It happens to small business owners everywhere.
Running a business takes time and dedication. You’re trying to hit targets, strategizing for the upcoming business year, and striving to keep your customers happy and satisfied. It’s easy to run out of time and push your bookkeeping responsibilities to the back burner. Maybe weeks or months have gone by without you organizing your invoices, receipts, and bank transactions.
But don’t worry; it’s possible to get caught up again when you’re behind on bookkeeping. The sooner you update your books, the lesser overwhelmed you’ll feel.
Don’t wait until the next tax season! Here’s what you can do to get your bookkeeping back on track.
Step 1: Gather Your Receipts
Your first task when you are behind on bookkeeping is to gain control of your invoicing and accounts receivable.
- Review your records and ensure your customer invoices are up to date for the tax year.
- Go through customer accounts for any bad debt expenses. If you have good customers who are slow at paying, give them a call to remind them. It’s important to write off any bad debt at this point.
- Check your vendor accounts and ensure you’ve paid all your suppliers. Log any invoices in your accounts systems for an accurate accounts payable listing.
- Collect all the receipts for the business expenses you’ve made out of pocket. You want your books in order while claiming deductions for your business.
Here’s a Tip: Use digital receipts instead of paper receipts. They’re easier to find this way and ensure you always have a backup.
Step 2: Reconcile Your Bank Accounts
Here’s where you identify and fix any errors in your accounts when you’re behind on bookkeeping. First, compare each transaction from your bank statement with your accounting records to ensure they balance out. Reconciling your reports will give greater visibility into your financial reporting and profitability. It will also allow you to handle your cash flow better.
It’s essential to ditch excel bookkeeping in favor of digital record keeping. It’s significantly easier to keep your books up-to-date this way.
Step 3: Collect W-2s, W-9s, and 1099s.
Did you work with independent contractors at any point in the year? Then it’s crucial to set aside time to file the necessary documentation. There’s plenty of legwork involved in filing W-9s and 1099s, so you’ll want to get started as soon as possible.
You’ll also need to create W-2s for your employees so they can file their personal tax returns.
Step 4: Segregate Business and Personal Expenses
It’s imperative to treat your business like the independent entity it is. Being behind on bookkeeping is no joke. Commingling your personal and business accounts can make you liable for your business’s debts and actions. It also results in unnecessary stress when filing tax returns.
The first step in separating business and personal finances is applying for an Employer Identification Number (EIN), so you can file your business’s tax return. You’ll also want to establish an LLC or a corporation and set up a business bank account.
Step 5: Upgrade to Professional Bookkeeping Services
It’s a good idea to hire an experienced CPA to review your books and ensure everything is in order. A few overlooked errors might come across like nothing at first, but they can snowball over months leading to inaccurate financial reporting and taxes. The last thing you want is for the IRS to come knocking.
Need to Get Your Business’s Finances in Order?
When you are behind on bookkeeping, call in the experts at Goode Bookkeeping and Consulting.
With our catch-up bookkeeping services, you can eliminate the backlog and some of your stress. Keeping track of your finances helps you strategize and budget for your business. Besides, it helps to have everything in order come tax season. So there’s no reason to keep waiting.
Contact Goode Bookkeeping & Consulting
Give us a call to learn how you can get caught up on your bookkeeping. You can reach us at (860) 659 6543 or complete our Contact Form to schedule your free consultation.