My Books Are Behind. Where Do I Start?

Quick Answer: The fastest way to catch up on bookkeeping is to find the last month your books were complete and checked against your bank and credit card statements. Gather the records for the months that follow, flag any urgent deadlines, and work forward one month at a time. If you don’t know where things went wrong, ask your accountant to help you choose a starting point.

You were going to catch up Friday. Then a customer needed something, payroll had to be handled, and Friday came and went. Now you’re several months behind, and opening the accounting software feels like one more thing you don’t have time for.

It’s easy to put off work when you aren’t sure how to do it. It’s even easier when nobody is calling to ask for it yet. But eventually, you need a tax return, a loan, or a clear answer about whether the business is making money.

If you’re wondering how to catch up on bookkeeping, start by figuring out what actually needs to be done. “Fix my books” is too big for a to-do list.

Find the last month you can trust

Transactions showing up in your software doesn’t mean the books are finished. A bank feed brings in information, but someone still has to check it, put it in the right place, and make sure nothing is missing or counted twice.

Find the last month your bank and credit card accounts were reconciled. That means the records were compared with the statements and any differences were explained. Then check whether payroll, loans, customer invoices, and unpaid bills were also up to date, where applicable.

If March was complete and April was not, April is usually your starting point. If you can’t find a reliable month, have your accountant review the file before you start changing old entries. You don’t want to undo work that was already correct.

Check for anything that cannot wait

Before working through the backlog, look for notices, filing deadlines, overdue bills, and customer invoices that still need to go out. Tell your accountant right away about overdue payroll or sales tax filings and payments, or a tax notice with a response date.

Keep current payroll, billing, and other deadlines moving while you clean up the past. Otherwise, you can spend a month catching up and end up another month behind.

Gather the records in one place

Make a folder for each month you need to finish. Start with these records:

• Bank and credit card statements for every business account, including accounts you closed.
• Sales reports, customer invoices, and payment processor reports.
• Receipts and vendor bills, with notes explaining purchases that aren’t obvious.
• Payroll reports and records of tax payments.
• Loan statements and paperwork for equipment purchases or new financing.

Also note business purchases paid personally and personal purchases paid through the business. Your accountant needs to know what happened so those transactions can be recorded properly.

The IRS explains that supporting documents provide the information needed to record business transactions. Keep the receipts and invoices along with the statements; a bank description may not tell you what you bought or why. See the IRS recordkeeping guide for more on what counts as a supporting document.

Don’t spend your whole afternoon making the folders pretty. The goal is to find what you need without searching through six email accounts and a glove compartment.

Work through one month at a time

Starting with the oldest unfinished month, enter or match the missing transactions, check the categories, and reconcile each bank and credit card account. Keep a short list of questions instead of guessing.

A few items deserve a closer look. A transfer between your own accounts should not become another sale or expense. A credit card payment should not count the purchases a second time. Loan payments need the proper split between principal and interest. Ask for help with entries you don’t understand, especially payroll and equipment purchases.

If the account won’t reconcile, find the reason. Adding an entry just to make the difference disappear can leave the reports wrong even though the account appears balanced.

Once that month is complete, move to the next. “Finish April’s checking and credit card accounts” gives you something specific to work on and a way to know when you’re done.

Give the work a place on your calendar

I’ve learned that if something isn’t on my calendar, it doesn’t happen. “When I have time” is how this bookkeeping cleanup got put off in the first place, the same way it works for a meal with a friend, a doctor’s appointment, CPE hours, or the book I’ve been meaning to read — without an actual block of time, something more urgent always takes its place. Set aside specific time for the cleanup, and separate time to handle the current week’s paperwork.

When I took over our firm from my dad, I saw how easily the office books could slip without a standing time set aside for them — he’d be the first to tell you it happened to him, too. Accountants aren’t immune to falling behind. Because our business return comes after we finish our clients’ returns, we’re always on extension, and I didn’t want to be scrambling to catch up our own books every September. So I put a weekly appointment on my calendar for the company books and added it to a recurring task list, so it couldn’t quietly disappear the way an occasional to-do does.

For a smaller backlog, you might start with two scheduled work sessions each week. After the first month is finished, you’ll have a better idea of how long the rest will take. Three months with a few dozen transactions is very different from three months with daily sales, payroll, and several accounts.

Choose a schedule you can actually keep. If every work session gets pushed aside for something else, that tells you the job needs a different arrangement.

Ask for help before you lose another month

Falling behind doesn’t say anything about how much you care about the business — sometimes it’s personality, sometimes it’s just a hard season of life.

You don’t have to clean up your books before contacting an accountant. That would be a little like cleaning the whole house before asking someone to help you clean it.

Bring what you have, explain how far behind you think you are, and be honest about what you don’t know. An accountant can help identify the missing work and explain what a cleanup would involve.

Ask what is included in the fee, what records you need to provide, and how ongoing accounting will work afterward. Catching up once won’t solve the problem if the same work lands back on your already full calendar.

One thing worth knowing going in: we can’t move your catch-up ahead of clients who’ve been sending in their information on time all year — that wouldn’t be fair to them. What we can do is work you in as quickly as the queue allows, and the earlier you reach out, the more room there usually is. It’s always better to ask for help the moment you see things sliding than to wait until the gap feels too big to bring up.

At Compton & Company, I love being able to jump in and help clients get caught up — and then stay caught up. The best way to avoid landing back here is turning in your information every month: put a standing spot on your calendar for the first week of the month to send your accountant what they need, and keep that appointment religiously. If your books are behind now, reach out to discuss where things stand and whether our monthly accounting services are a good fit. You don’t need to have everything sorted out before that conversation.

My own office books run on a weekly calendar appointment I don’t skip. My home finances are a different story — I don’t have one, and I’m behind. That’s next on my list. If you read our post on when to raise your prices, you already know my family has talked me into every streaming service known to man; the only way I’ll really see what they add up to is to sit down with our home finances every month instead of only when I remember to look. Adding to calendar now…

Helping you navigate today and plan for tomorrow.

Related reading: Why Growing Businesses Outgrow DIY Bookkeeping

Frequently Asked Questions

Can I skip the old months and start fresh?

Skipping unfinished months can carry mistakes into your current balances and leave earlier reporting incomplete. Have your accountant identify what needs to be corrected and agree on a starting point before you abandon the old records or open a new file.

What if I am missing receipts?

Start by requesting copies from vendors and checking email or online order histories. Write down what you know and flag anything you cannot document. Your accountant can help determine what additional support is needed; don’t make up details to fill a gap.

Will new accounting software fix the problem?

New software may help with future work, but it won’t explain old transactions or correct bad information on its own. Find out why the books fell behind before adding a software move to the cleanup. And talk to your accountant before picking software. They would be able to help you pick the right one for your needs.

How do I keep from falling behind again?

Assign responsibility for collecting records, answering questions, and finishing each month. Choose regular due dates and review the financial reports when they are ready. If you outsource the accounting, you’ll still need to provide information and respond when something needs an explanation.