Bookkeeping Clean-up Checklist

Use this historical bookkeeping clean up checklist, for each bookkeeping period you need to recover. At the end of each year you will need to perform an annual year-end close, an extra step noted at the end of the checklist. If you record transactions with the accrual method, your document collection will be more extensive. Just like the cash method, you will need all your credit card and bank statements, plus any financial statements from previous closeouts.

With these pieces in place, your accounting software can create a chart of accounts, recording transactions and classifying each appropriately. An exception to this is checks that were written by the company to others. It is possible for checks to be written and recorded in the system, but not cashed, and thus not reconciled for many periods. If you find checks like that in your system, and they are not reconciled (i.e. have not cleared the bank) after 90 days, investigate the situation further. It could be the check is a duplicate transaction, was actually void or had payment stopped, or the recipient just didn’t cash it.

Frequently Asked Questions – A Bookkeeper’s Guide for Doing a “Clean-Up” on Records

If you don’t reconcile your books with your external account balances (e.g., bank account), you’re going to be left with bad books. Check for data entry errors to clean up and sort out your books. You can find these types of errors by double-checking your work and preparing trial balances at the end of each reporting period. Using software like QuickBook, the account receivable process can be made less complicated. Monthly bills of a business for services done for clients should be inspected, and all deposits and cash should be checked in QuickBooks. Making revisions to General Ledger and Balance Sheet to balance your accounts receivable report is crucial.

• These occur when expenses or income are recorded in the wrong account, leading to inaccurate financial reports.
• He writes about entrepreneurship, finance, accounting, and economics.
• None will be as important as verifying your cash flow against source documents, but each of them contributes to an accurate picture of your business and its true value.
• Check for data entry errors to clean up and sort out your books.
• Compare transactions in your software with the same ones on your bank statements.
• But what if your accounting system shows you’ve reconciled nothing?

Giving you a clear picture of where your company stands and a fresh start for bookkeeping in real-time. Every small business owner has the best intentions from the beginning, but heavy responsibilities and busy schedules often lead to important tasks falling to the backburner. One area that is often overlooked is the company’s financial tracking. You may have to pay monthly or annual fees for high-quality accounting software programs. However, unless you use it correctly, it will be ineffective.

Review Payroll Records

Poor bookkeeping can also result in tax errors and penalties, missing out on tax deductions and credits, and an increased risk of an audit. Quick fixes, like relying on spreadsheets or delaying record keeping, may seem like a good idea in the short term. But they can lead to missing or inaccurate financial information, which will hurt your business potential now and when it comes time to sell. Many bookkeepers or accounting firms offer customized quotes after evaluating the specific needs and the extent of the clean-up required. Some software offers built-in features for reclassifying transactions or merging accounts, which can be especially handy during Clean-Ups with extensive misclassifications or duplicated entries.

We conduct a check-up of over 60 items in their accounting file to identify exactly if and where things have gone wrong and then proceed to the clean up stage to get everything fixed. Let’s define what I’m talking about just to make sure that we’re all on the same page. Compare transactions in your software with the same ones on your bank statements.

Pricing and Charging for Clean-Ups – A Bookkeeper’s Guide for Doing a “Clean-Up” on Records

So you need to be diligent about finding data entry errors. Take control of your finances and make informed decisions that drive growth and success. Hire our firm to handle your Clean-Up process and witness the transformation in your financial reporting. For instance, if clients frequently mix personal and business expenses, advise them on maintaining separate accounts for better financial management.

• As you might expect, this is a slow and incredibly painful process.
• Every small business needs to have its own business account, period.
• But if you think that you’re doing just enough to maintain accurate books, you might be whistling through the accounting graveyard.
• This article was written by Adil Abbasi, Chartered Management Accountant (CMA).
• We also invite you to explore our blog for more valuable knowledge resources on every aspect of managing your business.
• It includes access to their accounting software, such as QuickBooks Online, bank statements, invoices, receipts, and other financial records.

If a seamless integration is not available, at least utilize an export/import process for keeping systems in sync so you do not have to manually enter a bunch of data. We offer daily and weekly services bookkeeping clean up to our bookkeeping clients. Weekly services are included in our most popular bookkeeping packages. Let CFO Consultants be your trusted partner in achieving financial clarity and success.

Clear the clutter with virtual bookkeeping.

Suppose a client’s messy books have resulted in misreported expenses, leading to inaccurate tax filings and potential penalties. By offering a Clean-Up service at a reasonable price, the bookkeeper can save clients from financial troubles and provide them with peace of mind knowing their financial records are reliable. Essentially you are recording past transactions as if they were being recorded when they happened. This produces net income for financial statements, from previous periods, so you can visualize business performance.

After locating the source of your problems, you’ll probably be tempted to jump right in and begin fixing them. It’s wiser, though, to take a breath at this point and ensure that your books suffer no further damage. https://www.bookstime.com/ The key to this step is making sure that all incoming documents are handled by a reliable accounting system under the eye of a reliable bookkeeper. This can be as much a personnel decision as an accounting one.

What is an Example of an Error Correction in Accounting? – FAQs

As a bookkeeper, it’s essential to convey the value of Clean-Ups to your clients and the long-term benefits they will reap from having clean and organized books. Undeposited funds can create confusion and discrepancies in the books, especially when transactions are not promptly recorded in the bank account. Moreover, unresolved bank reconciliations can lead to inaccurate account balances. There’s really no reason to use a bookkeeping system if you’re not going to keep up with it. Schedule an appointment with yourself once a month to reconcile your bank statements and set your budget for the coming month. You should also check in weekly to code your transactions (making your monthly reconciliation that much faster).

These reports will be essential for clients to make informed business decisions and assess their financial health. Consider a scenario where you work on a Clean-Up for a small business owner. For example, if you encounter ambiguous expenses in the books of a graphic design studio, you can create a dummy account labeled “Uncategorized Expenses” to group these transactions. Later, you can consult with the client or research the details to allocate these expenses correctly. For instance, if you’re working with a manufacturing company and discover that inventory transactions must be properly recorded, rectifying this issue becomes a top priority.