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Bookkeeping basics5 signs your books need a cleanup
If tax season feels like an archaeology dig, your books are telling you something. Here's how to tell when it's time to catch up.
Most small business books don't fall apart all at once. They slip a month at a time: a busy season here, a bookkeeper who left there. Eventually the numbers in your software stop matching reality. Here are five signs you've reached that point.
1. Your bank balance in the software doesn't match the bank
If the balance in QuickBooks or Xero is different from your actual bank statement, something is missing, duplicated or in the wrong place. Reconciling each account every month is what keeps these two numbers in agreement. If you haven't reconciled in months, the gap usually gets harder to explain, not easier.
2. "Uncategorized" or "Ask my accountant" is a big number
Transactions parked in a holding account aren't on your profit and loss in any useful way. If that bucket holds thousands of dollars, your reports are guessing at your income and expenses.
3. You can't say whether last month was profitable
A business owner should be able to open a P&L shortly after month-end and trust it. If you're relying on your bank balance to judge how things are going, you're missing the timing of bills, customer payments and big purchases.
4. Your accounts receivable list includes people who already paid
When customer payments aren't matched to the right invoices, your A/R report fills up with old invoices that were actually collected, and real unpaid ones get lost in the noise. The same thing happens with bills on the A/P side.
5. Your CPA keeps sending questions (or bigger invoices)
When your tax preparer has to fix the books before filing, you pay CPA rates for bookkeeping work, and the return can be delayed. A clean, reconciled year-end package avoids most of that back-and-forth.
What a cleanup looks like
A cleanup works backward from your bank and card statements: every account gets reconciled month by month, transactions get categorized, and A/R and A/P get matched to what actually happened. Once you're current, a monthly close keeps you there.
At Steward & Brighten, a cleanup starts with a $350 diagnostic review that gives you a fixed quote. The fee is credited toward the cleanup if you go ahead. You can estimate your cleanup cost here.