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How to Catch Up on Your Business’s Bookkeeping

Behind on your business bookkeeping? You are not alone, many business owners struggle to keep their financial documents up to date amidst all of the hundreds of other tasks that they have to manage. However tedious, time-consuming and annoying bookkeeping might sometimes feel, it is essential to making informed business decisions and meeting your tax obligations. This blog post outlines the steps that you should take to get your files caught up and up to date.

Assess Your Situation

The first step is understanding how far behind you have fallen. Look into your records and see the last date your books were updated and how many months or years need your attention. This will help you have a full picture of where you stand and create a realistic plan for catching up.

Gather Your Documents

Once you have a good picture of the timeframe that you need to get caught up in, it is time to start collecting the documents you need to do the work of catching up. Start by looking at the following documents in your decided time frame.

  • Bank and credit card statements
  • Receipts
  • Invoices
  • Payroll records
  • Previous tax returns
  • Loan documents
  • Any other relevant financial records

Organize these documents by month to make the process more manageable.

Decide on the Right Tools

Using accounting or document management software can help you stay organized and accurate while working through getting your books caught up. If you don’t already have a platform, now is the time to start using one. Tools like LedgerDocs, QuickBooks, Xero, or FreshBooks can speed up your bookkeeping process and reduce the risk of errors.

Start with Bank Reconciliation

Start reconciling all of your business bank accounts from the period you have fallen behind. This means going through every bank transaction and matching them with your internal records. This will help you identify any discrepancies or missing transactions and fix any errors in your records.

This can be a time-consuming process, if you need help managing your bank and credit reconciliation, you can enlist the help of a bookkeeper to manage this portion of your bookkeeping for you. Having a bookkeeper handle this portion of your bookkeeping can not only save you time but could save you some costs, as it would be more expensive to have your accountant manage this for you.

If you plan on skipping a bookkeeper and accountant altogether and doing it yourself, here are the steps you should follow to thoroughly reconcile your accounts:

  1. Compare all of the ending balances on your bank statements with your accounting records.
  2. Match each one of your transactions on the bank statement with those in your records.
  3. Identify and investigate any discrepancies.
  4. Adjust your records as necessary to match the bank statement.
  5. Enter All Missing Transactions

If you discover any missing transactions while going through the reconciling process, you will need to go through and manually enter any transactions that are missing from your records. Go through all of your invoices, receipts, bank and credit card statements and be sure that every expense, income, and transfer is accounted for. This might be time-consuming, but manually checking the accuracy is key.

Review and Categorize Transactions

Review all transactions and categorize them appropriately (e.g., office supplies, utilities, revenue). Accurate categorization ensures your financial statements reflect the true nature of your business activities.

Update Your Accounts Payable and Receivable

Once you are done with your transactions, go through and check that your all outstanding accounts receivable and accounts payables are up to date and entered into your Quickbooks or any other accounting software. This will paint a full financial picture of what is owed to you and what you owe to others. This information is very important for filing your taxes accurately.

  1. Generate Financial Statements

Once you have reconciled your bank accounts, reviewed and categorized your transactions and updated your accounts payable and receivable, you can start to generate some of the financial reports and statements such as:

  • Profit and Loss Statement: This outlines your revenue, expenses, and profit over a specific period.
  • Balance Sheet: This is a snapshot of your assets, liabilities, and equity at a specific point in time.
  • Cash Flow Statement: This tracks the in and outflow of cash from your business.

This information can help you make better decisions and truly understand where your business stands financially. If you are unsure of how to prepare these reports you can enlist the help of a bookkeeper to prepare them for you.

Speak to a Professional

If your backlog is extensive or if you’re unsure about taking on the catchup project on your own, consider outsourcing the work to a professional bookkeeper or accountant. They can get you caught up in a cost-efficient and timely manner and you will be sure that their work is accurate and meets any federal or industry standards. They can also provide you with expert guidance and insights into your financial situation. LedgersOnline has a team of dedicated Canadian bookkeepers and accountants who understand your business situation and provide you with customized comprehensive support. They will clean your books and help you get caught up, no matter how behind you are, and they will take bookkeeping off of your plate and make sure that your books remain clean and up to date. Schedule a 1:1 call to learn more about how we can help you.

Create a Bookkeeping Plan

To avoid falling behind again, create a plan and process to manage your business’ bookkeeping every month. Consider the following tips to simplify the task for yourself.

  • Automate as much of the work as possible using accounting and document management software.
  • Keep your personal and business finances separate.
  • Digitize and file any relevant paperwork such as receipts and invoices

If you still find yourself feeling overwhelmed with bookkeeping and you are starting to fall behind again, it might be a good idea to consider outsourcing a bookkeeping service to keep your bookkeeping up to date on a monthly, quarterly or yearly basis. A service like this can keep you compliant and give you ease of mind, knowing that your records are fully handled. Schedule a 1:1 call with the team at LedgersOnline to learn more about how we can help you.

Getting your financial records back up to date can be a big task but by staying organized, using the right tools, and seeking professional help when needed, you can get back on track and stay on track.

Connect With A Member Of Our Bookkeeping Team

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