John Briggs walks through how to clean up your books before tax time. Reconcile every transaction against your bank statements, watch for negative balances that signal errors, and make sure all accounts with income or expenses are in your software. Sloppy books can trigger IRS fraud suspicion or cost you deductions.
What? Tips to clean up your books for tax filing purposes. And I will say this, tips for cleaning up your books, period. You shouldn't just have clean books only to file taxes. The first thing you wanna do is make sure that you actually have all of your transactions in your accounts. So accounting softwares have a reconciliation function. That is an accounting word that basically means I go in and I look at my books and I can see the transactions inside of my book software. I compare those transactions to the actual bank statements that I have, making sure that those are reconciled, meaning everything in my books what my bank statements show, and what my bank statements show is what I show in the books. So I don't have duplicate transactions inside my software. That is a very important step to make sure your books are cleaned up. Another one of the first things you want to do is you have all your accounts in your books. We will get clients when we take on their bookkeeping work and we go through it We have helped them identify they were missing entire bank accounts, which happened to have income and expenses reported in them. And if the client missed that, when the IRS decides to audit her tax return, the first thing the IRS does in an audit is they look at bank statements. They get all that from the client. They would see that. and they're gonna immediately think fraud. That's just how they think. They think we're all evil. So, do I have all the right accounts in my books? Are those accounts reconciled? 2 very important, easy, quick tips. 'Cause if you don't have those, there's no way your books could be clean. The next thing is, in general, having a negative number in an account is bad. So if I look at a profit and loss statement and my income number shows a negative number, that's bad. If I have an expense category, maybe, I don't know, call it office supplies, and that number is negative, that's bad. I mean, an obvious account that should be negative is your service and discount category. On my balance sheet, same deal. Do my books show negative cash balances in my bank accounts? Most banks don't let you go negative, so if my books show it's negative, I got some problems I got to clean up. If I reconciled my accounts, it's less likely that I will have any negative numbers. The other cleanup tips that I could share with you are related to having accounting knowledge. You want to make sure you have liabilities that are actually liabilities on the balance sheet, and you don't have things that really are expenses showing up on your balance sheet. We understand that many people don't go into business to be accountants, so if you're worried you might miss up— miss some cleanup items that having accounting knowledge would require you to know, We are happy to do a free review on your books. All you got to do is add me as an accountant in your QuickBooks. Here you can see the easy steps, and there's a link below as well if you want to pull up this graphic. Add us, we'll do a free review and let you know what cleanup work would look like, and we could give you a quote on what that looks like if we If you want us to do that for you. So you want to make sure you nail this the right way. There is risk that if you don't clean up your books the right way, one, you miss items that will cause the IRS to think you're committing fraud. That's bad. Or in my opinion, what's worse is you're going to miss items that would reduce your taxable income. So make sure your books are really cleaned up before you send them to your tax professional. Let us know if you need help. Again, we're happy to do the review. Just add me, follow the steps in the graphic, and remember, the IRS sucks.
