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The Importance of Clean Books: How We Help Small Business Owners Stay on Track

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:
  1. Categorize all transactions in holding: Ensuring they appear in your financials.
  2. Reconcile every bank, credit card, and loan account: Without reconciliation, there’s no confidence that your numbers are accurate.
  3. Apply customer payments to invoices: This prevents double-counting income and ensures your sales figures are correct.
  4. 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.
  5. 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


 

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By Alisa McCabe March 7, 2025
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By Alisa McCabe February 24, 2025
For small business owners, the word "audit" can strike fear and uncertainty. However, with proper preparation and organization, audits can become a manageable process—one that can even uncover valuable insights into your business operations. Here's what to expect during an audit and how to ensure your books are always audit-ready. What to Expect During an Audit An audit is a detailed examination of your financial records to ensure accuracy and compliance with tax laws, financial regulations, or internal policies. Here’s an overview of the process: Notification and Initial Request: You’ll receive a notice specifying the scope of the audit and a list of documents to provide, such as bank statements, receipts, and tax returns. Document Review: Auditors will examine your financial statements, expense records, payroll, and other relevant data. Interviews and Clarifications: Auditors may ask questions about specific transactions, policies, or discrepancies to gain a deeper understanding of your business practices. Findings and Recommendations: At the end of the audit, you’ll receive a report outlining findings, including any compliance issues or errors, along with recommendations for improvement. Audits can be conducted by external parties, such as the IRS, state agencies or financial institutions to assess processes and controls. How to Prepare for an Audit Proactive preparation can save time and reduce stress. Here’s how to ensure you're ready: Keep Accurate and Organized Records: Ensure all financial transactions are accurately recorded in your accounting software. Regularly reconcile bank statements, track receipts, and categorize expenses properly. Organized books are essential for quick retrieval of records and a sure sign that you are being proactive in keeping good financial records. Understand Compliance Requirements: Familiarize yourself with local, state, and federal regulations affecting your industry. Ensure you’re collecting and remitting the correct taxes, filing payroll reports, and following all applicable guidelines. Seek out professionals who are experts. Review Financial Statements Regularly: Conduct monthly or quarterly reviews of your income statement, balance sheet, and cash flow statement to ensure accuracy. Correct discrepancies as soon as they arise to avoid compounding errors. This should be regularly done with your accounting team. Maintain a Digital Trail: Use cloud-based accounting software like QuickBooks Online to store and back up records digitally. This makes it easier to retrieve and share information during an audit. Establish Internal Controls: Implement checks and balances, such as separating duties for handling cash and recording transactions. This reduces the risk of errors or fraud that could trigger red flags during an audit. Seek Professional Guidance: Enlist the help of a professional accountant or bookkeeper to ensure your books are accurate and compliant. If you’re notified of an upcoming audit, consider hiring a CPA with audit experience to guide you through the process. Preparing for an audit doesn't have to be daunting. By staying organized, adopting best practices, and leveraging technology, you can ensure your business is audit-ready at any time. Regular maintenance of your books not only reduces stress but also positions your business for growth and success. When in doubt, seek the guidance of financial professionals to help you stay on track.
A man in a suit and tie is pointing at a growing graph.
February 18, 2025
Sometimes it’s hard for business owners to know how to take their businesses to the next level of growth and profitability. If you’ve been stuck at the same level of revenue or profit for a while, it could be because scaling your business is not a skill in your toolkit… yet. Enter a classic management book on scaling your business: High Output Management by Andrew Grove, ex-chairman and CEO of Intel. While the book was written in 1983, it has made a recent comeback in Silicon Valley, but it’s still not well-known outside of the Bay Area. Many people who have read it say it’s the best management book they’ve ever read—life-changing even. In the book, Grove applies the principles of engineering and manufacturing production to management. It’s all about process—developing processes and procedures so you can track what’s going on and measure the results or output every step of the way. Only then can you improve the process so it leads to higher output. Measurement is an important concept in the book. No matter what business you’re in, you can apply the ideas of developing processes, measuring them, and improving upon them in your business. Grove explains how managers can motivate their team members and improve production. He talks a lot about leverage, which enables scaling both positively and negatively, and how it can affect employees’ output. One example of positive leverage is when managers ‘nudge’ employees to enable their work. A negative example is when managers meddle and get in the way of progress. In the section on meetings, Grove breaks the topic down by purpose and lends his ideas on how to run each type of meeting better. He touches on other key topics such as decision-making, planning, motivation, performance reviews, and values. One significant highlight from the book: If you’re motivated to become a better manager and wish to improve the output of your organization, there’s nothing more important than training yourself. Reading this book is a wonderful way to spend time learning new business skills you can put into action immediately.

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