How To Catch Up On Your Bookkeeping

By Author: Farheen
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It's worth catching up on delayed bookkeeping well before tax season, as tempting as it is to neglect it. Having tax-ready books will assist you in meeting IRS recordkeeping standards and filing an accurate tax return.

When working on a project like this, planning and defining expectations are crucial. Whether you're an accountant starting to catch up on a file or a company owner with an out-of-date QuickBooks file, it helps to know what the catch-up process entails.

Here's a

Step-By-Step Guide to Catch Up your Bookkeeping backlog quickly.

Organizing the project
Having all of the papers for all of the accounts that needed to be brought up to date from the beginning is also beneficial since it is preferable to reconcile all accounts for one month rather than one account for all months. It makes it easier to move funds across accounts and apply credit card and loan payments appropriately.

Make a priority list to ensure that you are as productive as possible. The importance of bank reconciliations cannot be overstated. You must decide whether undeposited money should ...
... be cleared before or after bank reconciliations, if there are any.

Gather your Receipts first.
To begin, gather any receipts and invoices relating to your business expenses.

You'll want to look for the following types:
Receipts
Invoices
and records.

Invoices from customers
Examine your client accounts to ensure you've collected all of the invoices due for the tax year. If your company uses a cash basis accounting system, you only need to submit an invoice to the customer once they've paid. If your company employs the accrual basis of accounting, you record the sale in your books as soon as it happens, even if you haven't yet received the money.

Collecting Debt
Examine customer's accounts for any outstanding debts. If a customer does not pay you for work completed on an accrual basis, you can write it off as a bad debt expenditure. You must show the IRS that you made reasonable attempts to collect the debt but were unable to recover the amount in order to deduct the expense of bad debt from your tax return.

In most cases, bad debts are deducted in part or in full from a company's gross income for calculating its tax liability. The specific charge-off method or the nonaccrual experience method can both be used to claim bad debts.

Firm's Expenses
Gather receipts for all of your business purchases made during the tax year. You can also use this thorough list of small business tax deductions to double-check that you're recording and claiming every deduction available to your company.

Accounts of Vendors
Examine your vendor accounts to make sure they're all paid in full. Ensure you have a record of each bill from each supplier transaction, and if you do not really, get one right soon from the supplier. These invoices should include bills for business operations that are still in progress throughout the closing period of your firm to guarantee that these costs reflect on your year-end financial statement.

Step 2: Catch up on Bank accounts
It's critical to reconcile your bank accounts so that you may identify any mistakes in your company or bank records. To confirm that the balance of each account is the same, compare each transaction on your bank statement with the identical transaction in your company accounting records. If they aren't, look for and correct any inaccuracies so that the balance on your bank statement corresponds to the balance on your company's books.

You will be charged additional accounting fees if your accountant has to do additional work to reconcile your accounts and fix your books. You and your accountant will save time and money if you reconcile your accounts ahead of time.

Step 3: Separate all the Personals and Businesses spendings
Our clients are constantly advised to keep personal and business spending separate. When you combine your personal and business spending in the same account, you're breaching the corporate veil, and you might be held personally responsible for your company's debts and activities.

Suppose you run a corporation or LLC and don't keep your personal and business activities separate. In that case, you risk losing the liability protection provided by your company's structure, and you might be held personally responsible for business losses.

Step 4: Gather your W-9s, 1099s, and W-2s.
If you employed freelancers or other employees throughout the tax year, you need to complete the following forms:

For Independent Contractors
I hope you paid an external consultant more than $4500 throughout the fiscal year for services rendered? If this is the case, you must prepare and submit the following forms:
Form W-9
Form1099-MISC
For Employees

Must file Form W-2 for all workers.
Step 5: Have your costs reviewed by a tax expert.
If you're reading this, you probably want to do everything yourself when it comes to bookkeeping and paying your taxes. And we understand. It is frequently the most cost-effective method. However, before you submit your taxes, we highly recommend that you have an experienced CPA or tax expert check your books, tax deductions, and any other financial information pertinent to your tax return.

Pro Tips
Eliminate the use of paper.
Make your life simpler while you're catching up on your bookkeeping by going paperless at your business. Create digital recordings of receipts, important papers, and other paperwork as you process your paperwork using these tools:

Shoeboxed
Evernote's
ScanSnap Scanner

Open a Bank Account for Your Business
The cleaning will be difficult if you don't draw clear lines between your personal and professional accounts. Making sure you have a separate account for business concerns is an easy option in the future. Don't assume that you have access to its cash for personal reasons just because you control the company.

Upgrade to Professional Bookkeeping Services
Suppose you want to get the most out of your money. Consider whether your time would be better spent elsewhere in your company. Tell yourself the truth about how you got behind in the first place. Explore your alternatives and do some research, whether you need an in-house bookkeeper, outsourced accounting services, or a software solution that can organize your data and relieve part of the strain off you.

We are a team of highly motivated Bookkeeping and accounting professionals. We are looking forward to assisting your company in meeting its financial goals. We have a thorough experience of every aspect regarding full charge bookkeeping which includes Accounts Receivable, Accounts Payable, Bank Reconciliations, Inventory tracking, Payroll Processing, Month and year-end Closings, and Financial Statements.