Why is it important to align QBO with a company's legal entity and tax information during initial set up?
A)The IRS (Internal Revenue Service)regularly accesses QBO information to update its records.
B)QBO only allows one type of legal entity to be input for a corporation - the C corporation,therefore,QBO must ensure all corporations are using this legal entity.
C)Legal entity dictates what tax form a company uses and the tax form affects the accounts QBO needs to use.
D)A company can use more than one legal entity at a time; it is important for QBO to track what type of legal entity a company is using for different transactions.

Question

Quizplus · Accepted Answer

Legal entity has a significant impact on the type of tax form a company uses which in turn impacts the accounts QBO needs to use. Therefore, it is important to align QBO with a company's legal entity and tax information during initial set up. Option A is incorrect because the IRS does not access QBO information to update its records routinely. Option B is incorrect because QBO offers various legal entity types for corporations, including S corporation, sole proprietorship, partnership, and limited liability company (LLC). Option D is incorrect because a company can use only one legal entity at a time, and it is not necessary for QBO to track different legal entities that a company might hypothetically use for different transactions.

Why Is It Important to Align QBO with a Company's