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Guide on How to Catch up on Your Fallen Behind Bookkeeping

Notice to Reader (NTR) Financial Statement
Notice to Reader (NTR) Financial Statement
March 22, 2021
Bookkeepers in Mississauga Can Save you Money
Bookkeepers in Mississauga Can Save you Money
March 26, 2021

So your business has fallen a little behind on bookkeeping, don’t panic. It happens to small business owners everywhere for many different reasons. Bookkeeping often falls low on the priority list for business owners. Organizing the documentation of business transactions piled up in shoebox overtime can be a nightmare.

If your business has fallen by the wayside in updating its books, there’s never a better time to catch up on it than right now- especially if the tax season is around the corner. If you wait until your tax return deadline begins to loom in front of you, you may risk running up against errors or other common audit triggers for the Canada Revenue Agency (CRA). At Filing Taxes, we thoroughly understand how difficult it can become for small business owners to catch up on their bookkeeping. The longer you put off, the more overwhelming the task will be. Therefore, we provide our well-grounded bookkeeping services in Toronto, Mississauga, Oakville, and Hamilton that can help you work through the details of your situation.  If you have no clue where to begin, here’s a step-by-step guide to help you to catch up on your fall behind bookkeeping. Let’s dig in.

  1. Sort and Organize your Documents

The first step is getting organized. Find out how far behind you are in your bookkeeping to determine how far back into the past you are going to have to begin. Start by gathering all of your documents. It is the most tedious task of the bookkeeping process. It is probably the most time-consuming task to catch up on. However, it might be simple if you know where to find all the documents. You should look for:

  • Invoices to customers – Gather customer invoices if you have sent any, you may have saved them somewhere on your computer system or have physical copies in a dedicated folder.
  • Record of bad debts – You might have some customers, whom you have not been able to collect from. This is termed bad debt and you can factor it into your tax return if accurate records are kept. The deduction would reduce your gross income for tax purposes.
  • Business expenses – To earn money you first must spend money, which is why businesses are allowed to deduct their expenses from their taxes. To get an accurate read of your income tax liability you must ensure to account for all receipts related to business expenses you intend to treat as tax deductibles.
  • Vendor invoices – If you have paid vendors and contractors you should ensure to get all these invoices and bills organized. You can simply request vendors or contractors to send you whatever you are missing.

2. Reconcile Your Bank Statements.

Once you have gathered everything together, it’s time to get into your records and reconcile them with your bank accounts. Bank reconciliation helps you to assure that your accounting records exactly match your bank and credit card statements. Being able to identify when and possibly to whom payment was sent to or received can help you track down and fill gaps during your catch-up bookkeeping endeavor. Reconciliations ensure your records are accurate.

3. Segregate the business and personal expenses.

Set definite limits between your business and personal finances, otherwise, the cleanup process will be tricky to manage. And for the future, it is advised to have a separate business account to have a separate record of all the financial activities of the business. Just because you own the business, it is not recommended to exploit your access to business funds for personal matters.

4. Digitize all your business records.

The essential tip to support all of the above is to digitize your record maintaining process. Digital eruption is becoming a necessity for today’s business world. Businesses are transforming to a paperless approach.

(If you need any guidance or training in this aspect log in to gettrainedgethired.com)

5. Hire a professional bookkeeper.

You should be honest with yourself when making this decision for the catch-up mission of bookkeeping. In the first place be honest to yourself about why you fell behind maintaining your records. Then explore your options that align with the reason identified. Being a business owner the reason is most likely that you have so much to look after that this essential routine task falls low in your priorities. The options you can consider can be whether you need an in-house bookkeeper, outsource bookkeeping services, or a software solution that can organize your data and take some burden off you. Whatever option you choose, filing taxes is always there to help you through its wide range of bookkeeping services in Mississauga, Oakville, Toronto, and Hamilton.

Tip: Once you have gotten your bookkeeping into better shape, avoid the temptation to put it off again.

Always bear in mind that there are some tricks to make catch-up work more efficient. If you still find the task too daunting to handle on your own, filing taxes help you consider all aspects of your business plan and goals to create a bookkeeping process that works for you. Let our bookkeeping services in Toronto, Oakville, Hamilton, or Mississauga help you get through this gap. Feel free to reach out to Filing Taxes at 416-479-8532? Schedule an NTR engagement appointment with us and take the first step towards proper management of your finances.

Disclaimer: The information provided on this page is intended to provide general information. The information does not consider your personal situation and is not intended to be used without consultation from accounting and financial professionals. Salman Rundhawa and Filing Taxes will not be held liable for any problems that arise from the usage of the information provided on this page.

Salman Rundhawa
Salman Rundhawa
Salman Rundhawa is the founder of Filing Taxes. Salman provides valuable tax planning, accounting, and income tax preparation services in Toronto, Mississauga, Oakville, and Hamilton.

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