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bookkeeping and accounting team

Fallen Behind on Bookkeeping? Here’s How to Catch Up

bookkeeping and accounting team

Tax season can be stressful, especially if your books are behind, inaccurate, or both. We estimate that roughly 25% of small businesses seek information on how to catch up on business taxes and get their financial records in order.

The benefits of clean, accurate books extend far beyond tax season. When your books are up to date, your business will be better equipped to make strategic financial decisions, analyze expenses, and manage cash flow.

Conversely, when you get behind in your books, it doesn’t just make it harder to prepare and file taxes. Outdated or inaccurate books can limit your ability to cover your expenses, pay your employees, or secure a small business loan.

You’re probably reading this because you already know you’re a little behind on books. The biggest decision to make is whether to try to get your books caught up on your own or secure the assistance of a catch-up bookkeeping service. We’ll help you decide by covering the pros and cons of both approaches in this article.

The Pros of DIY Catch Up Bookkeeping

When you’re considering how to catch up on business taxes, you might decide to handle your own books. That’s not a bad strategy, really, since DIY-bookkeeping offers the following advantages:

Costs Less

Let’s face it: today’s business owners need to cut corners any way they can. Rather than hire an in-house bookkeeper or outsource your bookkeeping needs to an accounting firm, you can simply catch up on your books yourself. 

If you’ve already got some experience in filing taxes and managing your accounting needs, this can be an area where you can minimize expenses. For a full overview of the costs of catch up bookkeeping, check out this post here

Intimate Knowledge of Your Business

No one knows your business better than you do. When you handle your own books, you’ll have an intimate knowledge of your income and expenses and will be in a better position to make updates and correct errors as you proceed. 

This consideration might be especially true if you’ve collected a lot of receipts and paperwork on your own. Having these documents on hand can make it easier to record income and business expenses as they happen, and by handling your own bookkeeping, you’ll be better able to identify expenses.

Privacy

As a business owner, you might be reluctant to hand over your sensitive financial data to a third party. By handling your own books, you eliminate all possible breaches in your data security, and you keep your business information limited to your eyes only.

The Cons of DIY Catch-Up Bookkeeping

There’s a reason that so many small businesses outsource their needs to a catch-up bookkeeping service. While there are many business tasks that you can handle on your own, bookkeeping isn’t always one of them and there are so many benefits to catch up bookkeeping. 

Business owners often discover that the bookkeeping process can be:

Time-Consuming

Stop and think about this for a minute. How did your books get so behind in the first place? For a lot of entrepreneurs, it comes down to a lack of time. But if you didn’t have time to maintain your books, how likely are you to find time to catch up on your books?

This contemplation actually brings us back to the question of money. Sure, handling your own books will cut down on your administrative expenses, but at what cost? Your efforts are better spent on the revenue-generating activities of your business, not the administrative details of your back office.

Confusing

It can be a challenge to get books caught up in time for tax season. Accounting terms and software tools aren’t always easy to navigate, especially without some degree of specialized training. And that’s to say nothing of the jumble that can occur when you get behind in your books.

This confusion is why it’s best to rely on an accounting professional who knows how to catch up on business taxes. They can sort through the mess on your behalf and bring clarity to your books, so you don’t have to sweat the process when it comes time to pay your taxes.

Inaccurate

The more tasks you’re juggling, the easier it is to make mistakes. But errors in your books can cost you, especially when it comes to tax preparation. Reporting errors can change the actual amount of taxes you owe, and if you underreport, you could be subject to penalties.

Having access to a team of financial professionals can ensure that your books are fully up-to-date, as well as free from any inaccuracies that can cause problems for your business. Plus, a financial professional may be able to help you maximize your deductions, saving you money and enhancing your profitability.

Get Started Now

If we’re honest, most of us make a plan to get started “tomorrow.” But by the next day, we put it off once again.

The best time to get started is now. With tax season looming on the horizon, you can’t afford to wait for another “tomorrow.” In fact, the more you put it off, the more your overdue books can snowball into an even messier problem.

This time crunch means that whether you plan on catching up on your own books or relying on a professional service to provide catch-up bookkeeping for small business, you’ll want to get a plan in place so you’ll be prepared for tax season.

How to Catch Up on Business Taxes Faster Than Ever

The expert team at Xendoo has already provided catch-up bookkeeping for small business owners across the country. We can bring your books up-to-date so that you’ll be prepared for tax season and put you on the road to greater financial control.

How much does catch-up bookkeeping cost? Your final price depends on how far behind you are, but Xendoo can provide catch-up services starting as low as $195. The real value is found in the peace of mind you get, knowing your financial records are handled by a trained professional.

Find out for yourself by signing up for a free trial, and see what Xendoo can do for your business.

Business woman working on lapto

What Is Catch-Up Bookkeeping?

Xendoo provides online bookkeeping, accounting, and tax support for your partnership business.

When you get behind in your books, you have two choices: lose sleep or turn to a catch-up bookkeeping service to help you out. 

What is catch-up bookkeeping? Catch-up or “clean-up” bookkeeping is the method of bringing your financial records up to date.

In other words, catch-up bookkeeping lets you spend less time worrying about the past and more time focused on the future. Let’s take a quick look at what you can expect from a catch-up bookkeeping service.

How Catch-Up Bookkeeping Is Different from Ongoing Bookkeeping

Most business owners already have some sort of bookkeeping strategy in place, which might involve recording income and expenses as well as saving receipts and documenting expenses in preparation for tax season. These ongoing bookkeeping strategies are intended to keep pace with the normal flow of business.

How is this different from catch-up bookkeeping? Catch-up bookkeeping operates as an emergency solution when you get behind in your ongoing bookkeeping efforts. Catch-up bookkeeping attempts to look back through the past several months, record income and expenses, and bring your books completely up-to-date.

Catch-up bookkeeping services can also provide some strategies to keep you from getting behind on your books in the future.

The Core Steps of Catch-Up Bookkeeping

Some business owners try to get books caught up on their own. But if you got behind in your books because you lacked the time to do your accounting properly in the first place, how will you find the time to get caught up?

Instead, it might be a good idea to rely on an experienced CPA or tax professional to review your books. These financial professionals can then help you to do the following:

Gather Your Receipts and Documents

First, you want to gather as many of your business receipts as possible. This will help you to better determine your income and expenses. 

Other documents to gather include:

  • Customer invoices
  • Debt collections
  • Business expenses
  • Vendor payments

With this approach, you’re trying to do two things. First, you’re attempting to find paperwork to document your business transactions. But secondly, you will determine whether there are any outstanding debts that you owe to your vendors and any outstanding invoices that your customers have yet to pay.

This will be particularly important when tax time rolls around, as these receipts can help you to determine your earnings for the year and write off any business expenses or bad debt that you incurred.

Reconcile Your Bank Accounts

Next, your accountant can help you to reconcile your bank accounts. What does this mean? During the reconciliation process, your financial professional will compare each transaction in your accounting records with the same transaction on your bank statements.

Ideally, the two numbers should match, but if they don’t, you’ll need to address any errors to ensure that your financial records are accurate.

If this process sounds time-consuming, that’s because it is! In many cases, this is the step that adds time to the catch-up process, since your accountant will have to spend a while sifting through your financial data. 

Separate Personal and Business Expenses

It’s critical that you keep your personal and business expenses separate. Not only can mixing them create confusion, but you could find yourself personally liable if something should go wrong in your accounting.

At the very least, you should have a business bank account and use this account for any transactions that involve your company. Some companies prefer to open multiple accounts to organize department budgets or to use one account for income and another for vendor payments, for example.

Separating these expenses will make it easier for you and your accounting team to manage your books and to be fully prepared for tax time. Keeping your personal expenses separate will also make it simpler to file your personal tax return.

Collect W-9s, 1099s, and W-2s

Do you have employees? Have you hired any independent contractors during the tax year? If so, you’ll need to distribute the appropriate tax documents before the end of the year.

If your business has employees, you’ll need to file Form W-2. If you paid an independent contractor more than $600 over the course of a year, you’ll need to use two documents. You’ll give a W-9 form to each contractor. They’ll complete their tax information and return it to you. You’ll then use this data to file Form 1099-MISC with the IRS.

Enjoy the Benefits of Accurate Financial Data

This process can take some time, but once it’s complete, you’ll be caught up with your books. You can breathe a sigh of relief and look forward to the benefits of accurate data, along with a more complete understanding of your company’s cash flow.

While we’ve highlighted the importance of getting caught up before tax season, there’s never a bad time to catch up on your books. Staying up-to-date throughout the year can even help you to plan ahead so that you can reduce the stress that often comes with tax season.

 

Catch up thumbnail webinar

How Much Does Catch-Up Bookkeeping Cost?

Understandably, many business owners find themselves wondering: “What is catch-up bookkeeping going to cost my business?”

The answer to this question depends on how far behind you are in your books. The longer it takes to reconcile your accounts and bring your records up-to-date, the more you can expect to pay for catch-up services.

Xendoo offers catch-up bookkeeping for small businesses starting at $195. This catch-up bookkeeping cost is negligible compared to the peace of mind you’ll have knowing your financial records are current and accurate. 

Get Caught Up with the Experts at Xendoo

You’ll rest easier knowing that your books are being handled by a financial professional. That’s why Xendoo offers expert-level catch-up bookkeeping services for small business owners. We’ll help you to get caught up and give you the tools to remain current on your books in the future.

To learn more about catch-up bookkeeping and other financial services, contact us today or sign up for our free trial.

A woman stress bites a pencil going over her Florida business taxes

3 Tips for Catching Up Your Books

A woman sitting at her computer bites a pencil due to stress

Falling a little behind in your books is no big deal. After all, you can always catch up tomorrow, right? But how many “tomorrows” in a row does it take before you lose control over your incoming and outgoing expenses? 

Before long, your overdue books are hanging over your head like that project you forgot to complete in middle school.

If your hands are already sweaty from the mere thought of catching up on your books, you’re not alone. Nearly 25% of businesses are behind in their books. Thankfully, we can help. Today, we’ll offer you three tips for catching up on your books and getting you back in the game. 

Why You Need Current Books

Business owners wear many hats. “Bookkeeper” should never be one of them. Some owners handle their own accounting, thinking they can do it all. Others cut corners, trying to save expenses where they can. 

Nearly all of them live to regret this decision. Don’t be one of them! 

Here are some of the reasons why you need current books:

Tax Planning

Overdue books will cripple your business once tax season rolls around. If your books are not up-to-date by the time you file your taxes, you don’t just need to catch up books and data; you also run the risk of mistakes, audits, penalties, and late fees. 

Filing an extension might sound like a solution, but it can cause your problems to snowball, creating a bigger mess than you had before.

Long-Range Planning

Without current books, you’ll have no clear picture of the health of your business. Keeping your books up-to-date will help you understand your cash flow, which can help you to make strategic plans and grow your business in the future.

Business Loans

If you need a business loan, your lender may ask for a recent financial report showing your income and expenses. Staying current with your bookkeeping will allow you to provide this documentation and increase your chance of receiving these funds.

Step 1: Organize Key Documents

One of the best tips for catching up your books is to stay organized. You’ll want to verify that you have the appropriate documents to record your company’s income and expenses. 

If you’ve fallen a bit behind, you’ll want to organize your key financial documents, including:

Customer Invoices

How much money have you taken in? Your income will be reflected in your customer invoices. Organize them by date, and make a note of any outstanding invoices, if any. 

You’ll also need to pay attention to your company’s accounting method. In a cash basis business, the invoice is sent to the customer once they’ve paid. But for accrual accounting, you’ll record the income when the sale occurs, even when the customer doesn’t pay until a later date.

Debt Collections

Unfortunately, many businesses will have customers who don’t pay their invoices. For accrual accounting businesses, you may have to chase down your delinquent clients. 

Technically, you can deduct the cost of bad debt from your tax return, but first, you’ll have to demonstrate that you took reasonable steps to collect the money you’re owed. 

Besides, it’s better to collect these debts than to accept defeat at the hands of non-paying clients!

Business Expenses and Receipts

What are your expenses? If you’ve saved your receipts, it should be easy to calculate and record your business expenses. Make sure to separate business and personal expenses, especially since these will represent different deductible income for tax purposes.

Vendor Accounts

Make sure you have a copy of every bill you’ve received from your suppliers. These expenses will appear on your year-end statement, so it’s very important that you have copies of these documents. 

If you discover you’re missing a bill or invoice, contact the vendor, and they may be able to send you a copy. If you’ve missed any payments, make sure to take care of this as soon as possible so you can remain in good financial standing.

Employee Records

If your business has employees, you’ll need to complete the associated paperwork. This is important for them, but it’s also important for your business. If you paid a contractor more than $600 over the course of a year, you’ll need to send them a W9 and have them return it to you. 

A W9 form requests the contract employee’s information, which you’ll then use to send them a Form 1099. This reports how much you paid them during the year. 

Company employees will require W2s to show their yearly earnings. These documents will be important for tax planning, but the income your employees receive will also be recorded among your company’s expenses.

Step 2: Reconcile

After you’ve followed the above tips for catching up your books, you’ll need to reconcile your bank accounts and financial records. When reconciling, you’ll compare each transaction from your bank statement with the same transaction in your company’s accounting records. 

Each transaction should be the same. If not, you’ll need to fix these errors so that your bank statement matches your company’s books. 

In some cases, you’ll have to return to the previous step, since some errors may be the result of outstanding customer invoices or unpaid bills. Reconciling your books can therefore be a laborious process, but it can highlight discrepancies in your income and expenses to help improve the health of your business.

If this process sounds time-consuming, it’s because it is—especially if you’re behind in your books! You can farm this process out to a bookkeeper or a CPA, but they may charge for all of the time spent on this relatively menial task. 

For some owners, it may be worth this added expense, especially if you need to catch up your books as fast as possible. Others might reconcile their books beforehand to save the account time and money.

Step 3: Have a Bookkeeper Help You (or Hire a Tax Professional to Review)

Finally, you may want to have a bookkeeper help you. Financial professionals will understand these tips for catching up your books quite well and can perform some or all of the work for you. 

At the very least, a CPA or tax professional may be able to review your books, ensuring that your records are complete and up-to-date. They may be able to offer additional tips for catching up your books for tax planning purposes. 

Small business owners usually have their hands pretty full. In some cases, you’ll need help with the whole process just to bring your records up to date. Thankfully, many of today’s accounting firms offer what’s called “historic accounting” or “catch-up bookkeeping.”

Catch-up bookkeeping is a simple process by which a financial professional will review your documents and ensure that your books are current and accurate.

These services can go a long way toward improving efficiency and cutting costs. Rather than relying on a company bookkeeper or accounting staff, an online accounting firm can handle your books and offer catch-up services at a fraction of the cost of a regular employee.

Catch-Up Bookkeeping You Can Count On

We hope you’ve benefited from these tips for catching up your books. Need a hand? We’d love to help. Busy entrepreneurs have come to rely on Xendoo’s industry-leading catch-up bookkeeping for small businesses, bringing financial records up-to-date. 

We also believe the best solutions come with a good strategy. Without a clear plan, you could find yourself faced with the same problem in a few months. 

Xendoo offers a variety of accounting and bookkeeping solutions to streamline your accounting processes and improve the efficiency of your business as a whole. 

Create a free account today, and learn more about what Xendoo’s services can do for your business.