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All That You Need To Know About Bookkeeping Clean Up Services

All That You Need To Know About Bookkeeping Clean Up Services

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There is a good reason why spring cleaning is an annual tradition in most homes. Things might get very dirty over time, especially if you’re constantly on the go. And the same thing might happen to your company’s accounting accounts if you run a business. In this article, we’ll go over the importance of keeping your books clean and tidying up your books through bookkeeping clean up services.

“In this article, we’ll go over the importance of keeping your books clean and tidying up your books through bookkeeping clean up services.”

Accounting Blog

Why is bad bookkeeping bad for your business?

What exactly is the problem if your books are a little bit disorganized? Bookkeeping that is disorganized, incomplete, and erroneous can lead to a variety of problems that cost more than just time to fix. Incorrect bookkeeping can result in significant fines and audits from the Internal Revenue Service.

The following is a list of specific problems that may arise as a direct consequence of your books being disorganized:

  • Difficulty obtaining investments or loans for businesses
  • Inaccurate impression of financial health
  • Overwithdrawals
  • Lost opportunities (e.g., tax deductions or credits)
  • Fines and penalties for incorrect filings
  • Inability to locate important records
  • Lost time
  • Irregularities in your records

In a nutshell, inaccurate bookkeeping threatens not only your time and money, but also the viability of your company. If you notice that you are experiencing any of the problems listed above, it is possible that it is time to show some TLC to your books.

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What does clean up mean in bookkeeping?

The significance of accounting procedures cannot be overstated because they serve as the basis for all other aspects of business planning and the prevention of fraud. CPAs will often just do the bare minimal amount of labor necessary to achieve tax compliance. This is true even though they will step in to assist with some year-end accruals and cleanup. A real cleaning up of the books would mean:

Your books will be reconciled

Each and every transaction will be compared and reconciled to the corresponding accounts and statements. There will be no transactions that are ambiguous. Any instances of duplication will be identified and removed.

You will know where your money is and goes

When your books are complete, correct, and up to date, you will have a far better idea of how your money is being spent and where it is going. You will have an accurate understanding of your costs and will be able to determine whether or not you are profitable.

You will be able to identify opportunities for improvement

You will be able to understand where your company needs improvement since you have access to accurate data that is well-structured and provides a complete picture of how your projects are progressing. If your expenses seem high or your revenue is low, you can adjust accordingly. You will be able to pinpoint your cash flow issues and formulate a strategy to resolve them.

You will be prepared for growth

You may improve your ability to make money and adapt to changing circumstances by making adjustments to the figures. If you are aware of your current financial standing, you put yourself in a better position for expansion since you are able to recognize patterns and make projections based on this information.

5-step bookkeeping clean up checklist for beginners

Identify your goals

If you’re looking for a bookkeeping checklist, you’ve undoubtedly realized that there’s something wrong with the approach you’ve been doing up until now. You will be able to select an acceptable plan of action moving forward if you first establish some goals for your bookkeeping procedures and then acknowledge any problems that are already present with those practices.

Set reasonable expectations

Many new businesses incorrectly believe that they can rely solely on Quickbooks throughout the entire year. These same businesses then make the mistake of hiring part-time contractors for year-end accounting cleanup and tax return filing, under the false assumption that the project will only take a day or two to complete. Regrettably, cleaning up bookkeeping errors takes time, which is especially problematic when previous data is either incorrect or missing entirely. You shouldn’t have any expectations that a contract bookkeeper will finish cleaning up your records in five to ten hours.

Be responsive and communicative

In order to guarantee that your company is proceeding in the appropriate direction, the finance department will compile a bookkeeping document checklist, reconcile the accounts, and analyze the financial statements. However, in order to construct a chart of accounts that is tailored specifically to your firm, they will need to have an understanding of how your company functions.

After beginning the cleanup process, an accountant will inevitably have questions. They will require documentation such as tax return filings, loan and credit agreements, lists of outstanding debt, and other financial documents. If you give responses that are fast and accurate, it will cut down on the amount of time needed for cleanup, it will help you avoid tax fines, and it will boost your long-term outcomes.

Resist the impulse to “start over” or delay your clean up

To be eligible for loans, to attract investors, to pay taxes, and to successfully complete audits, you will need reliable historical data. The process of cleaning up your books may appear to be frightening, but it is really necessary, and you can’t get around it by simply beginning again and erasing everything.

Similarly, you shouldn’t avoid cleanup because you are worried about the amount of time or money it will take. The longer you continue to employ systems of accounting that are not appropriate, the more work you are giving to your finance team.

Be prepared to make some permanent adjustments

It’s likely that your current accounting procedures need to be substantially revised if you’re doing a large overhaul. Financial statements are required when dealing with investors or other outside parties. Your stakeholders will look to you to ensure that your financial statements are transparent and in line with GAAP.

Many novice bookkeepers, for instance, wrongly add departments in accounting software. This is problematic even if the books are balanced: The chart of accounts should run vertically and departmental details should run horizontally in your financial statements.

Although this will necessitate a substantial restructuring of your company’s accounting methods due to changes in the way transactions are recorded, the potential benefits to your organization in terms of attracting investors and improving the accuracy of financial projects make the effort worthwhile.

What to expect when you outsource bookkeeping clean up services

It’s reasonable to have some anxiety when considering handing over control of your company’s finances to another party. You probably don’t enjoy discussing your company’s financial situation with others, and doing so could first make you feel uncomfortable. The benefits that your company may gain from having accurate and up-to-date books are incalculable and crucial, but getting past the initial unpleasant phase may be difficult. After getting that out of the way, let’s talk about what you may expect when you engage experts in bookkeeping clean up services.

Evaluation

There will be a stage of assessment and data gathering while dealing with an outsourced financial partner. Experts will collaborate with you to gain a thorough understanding of your current circumstance, including how far back your books need updating, how many transactions need to be handled (including the number of accounts, credit cards, etc.), and whether it concerns the overall company finances or specific project finances.

Your goals and expectations for upgrading are another topic that you should be prepared to talk about at this point. Depending on the reason you want to clean up your finances, you can choose to have them updated with all the details or without. Details cover every stage of a transaction, not only the final result like the client invoice, payment, and deposit. Without specifics, simply the deposit into an income account would be mentioned. In order to meet your expectations for how you want to be “cleaned up,” the team will collaborate with you to establish the best course of action. The procedure will run more smoothly the more information that is obtained up front.

Clean up bookkeeping

Your bookkeeper can begin working once all necessary paperwork, statements, access, etc., have been provided. They will work piecemeal to update and reconcile your books. Depending on their conclusions, you might need to provide further details or explanations in order to get it right. Meetings will serve as update and check-in points so you know what is occurring and where the project is at each stage of the process. Frequently, the bookkeeper will find important financial information while updating your books, such as:

  • Recurring payments
  • Inaccurately recorded transactions
  • erroneous customer balances
  • erroneous vendor balances

Keep in mind that the process of bookkeeping clean up services requires some time to finish in order to ensure that it is done correctly, and once it is finished, you will be ready to advance your company.

Pro tip:

After you have cleaned up your books, it will be very vital to keep them updated on a monthly basis so that you have all of the relevant financial information at your disposal and can continue to expand.

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