7 Signs Your Books Need a Cleanup (and What a Cleanup Actually Includes)

Nobody decides to fall behind on their books. It happens one busy month at a time. The bank feed piles up, a few transactions get parked in "Ask my accountant," and before long the numbers in QuickBooks or Xero have only a loose relationship with what's actually in the bank.

If any of the signs below sound familiar, your books probably need a cleanup. The good news: it's fixable, and it's usually less painful than you think.

1. Your software balance doesn't match your bank

This is the clearest sign. If QuickBooks says you have $18,000 in checking and the bank says $11,400, something is missing, duplicated, or recorded twice. The bank is almost always right.

2. Your accounts haven't been reconciled in months

Reconciling means matching every transaction in your books to your bank and credit card statements. If the last reconciliation was "a while ago," errors have had plenty of time to stack up on top of each other.

3. Your profit looks too good (or too bad) to be true

In a recent cleanup, a client's books showed about $81,000 of profit for six months. The real number was about $52,000. Most of the gap came from next month's invoices sneaking into the report, and the rest from expenses that were missing, duplicated, or miscoded. Any decision made from the first number, like hiring, taking a bigger distribution, or estimating taxes, would have been made on bad information.

4. Transfers between your own accounts show up as income or expenses

Moving money from checking to savings isn't income. Paying your credit card bill isn't an expense. When transfers aren't recorded correctly, your profit is off, and your taxes can be too.

5. Payroll accounts carry strange balances

If Wages Payable or Payroll Tax Payable shows a balance that never goes away, your payroll provider's withdrawals probably aren't being coded correctly. Those balances should clear every pay period.

6. Personal and business spending are mixed together

A business expense paid with a personal card, or a personal purchase on the business card, has to be recorded the right way. Otherwise you either lose deductions you're entitled to or claim ones you aren't.

7. Your CPA keeps sending you questions

If tax season starts with a long list of questions from your CPA, or a bill for cleanup work they had to do before they could start your return, your books weren't ready for them. Your CPA would much rather be doing tax work.

What a books cleanup includes

A cleanup brings your books up to date and makes them accurate, so every account ties to its statement. Here's what ours covers:

1. Baseline first. We save your current reports before changing anything, so every change can be traced.
2. Statement-by-statement review. We compare every bank and credit card statement line to your books, month by month.
3. Fixes. We add missing transactions, remove duplicates, recode miscategorized expenses, and record transfers, loans, and owner draws correctly.
4. Payroll tie-out. We match wages and payroll taxes to your payroll provider's reports.
5. Reconciliation. Every account is reconciled to its statement, to the penny.
6. Chart of accounts tidy-up. We archive unused accounts and add plain-English descriptions so the remaining ones make sense.
7. Lock and hand off. We lock the cleaned period so it can't change by accident, and send you a summary of what we found plus a short list of items for your CPA.

How long does it take, and what does it cost?

It depends on how many months and accounts are involved, and how quickly we can get statements and answers from you. A few months on one checking account is a very different job from three years across five accounts.

What we don't do is run an hourly meter. We review your file for free, then give you one flat price and a timeline in writing before any work starts. You can read more on our catch-up and cleanup page, and our monthly plans are on the pricing page.

Ready to get caught up?

Ventura Bookkeeping Services cleans up QuickBooks Online and Xero books for small businesses across Ventura County, including Ventura, Oxnard, Camarillo, Thousand Oaks, and Simi Valley. No judgment. We have seen worse.

Book a free 20-minute call and we'll tell you how far behind your books really are and what it will take to fix them. Or call us at 805-225-4959.

‍