My books are a mess. How do I fix it?
If your books are a mess, it can be overwhelming and stressful, but the good news is that it's fixable. Here are some steps to take to get your books back in order:
Organize all your financial documents Gather all your financial documents, including bank statements, receipts, invoices, and any other financial records you have. Sort them by date and create folders for each month and year. You can do this with physical documents or digitize them. Google Drive is a great way to get organized. This will help you to have a clear picture of your finances. You will also use these financial documents to justify tax deductions to the IRS if you are ever audited.
Review transactions and categorize expenses Go through each transaction in your bank statements and match them to the corresponding receipt or invoice. Make sure that each transaction is properly categorized based on your chart of accounts. This will help you to track your expenses and income accurately.
Reconcile your accounts Reconciling your accounts involves matching your bank statements to your financial records to ensure that they match. This helps to identify any discrepancies and missed transactions. Don't overlook this step. This is where you will catch 95% of mistakes during your cleanup.
Correct any errors If you identify any errors or discrepancies, correct them immediately. This will ensure that your financial records are accurate.
Use accounting software Use accounting software to track your finances. This will make it easier to manage your books and generate financial reports. I know this is an added expense to your practice, but trust me, the costs you pay later will be much greater.
Seek professional help If you're still struggling to get your books in order, consider seeking professional help from a bookkeeper or accountant. They can help you to identify any issues and provide guidance on how to fix them.
In conclusion, fixing your books requires time, effort, and attention to detail. By following the steps outlined above, you can get your books back in order and have a clear understanding of your business finances.
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