The Fastest Way for Entrepreneurs to Clean Up Their Books

Being an entrepreneur can mean having to be responsible for tasks that you might not be very good at. Case in point for many: keeping the books. Although it’s a far more straightforward process now that we’ve got the help of so many great software programs, there’s something special about bookkeeping that fills the average human mind with the inkiest of dread, even when everything is going right.

When that dread has turned into procrastination and that procrastination into messy books, well, it can feel like a struggle to even begin thinking about tackling the problem.

Chin up, fellow small business owners — all is not lost! You can recover from this, and I’ll show you how.

Step one: Find the damage

As embarrassing as it is to admit, I’ve been in this situation myself. My dog had just been diagnosed with cancer and I had a very strong emotional response that resulted in my not keeping on top of tasks for a while. It was just long enough that I created a problem that was not great, but not so long that I couldn’t dig out of it on my own.

 

But I can tell you from experience that the very first thing you have to do is stop making things worse, and deconstruct your bookkeeping. If you know where you went wrong, like I did, it’s easy to go back and basically start over from that point; if you don’t, you have more digging to do. If you can’t find the problem, you’ll want to skip the DIY and hire an expert, as these issues tend to snowball rapidly.

Step two: Make a copy

When you identify where things went wrong, make a copy of your files. Whatever you use for bookkeeping, copy it, and set the copy aside for safekeeping. You’ll need to take your working files and erase literally everything to the point where you went sideways. I know, I know, breathe through the anxiety.

It’s a lot easier to go back to your original sources of truth than it is to try to reconcile everything, though, I promise. Have your bank account records handy, have your receipts there (this may be contained in your document copy), and get your tax records out, too, if you want. Depending on what you track in your books beyond the basics, you may need additional information. For example, I also track billable hours so I can compare my efficiency month to month.

Don’t stress if you’re missing things that don’t really matter to your taxes. You may have to accept that, for example, you can’t track a key performance indicator (KPI) that’s related to your bookkeeping and that you keep with it (my billable hours, for example), and just not have that data. It won’t really affect anything beyond your personal metrics anyway.

Step three: Data entry

Surrounded by your comforting pile of data, you can now rebuild your books from the point where they went sideways. Enter all the things you need: incoming money, receipts, payroll, subscriptions, tax payments, and so forth. This may take a good part of the day, maybe even two days, depending on how far back the problem occurred and how fast you are with the data entry, but stick with it.

Once you’ve entered all the data as you have it, take one last effort for good measure and reconcile everything. This isn’t strictly necessary, but if you’ve been entering data for a day or two, you may well have made a mistake in all the tedium. You want to begin again right, so take the time to make sure you’re square.

Step four: Maintain your books

Step four is not really a repair step, as you fixed your books in step three. This one is about not going off the rails again. In step four, you get to decide how to move forward with your bookkeeping. Maybe you can simplify your accounting in some way, like leaving out extra data such as which department each receipt goes to, to make it easier to maintain long term.

For example, I don’t have as many transactions as many business owners, since I’m a freelance writer. So I adjusted my spreadsheets to reflect what I actually needed for my taxes. I find that people who use spreadsheets often give themselves way too much bookkeeping homework, and that’s what I was doing for sure.

You may also want to consider switching from a spreadsheet to one of many accounting software packages that can help you better prioritize what data is really needed and what is just a lot of extra noise.

Moving forward from your messy books

After you’ve fixed your books, you can choose to continue to maintain your own records, but set aside designated time every day or once a week to take care of them so they don’t get forgotten. You can also hire someone to do your bookkeeping for you, but you’ll still need to give them the information they need, and if your records are limited like mine, it may be actually more time consuming to farm this task out.

Whatever you do, don’t feel bad that your bookkeeping fell by the wayside. It happens. Your goal from here on out is to keep it lean and clean.

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