Bookkeeping Clean Up Checklist: A 5-Step Process

An accounting professional can help you unravel and clean up accounting records. At some point, you might do the opposite of a data entry error, too. You may forget to record a transaction, which is an error of omission. Failing to record every transaction throws off your books (aka bad bookkeeping!). In short, bad bookkeeping puts your time and money—and maybe even your business—on the line.

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Common bookkeeping errors that can impact your taxes include incorrect expense categorization, unrecorded transactions, unreconciled accounts, and inaccurate revenue recognition. The next step in your bookkeeping cleanup checklist is to reconcile your bank statements. Take a look at your bank statements over the course of the timeframe you are working on. Make a note of any discrepancies, like a missing check or deposit.

If you find yourself dealing with any of the above issues, it might be time to give your books some TLC. Once you’ve verified that you have all the information you need to complete your accounting process, you should enter (or import) your cliens’ information into your accounting software. By following the same process each month, you can ensure your clients’ books are in order and that you have not missed any steps. The cleaning industry has many unique accounting needs, so familiarizing yourself with these accounting tips is beneficial when you’re starting out.

For Businesses

There’s no need to start your bookkeeping clean-up checklist from scratch. We’ve created a template for you to use and customize for your specific needs. The final step is to send the monthly reporting to your clients. If you notice any unusual items or trends, you should include comments or questions when you send them the report. If you are working with an electronic file, you will need to download the information from the client’s financial institutions or wait for your client to send you PDFs each month.

If your business still handles its books this way, you should strongly consider moving to the accrual method of accounting, and this is the perfect time to do so. The accrual basis records transactions not when cash is exchanged but at the moment it is committed, through invoicing, purchase contracts, or other agreements. It’s a bit more work at the end of an already-long process, but it’s worth it. Submit your information here If you would like help evaluating your catch-up bookkeeping needs . Or Learn More About The Bookkeeping catch-up experts in our team.

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You may receive your client information as a physical or electronic file. Though the free template will work, teams should look at automated workflow management software to make the process more efficient. This is a great natural storage system for managing your electronic purchases.

• Another hurdle in a bookkeeping clean up is revenue recognition.
• Similarly, payroll costs can stack up, so you should only employ the people who you need on your payroll; don’t overstaff!
• There’s no need to start your bookkeeping clean-up checklist from scratch.
• If you’re still doing your own bookkeeping, you’ll want to block off an hour or two every week to review and reconcile transactions.
• In short, bad bookkeeping puts your time and money—and maybe even your business—on the line.

Whether you are performing a cash or accrual accounting clean up, you’ll need to organize your messy receipt drawer. Organize your documents by months, quarters, and years to have a better idea of the scope of your project. A P&L shows a detailed snapshot of income for a certain length of time. This is where your opening equity account balance is itemized as gain or loss before it is transferred to equity accounts. That is why P&L’s show temporary accounts, these accounts get closed-out in each period because they report recognized revenue and expenses.

If you use a third-party payment processor, review all of your transactions there as well. We have worked on 100’s of projects rapidly rebuilding financial records. Our accounting team provides a white glove experience where your finances are handled with speed and accuracy.

Too often, small business owners continue to manage the books themselves, even after the business has grown and its accounting needs have changed. If keeping your records in a shoebox was a good enough system three years ago, it’s clearly not enough at this point. Other businesses assign bookkeeping responsibilities https://www.bookstime.com/ to employees who lack the experience to follow through correctly. If you’ve been outsourcing your bookkeeping, it’s time to find a new accountant. If you’ve been keeping the books yourself or with in-house personnel, it’s time to get some extra training for the person who’ll be managing things from here on out.

When you are completed, the balance in your bank account should be the same as the balance on your accounting system. It’s hard to say which part of this process is the most difficult, but depending on the type of business you have, rounding up all your past financial records may be the most time-consuming. You are looking to gather all of your bank statements, receipts, invoice, and other related financial information. Now that you have a plan and know what you are getting into, it’s time for accounting.

If you don’t already have separate bank accounts and credit cards for your business, establish both immediately. That way, you won’t be in a pickle come tax time – determining what you can or can’t deduct. When it’s time for you to come on board with an accounting service, they should inform you of best practices (timeline of record retention, method, etc.) bookkeeping clean up for receipt-keeping for your business. However, if you’re currently struggling to keep your receipts organized, try smartphone apps that allow you to snap pictures of your receipts and organize them online. Whatever process you choose, make sure your receipts are easy to access so you can deduct the right amount of money from your taxable income.

Keeping up with sales and expenses in real-time you don’t have to rely on memory when reviewing transactions. Finally, with a steadier hand keeping the books and all incoming source documents fully accounted for, you can start addressing the problems you’ve found. This guide can’t anticipate every problem you might have discovered, but we can give you some ideas about issues common to businesses in your situation, and how you should plan to correct them. It might have seemed efficient to have invoices sent directly to one department, billing statements to another, expense reports to still another, and so on. But internal efficiency isn’t your biggest problem at this point.

• Accounting software can help you keep your records in one accessible space.
• Business owners love Patriot’s award-winning payroll software.
• Download, print, or screenshot all receipts and file them physically or electronically somewhere like Google Drive.
• It’s hard to say which part of this process is the most difficult, but depending on the type of business you have, rounding up all your past financial records may be the most time-consuming.
• For revenue to be recognized, a business needs to fulfill all performance obligations of a sale.