• Loans tied to lender statements, interest and principal split correctly
• Payroll liabilities tied to what's actually owed (Pay Liabilities screen vs. the balance sheet)
• Sales tax payable tied to the Sales Tax Liability report, and any adjustments explained
• Print or save every reconciliation report as PDF. Past reconciliation reports don't convert; this is your only copy.

Phase 2 Clear the holding accounts

Desktop has several accounts that are supposed to be empty and usually aren't. Each one converts as a balance that the Online file can't explain.

• Undeposited Funds to zero. Every received payment either became a deposit or was recorded twice. Match and clear.
• Opening Balance Equity to zero, with each piece traced (see clearing OBE). The converter is going to post its own differences here; don't make it share the account with five years of setup errors.
• Uncategorized Income and Uncategorized Expense to zero. These come from bank feed imports that were never coded.
• Ask My Accountant, or whatever your suspense account is called, to zero.
• Reconciliation Discrepancies reviewed. Anything in there is a forced reconciliation; find the real cause.

Phase 3 Fix inventory

Inventory is where conversions produce the most unexplainable numbers, because the Online file rebuilds cost layers from the conversion date (on FIFO unless you can select Moving Average Cost). Give it clean data to start from.

• No negative quantities on hand, for any item, as of the conversion date. Run the Inventory Valuation Summary and fix every negative with a dated adjustment or by correcting the entry sequence.
• Physical count completed and quantities adjusted to actual.
• Items with zero cost reviewed; they'll convert at zero and understate inventory.
• Inventory assemblies: export the bills of materials to a spreadsheet. QBO has no assemblies; they convert as plain items and the BOMs are lost.
• Inactive items with quantity on hand either zeroed out or reactivated. Inactive items with a balance confuse the conversion.
• Check whether the current conversion tool lets you choose Moving Average Cost for the Online file (Intuit added it alongside FIFO; it's chosen once at inventory setup and locked). If your Desktop file is on average cost and you can keep it, do.
• Otherwise accept that the inventory value will change on conversion, and read what that means for the books and the tax return before you do it.

Phase 4 Prune the lists

The converter brings every list item across, active or not. Online's list limits are generous but not infinite, and a file with 4,000 inactive customers is a worse file to work in.

• Chart of accounts: merge duplicates, make dead accounts inactive, confirm the structure you want (the design guide walks it). Easier to fix here than after.
• Customers, vendors, employees: make inactive anything with no activity in two years and no balance. Fix duplicate names (the same vendor as "ABC Supply" and "A.B.C. Supply").
• Items: make inactive what you don't sell. Check that every item points to the right income and COGS accounts; mappings carry over as-is.
• Classes: consolidate. Decide the class structure for Online now; QBO Plus and Advanced support classes, lower tiers don't.
• Names that collide: Desktop allows a customer and a vendor with the same name. QBO doesn't. Find and rename them before conversion or the tool will rename them for you.
• Custom fields: they don't convert. Export any custom field data you rely on to a spreadsheet.

Phase 5 Finalize payroll and sales tax

• Run the last payroll in Desktop and reconcile the liabilities. Payroll converts as journal entries at best; employee year-to-date detail, payroll items, and tax setup don't. Plan to set up payroll fresh in QBO (or with a third-party provider) and enter YTD figures manually.
• Save payroll reports for the year to date: Payroll Summary, Payroll Detail, each employee's YTD. You'll need them for the QBO setup and for year-end forms.
• File and pay any sales tax due through the conversion date. Sales tax converts as a balance, and the tax agency and rate setup is rebuilt in QBO. Clean cutoff makes the first Online filing far easier.
• If the conversion date is mid-quarter, document exactly which payroll runs and sales tax periods are Desktop and which are Online.

Phase 6 Export what won't convert

The full reference table is in the conversion guide. The short list of things to export now because they're gone after:

• Attachments (the Attach Documents folder, on disk alongside the company file)
• Memorized reports: export each to Excel or save the layout notes
• Reconciliation reports as PDF (from Phase 1)
• Payroll detail (from Phase 5)
• Custom fields and price levels
• Budgets other than P&L budgets
• Audit Trail report for the last year, as PDF, if anyone might ever ask
• A trial balance, balance sheet, P&L, A/R aging, A/P aging, and inventory valuation as of the conversion date. These are the source side of the tie-out.

Phase 7 Check the file itself

• Total Targets. Press F2 (or Ctrl+1) in Desktop and read the Total Targets count. Intuit's conversion limit is 750,000 targets; above that, only lists and balances convert, not transaction history. If you're over, the options are condensing the file or converting lists and balances only and keeping Desktop for history.
• Verify Data, then Rebuild Data (File > Utilities). Fix every error the log reports. A file that fails Verify fails conversion in ways that are hard to diagnose.
• Update Desktop to the current release. The conversion tool requires it.
• Multicurrency. If it's on, it converts, but confirm every foreign-currency balance reconciles first; it can't be turned off in either product.
• Close the books with a closing date and password as of the conversion date. Nobody should be posting to Desktop after the file is copied.
• Back up the file to a location you'll keep for at least seven years. Then make a second copy. The Desktop file is your permanent record of everything that didn't convert.

Then convert, and tie out immediately

Run the conversion, and the same day, pull the Online trial balance as of the conversion date and lay it next to the Desktop one from Phase 6. Work the tie-out in order: cash, A/R and A/P, inventory, payroll, sales tax, and drive Opening Balance Equity to zero with every variance documented. With this cleanup done, most of the rows tie on the first pass and the ones that don't are the known ones: inventory revaluation and payroll reconstruction.

The rule: fix it in Desktop. You know the file, the reclassify and find tools are better, and every problem you carry across becomes two problems, one in each system, that have to be explained to each other.

Common questions

General guidance on preparing a QuickBooks file for conversion, not accounting, tax, or legal advice. Conversion limits and what transfers change with Intuit's tooling; verify against Intuit's current documentation for your version before converting.