Catch-up bookkeeping: how to get your books back in order

Catch-up bookkeeping is the work of bringing a business's financial records up to date when they have fallen behind. Sometimes that means a few months of missing entries. Sometimes it means a year or more. Either way, the goal is the same: accurate, organized books that show what really happened in the business, and a plan to keep them current from here on.

Why books fall behind

Falling behind on bookkeeping is very common, and it does not mean you did something wrong. Most owners are busy serving customers and doing the actual work of the business. Bookkeeping gets pushed to later, and later keeps moving.

A few common reasons:

• The business grew faster than the system for tracking it.
• The person who used to keep the books left, or stopped.
• Business and personal spending got mixed in the same accounts.
• Bookkeeping software was set up, but there was never time to learn it or keep it updated.
• A busy season turned into a busy year.

The longer it waits, the harder it can feel to start. But books that are behind can be brought up to date one step at a time.

What catch-up bookkeeping involves

Every situation is a little different, but the work usually follows the same general steps.

1. Gathering statements and records

The first step is collecting what is needed: bank statements, credit card statements, loan statements, payment processor reports, and any receipts or invoices you have. If your accounts can be connected to bookkeeping software, some of this information can come in directly. Often it is a mix of both.

2. Categorizing transactions

Each transaction is recorded in the right category, such as sales, supplies, rent, fuel, or software. This is what turns a long list of bank activity into information you can read. Some transactions need a quick question for the owner, like what a payment was for or whether a purchase was personal.

3. Reconciling accounts

Reconciling means checking that the books match the bank and credit card statements, month by month. If a statement says the account ended the month with a certain balance, the books should agree. Reconciliation is how missing or duplicated entries get caught.

4. Cleaning up

Older books sometimes have problems that need attention: duplicate entries, transactions in the wrong category, old balances that were never resolved, or personal expenses mixed in. Clean-up fixes these so the reports are reliable.

When the work is done, you have financial reports, like a profit and loss statement and a balance sheet, that reflect the period that was behind.

What up-to-date books help with

Current books make several things easier. Tax preparation is simpler when the numbers are already organized. You can see how the business actually performed during the months you were not tracking. And if you need financial statements for a lender, a partner, or your own planning, you have them.

It can also bring some peace of mind. Decisions are easier when you know where the business really stands.

From catch-up to monthly bookkeeping

Catching up fixes the past. Monthly bookkeeping helps keep it from happening again.

Once the books are current, the natural next step is to keep them that way, month by month. With monthly bookkeeping, transactions are recorded and reconciled regularly, you receive financial reports, and you have someone to ask when a number does not make sense. Keeping books current is much less work than rebuilding them after a year.

That is the kind of relationship we like to build with clients: get organized once, then stay organized together.

Catch-up bookkeeping with Choice

At Choice Business Advisors, catch-up bookkeeping starts at $200. The final price depends on how far behind the books are, how many accounts and transactions are involved, and how much clean-up is needed. We talk through your situation and agree on the scope and price before the work begins. You can see our other services and starting prices on the tax and advisory page.

You do not need to have everything sorted out before you reach out. A rough idea of how many months are behind and which accounts the business uses is a good start.

Talk with us about getting caught up

If your books are behind and you are not sure where to begin, let's talk. We can look at where things stand and explain the steps in plain language, in English or Spanish. Start a conversation with us.

Written by the team at Choice Business Advisors, a bookkeeping, tax, and advisory firm based in Utah serving small businesses across the United States in English and Spanish.