By Alisa McCabe
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March 21, 2025
As a small business owner, keeping your financials in order is crucial—especially when it’s time to file taxes. Many small business owners come to us for cleanup services because they realize their books don’t reflect their actual business activity. Without accurate financials, you’re flying blind when it comes to planning, decision-making, and tax compliance. Here’s how we help small businesses clean up their books and get back on track: Step 1: Assess the Situation Our first step is to review your books and identify: What looks incorrect: We spot errors like negative balances, uncategorized transactions, or inconsistencies. What needs to be cleaned up: Issues like unreconciled accounts or miscategorized expenses. How to improve going forward: Suggestions to ensure your books remain accurate and useful. Common Issues We See in Small Business Books Here are some of the most frequent problems we uncover: Uncategorized transactions: These don’t show up in your financial reports, leaving you with an incomplete picture of your business. Bank and credit card accounts not reconciled: Without reconciliation, you can’t trust the accuracy of your financials. Large balances in the undeposited funds account: Often caused by customer payments not applied to invoices, leading to double-recorded income. Negative balances on the balance sheet: This usually indicates recording errors, like misapplied payments or incomplete loan setup. Inconsistent expense categorization: For example, telephone bills recorded under different accounts, making it harder to compare year-over-year trends. Step 2: Clean and Reconcile Once we’ve assessed your books, we tackle the cleanup process step by step: Categorize all transactions in holding: Ensuring they appear in your financials. Reconcile every bank, credit card, and loan account: Without reconciliation, there’s no confidence that your numbers are accurate. Apply customer payments to invoices: This prevents double-counting income and ensures your sales figures are correct. Review accounts with large balances: For example- A large sales tax liability may indicate payments are being recorded as expenses instead of reducing the liability. A negative loan balance could mean the original loan wasn’t recorded properly. Check for consistent categorization: We run reports to ensure, for example, that all telephone bills are categorized under the same expense account. Step 3: Build Confidence in Your Financials After cleaning up the books, you’ll gain: Accurate financials: Confidence that your reports reflect reality. Insights into past trends: So you can make informed decisions about the future. Ready for filing taxes: Avoid overpaying taxes by ensuring income is recorded only once. For instance, if customer payments are recorded as new income instead of being applied to existing invoices, you’ll overstate your revenue—and could end up paying taxes on double what you actually earned! Step 4: Prevent Future Problems We don’t stop at cleanup. We provide training and tips to help you: Keep your books accurate moving forward. Spot and fix issues early before they become major problems. Why Accurate Books Matter Accurate financials allow you to plan for the future of your business. Whether it’s forecasting cash flow, preparing for growth, or filing taxes, clean books give you the clarity and confidence to make smart decisions. Ready to clean up your books and take control of your financials? We’re here to help! Reach out to get started. Written By: Diane Roberts