Accounting cleanup is the process of making sure all of your accounting records are accurate and up-to-date. This may involve reviewing your records for errors, correcting any mistakes, and ensuring that all transactions are properly recorded.
Keeping your accounting records clean and accurate is important because they provide a snapshot of your financial situation. This information can be used to make critical business decisions, track progress over time, and prepare financial statements.
If your records are inaccurate, it can lead to ill decisions and cause problems down the road. Therefore, it’s worth doing a periodic accounting cleanup to help keep your business on track and avoid any potential issues.
What’s the big deal if your books are a little messy?
Maybe you’re thinking, “I run a small business. My books aren’t that complicated. I don’t need to spend a lot of time on this.”
Or maybe you’re thinking, “I’ll get around to cleaning up my books eventually. It’s not that big of a deal.”
Wrong.
A messy set of books is a huge problem for any business owner. It’s a problem that can affect your business in the following ways:
Long story short, you need small business accounting packages to keep your books clean and organized. Bad bookkeeping puts your money and time—and sometimes your company—on the line. Therefore, it’s about time to give your books of account some TLC If you’re dealing with any of the issues mentioned above.
But how do you do that? If you struggle with disorganization in accounting, you need a small business accounting program to help fix bad bookkeeping.
This is one of the most common causes of messy bookkeeping. Data entry errors can lead to all sorts of problems, from overstated expenses to missed revenue.
To fix this issue, you need to go through your records with a fine-tooth comb. Check each and every transaction to make sure it’s accurate. If you find an error in your accounting records, don’t panic! There are a few different ways to fix errors, depending on the type of error and the severity.
For minor errors, like a typo in an invoice date, you can simply correct the mistake in your records and move on.
If the error is more serious, like an incorrect calculation that affects your financial statements, you’ll need to make a journal entry to correct the error. Journal entries are a bit more complicated, but your accountant can help you with that. Whatever the case, it’s important to keep good records of your corrections so that you can explain to them if needed.
Well, this might seem like a lot of work, but it’s worth it to ensure the accuracy of your data and scheme for mistakes like:
You can find these kinds of errors by double-checking your bank statements and credit card bills against your accounting records. If you spot any discrepancies, make the necessary changes in your books.
At some point, you might have also failed to record a transaction, which is an error by omission. To track down these types of errors, check your bank account and credit card statements for any missing transactions. Once you find the missing transaction, add it to your books. Forgetting to record a transaction can throw off your books in an imaginable way (aka bad bookkeeping!)
This is one of the best ways to catch errors and prevent them from snowballing into bigger problems. When you reconcile your accounts, you compare your records to your bank statement to make sure everything matches up.
Reconciling your accounts is the process of matching your books to your bank statements.
This helps you catch any discrepancies between what you have recorded in your books and what has actually happened in your bank account. If you find any discrepancies, you can make the necessary changes to your records.
For example, you may need to adjust your books to include:
Similarly, you may want to adjust your bank statement balance to ensure that your account for:
Reconciling your accounts regularly—ideally, at least once a month—is a great way to keep your bookkeeping accurate and up-to-date.
Making adjusting entries might seem like a daunting task, but it’s worth it to keep your bookkeeping in check. It’s the key to recording transactions in the correct accounting period. Adjusting entries journal entries that you make at the end of an accounting period to correct errors and omissions in your financial records. For example, if you forgot to record a $100 utility bill in June, you would make an adjusting entry in July to account for the expense.
Accrued expenses: You may have incurred an expense but not yet recorded or received, or paid for it.
Deferrals include revenues or expenses you’ve earned or incurred but have not yet recorded.
Depreciation and amortization: These expenses are used to write off the cost of long-term assets, such as equipment, over time.
If you’re not sure how to make adjusting entries, don’t worry—there are plenty of resources out there to help, but we’ll discuss that later.
Upgrade The Way You Manage Your Books
If all of this sounds like a lot of work, that’s because it is! Bookkeeping can be time-consuming and tedious. But it doesn’t have to be. There are plenty of tools and resources out there to help you streamline your bookkeeping so you can focus on running your business.
For example, you can use:
Home and small business accounting software: There are tons of software options available to help you keep track of your finances, from simple spreadsheets to comprehensive accounting software.
Online bookkeeping services: If you don’t want to deal with the hassle of tracking your finances yourself, you can outsource your bookkeeping to a professional.
Bookkeeping templates and checklists: They can help you stay organized and on top of your bookkeeping.
No matter your route, the important thing is to find a system that works for you and stick to it. Consistency is vital when it comes to bookkeeping.
Lack of procedures and not keeping records is likely the reason you found yourself in an accounting mess in the first place. What’s done is done, but you should do your best not to repeat that mistake again. Invest in your accounting process and proper documentation to ensure that you have reliable and accurate financials moving forward.
Successful execution of your accounting mess cleanup heavily depends on the expertise of the accountant you’re working with. Do they only clean up books occasionally, or are they doing it routinely? Are they experienced, and have they worked with businesses like yours before?
Have they worked with companies in your industry before? Are they willing to bring you to a complete accrual accounting, or are they just handling the cash basis? Be sure to understand the cleanup process before allowing execution to commence.
If you’re feeling overwhelmed by the bookkeeping process, it might be time to consult a professional. An accountant or bookkeeper can help you set up a system that works for you and your business, and they can also offer advice on how to make the most of your finances.
Hiring a professional can be a big investment, but it’s one that can pay off in the long run. Hiring an accountant has the following benefits:
If you’re like most business owners, you probably don’t love accounting. It can be messy, confusing, and time-consuming. But whether you like it or not, accounting is vital to running a successful business. And, we have made the work of finding the right professional for the job easier for you!
When it comes to tidying up your books, you can trust that we will bring your business up to date so you can focus on the future. We will reconcile your accounts and make the appropriate adjusting entries to ensure that your books are accurate and up-to-date and We can also help you get caught up on your filings if you’ve fallen behind.
We understand that every business is different, which is why we offer customized solutions to fit your specific needs. We’ll work with you to come up with a plan that works for you, and we’ll be there to answer any questions you have along the way.
Don’t wait—contact us today to get started on cleaning up your books!
Why outsource cleanup and historic accounting services to MR.Accountants.com?
There are many reasons to outsource your cleanup and historical accounting to MR-Accountants. We offer a wide range of services and are always here to answer your questions. In addition, our team is composed of experienced professionals who are dedicated to providing the best possible service. In essence, here are some of the things that set us apart:
We’re always here 24/7, 365 days a year: You can contact us anytime, day or night, and we’ll be happy to answer your questions.
We have decades of experience: Our team has a wealth of experience in the accounting and bookkeeping field, so you can rest assured that your books are in good hands.
We offer a 100% satisfaction guarantee: We’re so confident in our services that we offer a 100% satisfaction guarantee. If you’re not happy with our work, we’ll make it right.
We’re affordable: We offer competitive rates, and we’ll work with you to find a solution that fits your budget.
Holistic approach: We take a holistic approach to bookkeeping, meaning we’ll look at your entire financial picture and offer advice on improving your overall financial health.
No matter what your needs are, we’re here to help. So reach out to us, and we’ll take care of the rest. We have a team of experienced bookkeepers who can help you get your books in order ASAP!
Mr Accountants is a Professional Service Firm, providing YOU Finance & Accounting Outsourcing and Business Consultancy Services. We work to develop trust and long-standing relationships with our clients (YOU) by obtaining a detailed understanding of their (YOUR) objectives; counting both business and individual needs.
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