Every winter, Massachusetts business owners have the same realization at roughly the same moment: the CPA is about to ask for the year’s numbers, and the books stopped somewhere around June.
If that is you, you are far from alone. Liliane Larsen has been keeping books since 2001, and she says owners in this spot often think they are the only ones. They are not. They are busy, doing what they need to do to take care of customers. Here is a calm, practical plan for getting caught up.
Step 1: Find out exactly where things stand
Before entering a single transaction, take stock:
- Which accounts exist? List every bank account, credit card, loan, and line of credit, including the ones you rarely use.
- When was each one last reconciled? In QuickBooks Online, the reconciliation history shows the last statement date for each account.
- What is missing? Statements, receipts for large purchases, loan statements, and payroll reports from your provider.
- When was your last tax return prepared, and through what date? This often decides how far back the cleanup needs to go.
Step 2: Decide how far back to go
A cleanup goes back as far as necessary, but not always as far as people fear. Sometimes it only needs to go back to the period covered by the last tax return your CPA prepared, since those years have already been reviewed and filed. That can save real time and money.
When earlier years have problems that affect today’s balances, such as an account that never reconciled or loans recorded incorrectly, the cleanup needs to reach back to where the problem started.
Step 3: Get statements, not just bank feeds
Bank feeds are convenient, but they are not proof. A proper catch-up reconciles each account to the actual statement, month by month, so the ending balance in QuickBooks matches the bank to the penny. Feeds sometimes skip transactions, duplicate them, or stop connecting without warning.
Step 4: Work in order, oldest month first
It is tempting to start with December because it feels urgent. Resist it. Each month’s reconciliation depends on the one before it. Work forward from the earliest unreconciled month, and each month you finish becomes solid ground for the next.
Step 5: Make a short list of questions for yourself
Some transactions only you can explain: a large transfer, a check with no memo, a charge from a vendor you do not recognize. Collect them as you go and answer them in one sitting rather than stopping every ten minutes.
Step 6: Hand your CPA a clean set of books
When every account is reconciled through December 31, run a profit and loss and a balance sheet for the year. Then look at them with fresh eyes: do the loan balances match the lender’s statements? Do the owner draws look right? Clean year-end books mean your CPA asks fewer questions, and year-end goes faster.
Your catch-up plan
Tick off each step as you finish it.
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When to bring in help
A catch-up is very doable on your own if you are a few months behind and your file is basically sound. It is time to call someone when:
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How Larsen Bookkeeping approaches a cleanup
We bring the file back to accurate and organized, going back as far as necessary. We scope the cleanup separately, with an estimate, as the first step of ongoing monthly bookkeeping. That last part matters: a cleanup on its own fixes last year, but monthly bookkeeping keeps you from ending up here again next winter.
Frequently asked questions
Our cleanups lead into monthly bookkeeping. If you would rather keep the books yourself, our online QuickBooks training may be a better fit.
It depends on how many accounts and months are involved, and how quickly questions get answered. We give you an estimate after looking at the file.
Yes. We work with your CPA at year-end and whenever they need clarification during the year.
Start before the rush
If you are in Hanover, Norwell, Braintree, Boston, or anywhere in Massachusetts and the books are behind, request a free consultation now, before January. Prefer to call? 781-924-1489.
This article is general education, not tax advice.