The receipts are piling up, you don’t remember which customers have been invoiced or suppliers paid yet, and none of it has been entered in your bookkeeping system. Right now it looks like a mountain you don’t have the time or energy to climb — and that mountain gets bigger every day.
Your easiest solution would be to hire an accounting company like Xendoo to get your books caught up. But if you’d rather try to DIY it, here are some essential steps you’ll need to take.
Organize the paperwork.
Get out all those receipts, invoices, bank statements, tax forms, and so on. Now you’re ready to deal with them efficiently.
A smart way to do this is by digitizing them — they’ll be a lot easier to sort and find on your computer than in a desk drawer. Choose from a variety of apps including:
• FileThis photographs and stores documents online
• Shoeboxed scans receipts and creates expense reports
• EverNote captures pictures, voice, and notes
Pay and record supplier invoices.
Check all your vendor accounts to be sure you’ve received bills for every purchase. This is especially important when it’s close to the end of your business’s tax year and the vendor might be slow in sending invoices. You won’t be able to prepare an accurate year-end financial statement or your tax return without them.
Update customer payments and debts.
Enter paid invoices in your books. Review all customer accounts for delinquent payments and send reminders. If the debt is extremely overdue or otherwise uncollectible, make a note to write it off on your tax return as a bad debt.
Record tax-deductible expenses.
Collect receipts from equipment purchases, business travel, and other expenses that you can use to lower your tax liability. Check out our list of small business tax deductions for more expenses you should be keeping records of.
Reconcile your bank account.
This is where you make sure the balance on your bank statement is the same as the one in your books. If there’s a discrepancy, check each transaction to see what happened. It could be a simple data entry error, a credit/debit you forgot to write in your checkbook register, or worst-case scenario, your account has been hacked. Whatever it is, you need to know ASAP.
Update income tax forms.
For regular employees, you’ll need to file IRS Form W-2. For independent contractors, You’ll need to submit Form W-9 and Form 1099-Misc.
Make sales tax remittances.
You must register to collect sales tax in every state where you have customers. E-commerce businesses, be aware that the rules are changing rapidly and the old “nexus” of having a physical presence in the state is no longer true.
Remit the taxes you collected within the state’s specified deadlines to avoid late penalties.
If you’ve made it this far, congratulations! You now have a clearer picture of the state of your business. On the other hand, if you’re thinking this is all too much work when you need to be running your business, let Xendoo take care of it for you.
Our catch-up service can get your books current usually in just a couple of weeks. We’re reasonably priced for small businesses. And won’t it feel good to have that mountain off your back?