Catch Up Bookkeeping: The Complete Guide

If you’re a business owner, falling behind on your books is almost guaranteed. There’s always something pulling on you whether it be implementing the next product or service, training new employees, or strategizing for the next campaign. If you’re lucky you’ll find the time to catch up bookkeeping yourself but often business owners end up outsourcing the burden to tax professionals.

It’s easy to put your bookkeeping on the back burner until next month, but eventually, next month turns into next year and tax season is knocking on the door. And of course tax season conflicts with your late first-quarter objectives leaving you little to no time to get the books up to date.

Whether you’re just a few months or even years behind on your books the reality is it’s costing you a lot of money and probably some needed stress. An astounding 82% of small businesses fail due to poor cash flow. Not filing on time, or making mistakes because you rushed the process can result in penalties, fines, IRS audits, and even more lost time and money trying to dig yourself out of the hole.

Catch-up bookkeeping services are the perfect solution for a busy small business without the time or resources to handle taxes in-house. If you’ve fallen behind on your books that’s normal. Don’t have an organized record or your business expenses in a handy spreadsheet? It happens all the time.

In this in-depth catch-up bookkeeping guide, we’re going to break down everything you need to know about catch up bookkeeping services and how they can get you back on track and keep you on track going forward.

What is Catch Up Bookkeeping?

Basically, catch-up bookkeeping services are a way to update your finance and accounting books so they are ready for tax season. Accurate bookkeeping is critical because it paints an accurate picture of how your business is performing which allows you to make better business decisions while at the same time keeping you in compliance with the IRS.

The Benefits of Catch Up Bookkeeping Services

Makes Tax Preparation Easier

When you have your business books up to date and in order it makes tax filing a lot easier and much less stressful. You’re less likely to make a mistake, avoid penalties, interest, and best of all not be surprised or blindsided about how much you owe. In fact if you keep organized and stay on top of your quarterly payments you might now owe anything at the end of the year, or even get a refund.

Better Financial Control

Knowing where you’re at with the financial health of your business allows you to make better and more strategic decisions. When you keep a clean record of receipts, accounts, w 9s, w 2s, credit card expenses, and financial statements you get maximum clarity on company health and leverage.

Optimized Cash Flow

Recording revenues, expenses, liabilities, and receivables set you up to better track when payments are due and when money comes into your bank accounts. As a result, you can more intelligently manage your cash flow and never get caught in a position where you’re short on cash and fall behind.

Strategic Planning

Unless you have a clear view of the short-term and long-term playing field you can’t make meaningful moves. The only way to mitigate risk while growing a business is to have good data to guide you. Relying on hunches or best guesses can lead to disaster. When you get your books up to date you’re taking the first step to future success.

Small Business Bookkeeping Checklist

When you’re behind on your books the idea of getting started can feel overwhelming. Where do you even start? Like anything complex you have to take it one step at a time.

Step 1. Collect All Receipts

The first step is to gather all your receipts, and bank and credit card statements related to any business expenses for every month you have fallen behind on. If you can’t find receipts for small meals don’t worry, the IRS only requires receipts for anything over $75.

Make sure to have bills for all vendors you’ve worked with and are still working with. If you’re missing some vendor receipts make sure you contact them because it can make a huge difference for your overall tax deductions.

The best practice is to create a digital backup of all receipts and bills. You can upload and organize them using a variety of apps.

Step 2. Track Invoices and Payments

Review your customer accounts to check if you’ve sent and been paid for all invoices. The type of accounting system you use (cash or accrual) will determine how you record these items.

Send out all pending invoices and follow up on overdue payments. If you find yourself in a situation where a customer is not paying you can write it off as a bad debt expense.

Step 3. Reconcile Bank Accounts

Now it’s time to sit down with your bank and credit card statements and reconcile all the transactions. You’ll need to compare each transaction from your bank statement with the corresponding transaction in your records. If those numbers don’t add up, identify and fix the errors. The balance in your bank statement should end up matching your company records.

If you don’t have a professional bookkeeper you can use Quickbooks or other software to help you with the reconciling process.

Step 4. Separate Expenses

You always want to keep your personal and business accounts separate. Mixing them up will make sorting them out a massive headache, and you may even make yourself liable for any business liabilities.

Take a close look at your statements and ensure all the expenses are strictly business expenses. You can use the IRS Business Expense Guide if you’re not sure what qualifies as a deductible business expense.

Step 5. Organize W-2s, W-9s, and Form 1099s

Now you’re getting close to the finish line. If you worked with contractors or employees you’ll need to set aside time to document and file the tax forms. If you’ve paid a contractor over $600, you need a Form W-9 and a Form 1099-MISC.

If you have employees you’ll need to create a Form W-2 which they’ll use to file personal taxes.

Step 6. Hire a Catch Up Bookkeeping Service Provider

If you read all of these steps and are shaking your head because you know you do not have time for this then you can do what millions of business owners do every year – hire a catch up bookkeeping service. They do all the heavy lifting, and time-consuming tasks. And because they know what to look for, often they find hidden tax deductions you may have missed. At the same time, they help you avoid costly errors that can lead to penalties and fines with the IRS.

Catch up Bookkeeping vs. Clean Up Bookkeeping Services

In your search to learn more about getting your books up to date you likely came across the term clean up bookkeeping and might be wondering how it’s different from catch up bookkeeping.

Technically clean up bookkeeping services, discover inaccuracies in your books, find out why they happened and correct them so everything balances out. This ensures your accounts and financial reports are accurate.

Clean up bookkeeping services requires a skilled bookkeeper with an eye for detail. They need to have a solid understanding of both bookkeeping and accounting principles so they know what to look for.

Most bookkeepers and accountants wouldn’t put clean-up bookkeeping at the top of their most favorite list. However, if you can work with a firm that has the people and the tools for clean-up bookkeeping services it can be well worth the investment.

The term catch up bookkeeping on the other hand assumes the books are correct up to the date they have been entered but are missing some months.

When a catch up project gets underway the bookkeeper should start by taking the time to verify that the books are, in fact, accurate in order to avoid a future mess. If everything looks good then most catch up bookkeeping projects for a small business wouldn’t take nearly as much time as a clean up bookkeeping project.

What you Need to Get Started with Catch Up Bookkeeping Clean Up Bookkeeping

For a clean up bookkeeping project, you’ll need to provide access to your bookkeeping software. If you use Quickbooks Online, Wave, or Xero you can invite an outside user to gain access. If you use desktop versions we can utilize a remote desktop app like Team Viewer to gain access.

In most cases we can get started before you gather all the information we need. In many cases clients aren’t aware of what they’re missing and it’s our bookkeeper’s job to discover what you need and relay that message.

Hire a Professional Catch up Bookkeeping Service Provider

Many of our projects come from business owners who placed their trust in a solitary bookkeeper who did a poor job, turned their books into a mess, and doesn’t have the expertise to get everything sorted out.

We’ve also found ourselves helping out solo bookkeepers who run into trouble with a client’s books at no fault 0f their own!

And sometimes we work with business owners that have tried to handle their books on their own, but simply could not find the time to keep up, and eventually, they were six and nine months behind and didn’t even want to attempt to sort the mess out.

Whatever your situation it’s important that you work with a professional catch up bookkeeping firm that has the experience to get your books back in shape fast and error-free.

The Tax Hardship Center Catch up Bookkeeping Services

The Tax Hardship Center provides expert IRS tax resolution services, and as a result, know how to file perfect tax returns for our business clients. Part of filing perfect tax forms is having perfect records to match. It’s easy to get behind on bookkeeping if you’re doing it yourself, hire the wrong bookkeeper, or just have a complicated business with lots of invoices coming in and out.

Our team of experts can complete months or years of overdue bookkeeping in just days. If you can’t find missing documents or your records are in disarray no need to worry. Our team knows where to look and how to get missing documents and make sense of months or years of historical bookkeeping.

Once your books are in tip-top shape again we can assist you with all the forms you need to file for tax season. If you want us to handle everything and file for you – we can do that too!