If your bookkeeping is months behind, your QuickBooks account is a mess, or you haven’t filed taxes in a couple of years, you may be putting off calling someone because you’re embarrassed by how bad you think it is.
We’ve seen books that were three years behind.
Being behind isn’t unusual. More importantly, the amount of time that’s passed isn’t always what determines how difficult the cleanup will be. Some of the things that worry business owners are fairly straightforward to sort out. Other habits that seem harmless can create much more work.
Here’s what we actually see when St. Augustine business owners come to us for bookkeeping cleanup.
The short version: the number of accounts usually matters less than whether the records are complete, the transactions are categorized correctly, and business and personal finances have been kept separate.
Multiple Bank Accounts and Credit Cards Usually Aren’t the Problem
Business owners sometimes assume having several accounts will make their books unusually difficult to straighten out. Multiple accounts aren’t necessarily a problem.
If the accounts have good records and their activity can be identified, we can work through them systematically.
What makes cleanup harder is when business and personal finances are mixed together.
One of the most common situations we encounter is a business owner who doesn’t maintain a separate business bank account. Another is someone who has a business credit card but regularly uses it for personal purchases.
Now every transaction has to answer an additional question: Was this actually a business expense?
Keeping business finances separate makes that answer much easier.
A QuickBooks Bank Feed Is Not the Same as Reconciliation
This is one of the most common QuickBooks problems we see.
A business owner connects QuickBooks to the bank, sees transactions flowing into the software, and assumes the books are being reconciled as those transactions are accepted.
They aren’t.
Bank reconciliation is the process of verifying the books against the actual bank statement and accounting for differences. Simply importing transactions through the bank feed doesn’t establish that the books are correct.
That distinction becomes particularly important during a cleanup. A QuickBooks file can contain months of imported transactions and still need substantial reconciliation work.
QuickBooks Can Guess an Expense Category. That Doesn’t Mean It’s Right.
QuickBooks can suggest or automatically assign categories to imported transactions. Those suggestions still need to be reviewed.
We regularly see clients accept bank-feed transactions without looking closely at the expense category QuickBooks selected.
One incorrect category may not seem important. Repeat that process across hundreds of transactions, though, and the financial reports generated from those books may not accurately describe what happened in the business.
Getting transactions into QuickBooks is only part of bookkeeping. They also have to be recorded correctly.
Cash Creates a Different Kind of Bookkeeping Problem
Cash payments are another common issue in messy books.
A bank or credit card transaction leaves a trail that can usually be followed later. Cash requires the business owner to create that trail through receipts and records.
When many expenses are paid in cash and haven’t been consistently recorded, reconstructing what happened can take more work.
This doesn’t mean a business can’t use cash. It means cash transactions need a record just like transactions that appear automatically on a bank or credit card statement.
Being a Year Behind Is Less Unusual Than You Probably Think
We’ve had clients come to us after not reconciling their books for an entire year. We’ve also worked with people who haven’t filed their taxes for multiple years.
Our longest bookkeeping backlog has been three years.
Business owners can put off dealing with the problem because every additional month makes it feel worse. Eventually they’re reluctant to call anyone because they expect judgment over how far behind they’ve gotten.
For us, being behind is simply the starting point.
The first job is figuring out what records exist, what can be verified, and where the books stopped being reliable. Then we can determine what actually needs to be cleaned up.
What Makes a Bookkeeping Cleanup Harder?
In our experience, the calendar isn’t the best measure of how difficult a cleanup will be.
Usually easier to work through
- Multiple accounts with complete statements
- Clearly identified account activity
- Business and personal finances kept separate
- Receipts and records available for review
Usually creates more cleanup work
- Personal and business purchases mixed together
- Cash expenses without consistent records
- Bank-feed categories accepted without review
- Imported transactions that were never reconciled
A business with several properly separated bank and credit card accounts may be easier to work through than a business with fewer accounts where personal purchases, business expenses, and cash transactions have all been mixed together.
That’s why one of the best things a business owner can do going forward is simple: keep business and personal finances separate.
And if that hasn’t happened? Don’t spend another year avoiding the books because you think you need to fix everything before you can ask for help.
You don’t.
Bring Us What You Have
Ancient City Accounting helps St. Augustine area business owners sort out bookkeeping backlogs, reconcile accounts, clean up QuickBooks records, and establish books they can actually rely on.
If your books are behind, bring us what you have. We’ll figure out where to start.
Ancient City Accounting provides bookkeeping, QuickBooks support, tax preparation, and financial guidance for individuals and small businesses in St. Augustine and St. Johns County, Florida.
