Falling behind on bookkeeping is more common than many small business owners realize. When you’re busy serving customers, managing employees, and handling the day-to-day demands of running a business, bookkeeping can easily move to the bottom of the priority list.
A few missed weeks can quickly turn into several months of unrecorded transactions, unreconciled accounts, and a growing pile of receipts.
The good news is that overdue bookkeeping can be fixed. The key is getting organized, working through your records systematically, and putting a process in place to prevent the same problem from happening again.
How Far Behind Is Your Bookkeeping?
The first step is determining exactly where your bookkeeping stopped being current.
Check when your bank and credit card accounts were last reconciled and whether all recent income and expenses have been entered into your accounting system.
You may also need to review outstanding invoices, bills, payroll records, HST records, and other financial transactions.
Knowing where the problems begin gives you a clear starting point instead of trying to fix everything at once.
Gather Your Financial Records
Once you know which periods need attention, start gathering the records required to rebuild your books.
Depending on your business, these may include:
- Business bank statements
- Credit card statements
- Sales invoices
- Supplier bills
- Receipts
- Payroll records
- Loan statements
- HST records
- Previous bookkeeping reports
If some receipts or invoices are missing, your bank and credit card statements can help identify transactions that need further investigation.
Having everything organized before you begin can make the catch-up process significantly faster.
Reconcile Your Bank and Credit Card Accounts
Bank reconciliation is one of the most important parts of catching up overdue bookkeeping.
Reconciliation involves comparing the transactions recorded in your bookkeeping software with the transactions appearing on your actual bank or credit card statements.
This process can identify missing transactions, duplicate entries, incorrect amounts, or transactions that have been categorized improperly.
Ideally, each account should be reconciled month by month until your bookkeeping is completely current.
Review and Categorize Your Expenses
When bookkeeping has been neglected for several months, there may be a large number of transactions that still need to be categorized.
Each expense should be reviewed and assigned to the appropriate category based on the nature of the transaction.
Common categories can include advertising, office expenses, professional fees, insurance, software, supplies, vehicle expenses, and other costs associated with operating the business.
Avoid guessing when you aren’t sure what a transaction represents. Taking the time to identify unclear expenses can improve the accuracy of your financial records and reduce problems later.
Check Your HST Records
If your business is registered for GST/HST, catching up your sales tax records should be a priority.
You need accurate records of the GST/HST collected on taxable sales as well as eligible GST/HST paid on business expenses.
If transactions have not been recorded correctly, your bookkeeping may not accurately reflect how much tax needs to be remitted or the Input Tax Credits your business may be eligible to claim.
This becomes especially important if you have GST/HST returns that are approaching their deadlines or are already overdue.
Review Accounts Receivable and Accounts Payable
Falling behind on bookkeeping can also make it difficult to know who owes your business money and which bills still need to be paid.
Review your accounts receivable to identify customer invoices that remain outstanding. You should also review accounts payable to make sure supplier bills have been properly entered and paid.
Cleaning up these accounts gives you a more accurate picture of your business’s financial position and can help uncover unpaid invoices that may otherwise have been forgotten.
Don’t Wait Until Tax Season
One of the biggest problems with overdue bookkeeping is discovering issues when a tax deadline is approaching.
Trying to organize an entire year of financial records at once can be stressful and increases the likelihood of missing information or making errors.
Getting caught up earlier gives you time to identify missing records, correct discrepancies, and provide your accountant with organized financial information.
It also means you can start using your financial reports to understand how your business is actually performing instead of waiting until year-end.
Create a Bookkeeping Routine Going Forward
Once your books are caught up, the goal should be to keep them that way.
Set aside time each week or month to record transactions, organize receipts, reconcile accounts, review outstanding invoices, and check your financial reports.
For some business owners, maintaining this routine internally works well. For others, outsourcing bookkeeping allows them to focus on running the business while knowing their financial records are being maintained consistently.
The most important thing is having a system that works for your business.
Need Help Catching Up Your Bookkeeping?
If your bookkeeping is several months behind, you don’t have to spend evenings and weekends trying to sort through everything yourself.
Pivot Bookkeeping helps small businesses in Halifax and throughout Nova Scotia organize overdue financial records, reconcile accounts, and get their bookkeeping back up to date.
Once your books are caught up, ongoing bookkeeping support can also help ensure they stay organized throughout the year.
Whether you’re a few months behind or have a larger backlog to work through, getting started now can make tax time easier and give you a much clearer understanding of your business finances.
Behind on your bookkeeping? Contact Pivot Bookkeeping today to discuss catch-up bookkeeping services in Halifax and get your financial records back on track.
