As a small business owner, it's easy to let bookkeeping slip to the bottom of your priority list. After all, juggling everything from operations to customer service can leave little time for anything else. But, even though it might be tempting to push it aside, catching up on your bookkeeping before tax season arrives is one of the best moves you can make for your business. Not only will having up-to-date books help you comply with record-keeping requirements, but they also allow you to access the largest possible amount of deductions when filing your tax return.
At JNG Bookkeeping, we understand that managing overdue bookkeeping can feel overwhelming. While we offer a specialized Catch-Up Bookkeeping Service, we know that some business owners prefer to take matters into their own hands. If you're one of them, don't worry—we've got you covered.
Here's a step-by-step guide to help you breeze through your bookkeeping backlog in no time.
First things first—let’s start by rounding up all your business receipts and invoices. It might sound tedious, but getting everything in one place is the foundation of catching up on your bookkeeping.
Here’s what you’ll want to gather:
Customer Invoices
Take a close look at your customer accounts and make sure you’ve collected all the invoices for the year. If your business operates on a cash basis, you only need to send invoices when payment has been received. But if you’re using the accrual method, you’ll record the revenue as soon as the sale happens, regardless of when the cash hits your account. For example, if you made a $1,000 sale in October but didn’t get paid until February, under cash basis, you’d record it in February. Under accrual, it goes in the books in October.
Business Expenses
Next, gather every receipt from business-related purchases throughout the year. You want to ensure you’re tracking all your expenses and don’t forget to review a comprehensive list of small business tax deductions to ensure you’re not leaving money on the table.
Vendor Accounts
Finally, review your vendor accounts to confirm that all bills are paid. Make sure you have a copy of every bill from your vendors, especially for ongoing business activities that will show up on your year-end financial statement. If you’re missing any, reach out to your vendors to get those copies ASAP.
Step 2: Reconcile Your Bank Accounts
Let’s face it—reconciling your bank accounts isn’t exactly the most exciting task on your to-do list. But here’s the deal: if you’re not doing it, you’re setting yourself up for some major headaches down the line. It’s all about making sure your bank statement matches what’s in your books, down to the last cent. If they don’t line up, you’ve got some digging to do. Find those errors and fix them. Your future self will thank you.
Now, here’s the kicker—if you hand over messy, unreconciled accounts to your accountant, guess what? You’re gonna pay for it. Extra work means extra fees. But if you handle the reconciliation yourself, you’re not just saving time; you’re saving cold, hard cash.
Step 3: Keep Business and Personal Separate
Rule number one in business: don’t mix personal and business expenses. Ever. It’s like trying to mix oil and water—it just doesn’t work. When you blur those lines, you risk losing the very thing that protects you—your business’s liability shield. And trust me, you don’t want to pierce that corporate veil. Keep your business and personal finances separate, or you could end up personally on the hook for your company’s debts.
Plus, come tax time, sorting through a tangled mess of personal and business expenses is the last thing you need. It’s a waste of time and a recipe for mistakes. So, if you haven’t already, open a separate business bank account. Keep it clean, keep it simple, and keep yourself out of trouble.
Step 4: Go Paperless and Save Your Sanity
While you’re catching up on your bookkeeping, why not level up and go paperless? Ditch the clutter and save your sanity. Digital records are easier to manage, less likely to get lost, and way more efficient.
Here’s how to do it:
Shoeboxed: Scans and organizes your receipts. It’s like having a personal assistant that automatically creates expense reports.
FileThis: Snap a photo of your receipts, bills, and statements with your phone, and store them all online.
Evernote’s ScanSnap Scanner: Automatically uploads and stores all your scanned documents to Evernote, so everything’s in one place and easy to find.
Step 5: Gather Your W-9s, 1099s, and W-2s
If you’ve paid independent contractors or employees, you’ve got some forms to collect and file. Don’t skip this step—it’s essential for staying on the IRS’s good side.
Independent Contractors: If you paid them more than $600, you need a W-9 from them. This form gives you their taxpayer info, so you can issue a 1099 to the IRS. It’s not glamorous, but it’s gotta get done. If you’re unsure how to handle this, check out a guide on filing 1099s—it’ll save you a ton of hassle.
Employees: Every employee needs a W-2. This is what reports their wages, tips, and other compensation to the IRS. Make sure you’re on top of this.
Step 6: Bring in the Pros
Look, I get it—you’re a DIY kind of person. But when it comes to taxes, even the most seasoned entrepreneurs can benefit from a second set of eyes. A good CPA or tax pro can review your books, help you claim every deduction, and ensure your tax return is spotless. Plus, if the IRS ever comes knocking, they’ve got your back.
And hey, if you’re ready to hand off that bookkeeping backlog, JNG Bookkeeping has your back. Our Catch Up Bookkeeping Service is designed to get your books in order fast, so you can focus on what you do best—growing your business.
This post is intended for informational purposes only and does not constitute legal, business, or tax advice. You should consult with your own attorney, business advisor, or tax advisor regarding any specific matters referenced in this post. JNG Bookkeeping assumes no liability for actions taken in reliance upon the information provided herein.
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