Bookkeeping cleanup can feel overwhelming, especially if you’re just starting. Whether you’re tackling a small business’s financial backlog or doing a major catchup project, approaching the task systematically can make it manageable. In this post, I’ll break down the essential steps to performing a bookkeeping cleanup job, including what to gather, how to organize, and how to work with your client for a smoother process.

Step 1: Gather the Essential Documents

Before diving into any bookkeeping software, your first task is to gather all relevant financial documents from your client. Here’s what you’ll need:

• Bank Statements: Get statements for all business accounts, including checking, savings, and any credit card accounts. If possible, ask for check images as they provide extra details, especially when you’re uncertain about certain transactions.
• Receipts: While receipts can sometimes be overwhelming or disorganized, they can still be helpful if they’re well categorized. Consider dealing with only those that are relevant or necessary for reconciliation.
• Payroll Reports: If the client runs payroll, you’ll need access to payroll information, including reports from their payroll provider.
• Tax Information: The most recent tax return is particularly helpful as a reference to ensure the books tie up with tax filings.
• Deposit Records: Make sure to get information on how money is being deposited, whether through credit card processors, invoicing systems, or manual deposits.

These documents provide the foundation for cleaning up the books and ensure you have the necessary background information before you begin.

 

 Step 2: Review the Client’s QuickBooks (or Other Software)

After gathering the required documents, the next step is to take a deep dive into your client’s bookkeeping software, usually QuickBooks Online (QBO). Here’s how to proceed:

Access the Account: Ensure the client has added you as an accountant or given you the necessary access.

Review the Last Reconciliation: Check when the books were last reconciled. You can pull important reports like the Profit and Loss (P&L) and Balance Sheet to get an overview of the business’s financial health.

Examine Bank Feeds: Go to the Bank Feeds Tab to see if the accounts are connected and whether the transactions have been categorized. Also, review outstanding invoices if the client uses the system for invoicing.

Take Note of Red Flags: Pay attention to any issues that pop up, such as unrecognized vendors, uncategorized transactions, or discrepancies in payroll.

This step helps you familiarize yourself with the state of your client’s books and enables you to ask the right questions as you move forward.

 

 Step 3: Have a Follow-up Meeting with Your Client

Once you’ve done your initial review, it’s time to circle back with your client. Schedule a phone call or meeting to clarify any concerns and gather additional information. Here’s what to ask:

• Vendors and Expenses: Who are the client’s regular vendors? What recurring bills do they pay each month (e.g., rent, utilities, office supplies)?
• Income Sources: How does the client receive income? Do they use PayPal, credit card processors, or direct bank deposits? Understanding income streams will help in properly categorizing transactions.
• Set a Time Frame: Determine the time period you’ll be cleaning up. Does the client need cleanup for the current year, or are they catching up on several years of financial data? This will help you prioritize what to focus on, especially if tax filings are involved.

Clarifying these details upfront helps avoid any confusion later and gives you the information needed to clean up the books efficiently.

 

Step 4: Start with One Thing at a Time

Now that you’ve gathered documents and spoken with your client, it’s time to roll up your sleeves and begin the cleanup. Start with just one category to avoid overwhelm. Here’s how to proceed:

Begin with Income: In most cases, income transactions are simpler and fewer in number than expenses. Focus on categorizing income for the first month of the period you’re cleaning up.

Move to Expenses: Once you’ve tackled income, proceed to categorize expenses. This process can be more detailed since expenses typically involve more transactions and various vendors.

Work Month by Month: Complete each month in sequence. After categorizing income and expenses, handle payroll, invoices, and finally, reconcile the month.

Tackling one area at a time keeps the process manageable and helps you stay focused.

 

 Step 5: Take Notes and Stay Organized

During the cleanup, it’s important to stay organized. Here are a few tips to keep track of everything:

Create an “Ask My Accountant” Category: If you come across transactions you’re unsure about, temporarily categorize them in an account like “Ask My Accountant” or something similar. This will remind you to clarify these transactions with your client later.

Keep a Running List of Questions: As you clean up the books, you’ll likely come across transactions or patterns that need further clarification. Write these down as they arise.

Maintain a ToDo List: Have a list of tasks you need to circle back on, such as reconciling payroll or reviewing a particular vendor’s transactions. This helps you stay organized and prevents you from forgetting important details.

Taking detailed notes helps you stay focused on the task at hand and ensures that nothing falls through the cracks.

 

Final Thoughts

Cleaning up a client’s books can seem daunting, but by breaking the task into manageable steps, you can approach it methodically. Gather the right documents, take a thorough look at their bookkeeping system, and don’t be afraid to ask questions. Starting small and staying organized will allow you to work through even the messiest of books with confidence.

If you have specific questions or run into any roadblocks during the process, don’t hesitate to reach out to other bookkeepers or resources for advice!

Feel free to ask for any clarifications or more detailed posts on specific aspects of bookkeeping cleanup!