9 Crucial Bookkeeping Clean-Up Checklist

Note that these messes can bring about troubles, hassles, or even sleepless nights, and if left unattended, can destroy the business. Unfortunately, messes are part of things that cannot be avoided due to how small businesses are handled. However, there are a few other mistakes that are often overlooked when cleaning up your books. It’s important to make sure that each expense is categorized correctly, as this can affect your tax deductions and overall financial analysis. One important aspect to consider when evaluating your bookkeeping system is the security of your financial data. Are you taking necessary measures to protect your sensitive financial information?

  • When you are unable to pay the bills, you can face a negative reputation about the dependability of your company, loss of employment, and even eviction.
  • A duplicate journal entry can show you have more or less money than you have.
  • If you need more accurate, efficient, and integrated bookkeeping, call me.
  • By reviewing your inventory records, you can ensure you’re not stocking up on unnecessary items and that your prices are reasonable.
  • 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.

So, if you haven’t already, invest in a bookkeeping system that works for you and make sure to keep it up-to-date. So mark a day on your calendar, set an alarm, or get an accounting accountability buddy and regularly sit down with your finances. You can use this bookkeeping cleanup checklist to help you stay on track.

Review past transactions to check that they were categorized correctly, as well as update those that have not yet been categorized. Zeni preserves a historical copy of client data, ensuring GAAP compliance and matching records accurately with bank records, investment records, and other documentation. Our platform also offers user-friendly access to comparative data over your business’s operational lifespan, providing essential information about long-term growth. In other words, you shouldn’t expect a contract bookkeeper to clean up your books in five to 10 hours. To keep the project within a timely manner (and avoid future accounting issues), work with a team with experience in your industry year around.

Reconcile Your Cash and Credit Accounts

Failing to pay an invoice or to collect a payment can chip away at the company’s livelihood. When you are unable to pay the bills, you can face a negative reputation about the dependability of your company, loss of employment, and even eviction. If you find yourself frantically searching for old documents and bank statements, it is time to hire a professional. All About Businesses offers clean-up and catch-up bookkeeping services and is here to provide a checklist so you can keep your accounts in order. General checks in the bookkeeping cleanup checklist refer to the tasks needed to ensure that the financial records are accurate and up-to-date.

  • If you’re using a paper-based system or spreadsheet, you will need to manually create the following month’s checklist.
  • By checking your tax returns, you can ensure that all taxes have been paid on time and that all necessary paperwork has been submitted accurately.
  • It’s vital that you clean up the last three years of records, and best if you go back seven years.
  • As with your cash accounts, plan to reconcile each credit account once a month going forward.
  • When asked, it would ensure that you could produce financials for the interested parties at a moment’s notice.

Bad bookkeeping can also lead to hefty IRS penalties and (gasp!) audits. 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. 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.

Centralize Management of Source Documents .

If you’re performing a major cleanup, your current accounting practices probably require significant updates. Eventually, you’ll need to present your financial statements to investors and other third parties. Those individuals will expect your statements to follow GAAP-compliant accounting practices and present information clearly and consistently. They’ll need lists of outstanding debt, loan and credit agreements, tax return filings, and other financial documents.

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Before you know it, it’s been months or even (yikes) years, since your bookkeeping has been properly updated. And now the project looms over you like an ominous thunderstorm waiting to strike with disastrous results. Make sure to track down any past-due payments and correctly record them. Also, consider reminding customers or following up if they have unpaid amounts. Ready to find out if workflow software is the right fit for your firm? Select the potential number of users at your company below to get started with your 14-day free trial.

Common bookkeeping errors that can impact your taxes include incorrect expense categorization, unrecorded transactions, unreconciled accounts, and inaccurate revenue recognition. This step may not apply to all businesses, but it’s a common enough issue. Many small businesses begin as side projects; many barely record sales or revenue at first. Most fledgling businesses keep records of when they receive cash from sales or spend cash to cover bills, and leave it at that. 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.

Every invoice gotten from a supplier or forwarded to a customer is entered separately, and that gives the businesses a clearer picture. If any of these signs show up while doing a complete bookkeeping clean-up checklist, then there is a need for the business to clean up its bookkeeping records. It’s important to note that reconciliation should be done on a regular basis, such as monthly or quarterly, to ensure that any discrepancies are caught and corrected in a timely manner. Additionally, reconciling your accounts can help you identify any fraudulent activity or unauthorized charges on your accounts, which can help protect you from financial loss. Another reason for falling behind on bookkeeping is procrastination.

Use Your Cloud-Based Accounting System’s Tools Wisely

It is also recommended to review your bookkeeping system periodically to ensure that it is still meeting your business needs. As your business grows and evolves, your bookkeeping system may need to be updated or modified to accommodate changes in your operations. Regular reviews can help you identify any areas that need improvement and ensure that your financial records remain accurate and up-to-date. First, let’s address why you may have fallen behind on your bookkeeping. Or, it could be because you simply don’t enjoy bookkeeping tasks.

We recommend using a cloud-based accounting software to safely store your financial documents. It would also help you access free government money of PPP or EIDL loans with proper bookkeeping and updated tax returns. You’ll also want to customize your checklists to fit the type of clients you’re working with. Inventory and COGS will be relevant for some clients and not others. Areas like payroll and sales tax will depend on the type of business and what’s being done in QBO. QuickBooks cleanup projects can easily become overwhelming and time-consuming, especially if you’re not sure where to start.

Of course, many of the steps listed above will include multiple sub-tasks. The cleanup checklist you use should break these out so you can walk through them step-by-step, avoiding confusion. Each of these tasks is laid out on the checklist to make it simple to work your way through. Routine bookkeeping clean up is directly connected to business survival rate – the more you review your books, the better chance you have of succeeding.

Download this checklist from Acuity, and start optimizing your financials. Simplify your processes with the help of this guided checklist, including insightful data, helpful resources, and easy-to-use templates. These problems are easy to spot when you look for them, and they tend to indicate systematic problems with a company’s books. If one or more of these issues crops up, you’ll need to thoroughly audit your records and establish a steadier course for the future. Likewise, you shouldn’t avoid cleanup because of concerns about the time frame or cost. The longer you use improper accounting methods, the more work you’re handing over to your finance team.

I call it my QBO Colossal Cleanup Checklist (Available for purchase in the 5MB Academy linked here). Whether you’re using my checklist , or creating your own, there are some key pieces you’ll want to be sure are included. My checklist starts with two main sections – one is for client information and then the other is the actual cleanup checklist.

This includes checking for accuracy in categorization, ensuring that all accounts are up-to-date and balanced, and looking for duplicates. Take your time and be thorough in this step to avoid any mistakes and ensure the accuracy of your financial records. Additionally, wave connect 2020 staying organized in bookkeeping can help you avoid costly mistakes. When you have a system in place for tracking your finances, you’re less likely to make errors or overlook important details. This can save you money and prevent potential legal issues down the line.