How do I know if my books are behind or need cleanup?
The clearest sign is that you can’t answer basic questions about your business finances. If someone asked how much profit you made last month and you couldn’t give a confident answer, that’s a problem. Accurate books should give you that number in about 30 seconds.
Check when your bank accounts were last reconciled. Open your accounting software and look at the reconciliation history for each account. If the last reconciliation was more than 60 days ago, you’re behind. If you’ve never reconciled or don’t know what that means, your books almost certainly need work.
Look for uncategorized transactions. QuickBooks and similar software flag transactions that haven’t been assigned to an expense or income category. A handful is normal if you’re staying current. Dozens or hundreds of them means weeks or months of bookkeeping work have piled up.
Compare your bank balance right now to what your accounting software shows. These numbers should match as of the last reconciliation date. If they’re off by more than a few dollars and you don’t know why, there are errors hiding in your records.
Other warning signs include invoices sitting in accounts receivable that were actually paid months ago, duplicate transactions appearing throughout your records, personal and business expenses mixed together without clear separation, and your accountant complaining every tax season about the state of your files.
The longer messy books sit, the harder cleanup becomes. Bookkeeping cleanup for a few months of neglect is manageable. A few years of accumulated problems takes significantly more time and costs more to fix.
If you recognize several of these signs in your own situation, address it before tax season forces the issue. A Detroit bookkeeping service can assess the current state of your records and tell you exactly what needs to happen to get them accurate again. From there, staying current is much easier than constantly playing catch-up.
Metro Detroit's Small Business Bookkeeper
The Next Step:
A Short Conversation
Tell us about your business and your current bookkeeping situation. We'll listen, answer your questions, and give you a clear quote.
More Questions
What bookkeeping records do optometry practices need to maintain?
Optometry practices need records covering both medical and retail operations. This includes patient payments, insurance reimbursements, optical inventory, lab costs, and standard operating expenses.
Read answerHow do I reduce my days sales outstanding?
Invoice immediately after delivering goods or services, make payment as easy as possible, and follow up on overdue accounts within days rather than weeks. Most businesses with high DSO are slow on at least one of these.
Read answerHow do towing companies track vehicle-specific income?
Track income by truck using classes or tags in your accounting software. Assign every tow job to the specific vehicle that performed it, then run reports to see profitability per truck.
Read answerWhat is Michigan Treasury Online and how do I use it?
Michigan Treasury Online is the state's portal for registering, filing, and paying business taxes. You'll use it to manage sales tax, withholding tax, and other state tax obligations.
Read answerWhat is bank reconciliation and why is it important?
Bank reconciliation is the process of comparing your internal financial records to your bank statements to make sure they match. It catches errors, detects fraud, and gives you an accurate picture of your cash position.
Read answerShould I use cash or accrual accounting for my small business?
Most small businesses do fine with cash basis accounting because it's simpler and gives you more control over tax timing. Accrual makes sense if you carry inventory, have significant receivables, or plan to seek outside financing.
Read answer
