Cleaning up your books

Cleaning is time consuming and boring.

As a bookkeeper, I offer clean up services for small businesses, but what does it mean to “clean up my business’ books”?

Business books have multiple traditional accounts including checking, savings, credit cards, and loans. These have multiple transactions that need to be categorized for expenses and income/revenue. Accounts also have a lot of transfers between accounts that need to be properly accounted for as well which can make things messy. When working with QuickBooks Online (QBO) these transactions are downloaded, but they still need to be properly sorted and categorized. When the owner or staff get busy, many times these transactions build up and if not properly monitored, your books can have thousands of transactions over many months (or even years) that need to be sorted and “cleaned.”

Sorting and reconciling those expense and income transactions is just part of cleaning your books. A proper clean up also includes reviewing your balance sheet to ensure those accounts are accurate. This includes your accounts receivable, accounts payable, fixed assets, payroll liabilities, tax liabilities, owner/shareholder draws and investments, and a variety of other accounts beyond the traditional bank/credit card accounts and loans.

Have you ever looked on QBO account and saw your checking account with a negative amount, but in real life the account is positive? You need to clean your books.

Have you ever seen QuickBooks Online amount vary by thousands of dollars from the actual amount? You need to clean your books.

Cleaning up your books helps resolve those issues, and sometimes requires a lot of time and knowledge of accounting principles, and QBO training.

Here are couple great tips for starting to clean up your books.

#1 - At all starts with finding the proper starting balances.

Find the proper starting balances for your traditional accounts as wells as your accounts receivable (A/R) and accounts payable (A/P). Most cleanup periods start on January 1st. So you’ll need to find the balances of your accounts as of December 31st. Check your tax return from the previous year to find this information. If you didn’t file taxes, find the statements from the respective banks and/or lenders.

#2 - Make an adjustment in QBO to match the QBO balance and the numbers from the tax return (or statements if no tax return) to properly reflect your actual numbers. This can be done to usually with a journal entry. Be sure you adjust the accounts properly with debits and credits. You should ever use negative numbers to make adjustments! Use debits and credits properly and the accounts will go up or down to match your numbers. Hint: Use your Opening Balance Equity account help balance out your journal entry.

#3 - Be VERY CAREFUL to make these adjustments properly. Careless adjustments could cost your hours of fix them as well potentially creating inaccurate numbers for your business and the IRS. This could cost you thousands of dollars and potentially risk getting audited by the IRS.

#4 - Work with a professional if you have problems or issues. There are a lot of great resources to help you learn these concepts, but as with most skills, they require practice. If you don’t have the time to learn them, reaching out to a professional can save you time and money in the long run.

I specialize in QuickBooks Online (QBO), and I can clean your QBO accounts including your balance sheet and profit and loss (P &L) statement.

Reach out me to find out how I can "clean" your business' books!

Dr. Bryan Raya

DBR Bookkeeping

“Doing Business Right”