Step 1: Decide the start date
Pick the earliest month you need accurate books. For taxes, that is the start of the tax year in question. Work forward from there rather than trying to fix everything at once.
Step 2: Gather the source documents
Get statements for every business bank account, credit card, loan and payment processor for each month. If you are missing any, download them from the institution's website. Collect payroll reports, sales tax filings and any records of cash transactions.
Step 3: Check the opening balances
The first month has to start from the right balances. If the software shows a balance that does not match the statement, fix that first. Wrong opening balances cause errors in every month after.
Step 4: Reconcile month by month, in order
Categorize each month's transactions, then reconcile to the statement ending balance before moving on. Do not skip ahead. If a month will not reconcile, find the difference now. Common causes are duplicate entries from a bank feed and a manual import, transfers recorded twice, and missing transactions.
Step 5: Clean up the loose ends
Clear uncategorized and "ask my accountant" items, match payments to invoices and bills, and check loan balances, sales tax payable and payroll liabilities against actual filings and statements.
Step 6: Keep it current
Once you are caught up, set a monthly rhythm. If you fell behind because it never gets done, that is the signal to hand it off. MCC Solutions offers cleanup projects with a written quote, followed by monthly bookkeeping.
Common questions
How much does a cleanup cost?
It depends on the number of months, accounts and transactions, and the state of the file. We review first and give a written quote. Our bookkeeping page lists starting prices for cleanup.
Will the IRS care that I'm behind?
Late tax filings can carry penalties regardless of your books. If you have unfiled returns, talk to a tax professional promptly.
This guide is general information, not tax, legal or accounting advice. Rules, fees and due dates change; check with the IRS, the NJ Division of Taxation or a licensed professional for your situation.