Books rarely go wrong all at once. A busy season, a bookkeeper leaving or a new bank account that never got connected, and a few months later the numbers no longer make sense. Here are the signs to look for.
1. Your accounts have not been reconciled in months
If nobody has matched your bank and credit card accounts to their statements recently, there is no way to know whether your books are complete. This is the most common sign, and usually the first thing a clean-up fixes. Read more on why monthly reconciliations matter.
2. The uncategorized list keeps growing
Transactions sitting in "uncategorized income", "uncategorized expense" or "ask my accountant" are transactions your reports cannot use. A long list means your profit and loss is not telling the full story.
3. Your bank balance and your books do not match
If the cash balance in your accounting software is very different from what the bank shows, something is missing, duplicated or recorded in the wrong place.
4. Your reports do not look right
Negative balances in accounts that should never be negative, a month with no rent expense, or profit that looks far too high or too low are all signs that something underneath needs fixing.
5. Your CPA keeps sending questions
If tax season starts with a long list of questions and adjustments from your CPA, your books are probably not tax ready. That extra work often shows up on their bill too.
6. Business and personal spending are mixed
Personal purchases on the business card, or business costs paid from a personal account, make it hard to see true business results. They need to be found and recorded properly as owner draws or contributions.
7. You are behind and do not know where to start
If you have been putting off the books because the pile feels too big, that is a sign in itself. The longer it waits, the harder it gets to find receipts and answers.
What a clean-up involves
A clean-up brings your books back to a point where they are complete, accurate and reconciled. It usually includes:
- A review of your current file and a plan agreed before work starts
- Categorizing every missing or uncategorized transaction
- Reconciling each bank, credit card and loan account, month by month
- Fixing duplicates, errors and transactions recorded in the wrong place
- Tidying your chart of accounts
- Agreeing opening balances to your last tax return where possible
Once the clean-up is finished, monthly bookkeeping keeps everything current so you do not end up in the same place again.
What you will need
Bank, credit card and loan statements for every month being cleaned up are the most important items. Access to your accounting software, your last tax return and any receipts or invoices you have will help too. A good bookkeeper will tell you exactly what is missing.
The bottom line
If you recognized two or more of these signs, a clean-up is probably worth it. It is easier to fix things now than in the weeks before a tax deadline.
We review your file and give you a fixed price before any work starts. See our catch-up and clean-up service.