Small business owners’ back offices sometimes need to dig out.
Many small business owners fall behind in their bookkeeping. It happens. Paperwork piles up, things go unrecorded, and before you know it, business bookkeeping hasn’t been done in – a while.
We’ve spoken before about how good record keeping guides your business. It’s important. The longer you let the task of record-keeping fall by the wayside, the bigger the hurdle becomes. It’s often hard to know where to begin.
Assuming you already have the biggest small business rule in place - a separate business banking account - let’s begin. When you have a moment to clear the old pizza boxes off the desk, roll up your sleeves and get some peace and quiet, here’s what you should do first to catch up with bookkeeping.
If there is a tax return deadline looming and the better part of a year has passed since you’ve done bookkeeping work, consider bringing in a professional bookkeeper to help. You simply don’t have the luxury of time; a bookkeeper will help make the process more organized as you’re under the gun.
Gather receipts. This is the first item on the list, as it’s the most time-consuming, tedious and overall unpleasant. Begin by printing out your bank account and credit-card statements for the missing bookkeeping months. Gather both physical and digital receipts for transactions reflected.
You can now either take a photo of each receipt and upload it to your accounting file so they are accompanying matching transactions. A file storage system like Google Drive works, too.
The IRS requires receipts for anything over $75, but it’s best to get in the habit of keeping all receipts, for everything, just in case.
Organize invoices. Go through your software system and gather customer invoices that came in during this time. Ensure payments received are linked to the appropriate invoices, with the correct date. Follow up on overdue invoices, too, or those due soon, with friendly reminder emails.
Collect documentation from those who helped you this year, also known as W-9s, 1099s and W-2 forms. Freelancers and contractors get W-9s to gather information, and whentax season arrives you are responsible for sending them 1099s. Your payroll provider will assist you with W-2s for employees.
These are huge steps toward getting organized – but there is one more –going digital, if you haven’t yet. Put an end to the paper receipts and store it all digitally with a software program that best suits your business. Your accountant can recommend one. AI platforms even learn as they go, become better at keeping track of your company’s paper receipts over time.
This way, the catch-up task is hopefully one you won’t have to do again.