01/23/2026
Messy weather this time of year brings a cleanup into the forecast!
A bookkeeping cleanup is the process of fixing, organizing, and bringing a company’s financial records up to date and in compliance. Bookkeepers usually do this when the books are messy, behind, or inaccurate. Here’s how it typically works, step by step:
1. I Assess the Current State:
-How many months/years are behind
-Which accounting software is used (QuickBooks, Xero, etc.)
-Bank and credit card accounts
-Whether prior tax returns were filed
-Existing chart of accounts
-This determines the scope and cost of the cleanup.
2. I Collect and Gather Missing Information:
-Bank and credit card statements
-Loan statements
-Receipts and invoices
-Payroll records
-Prior financial reports
-Sales platform reports (Stripe, Square, Shopify, etc.)
-If documents are missing, I will even reconstruct activity from bank data.
3. I Reconcile Accounts:
-This is the core of cleanup.
-Match transactions in the books to bank and credit card statements
-Identify and fix missing, duplicated, or miscategorized transactions
-Clear unreconciled or old outstanding items
-Every account must reconcile correctly before moving on.
4. I Fix Categorization Errors
-Reclassify expenses to the correct accounts
-Separate personal and business transactions
-Correct income recording issues
-Adjust asset vs. expense errors (e.g., equipment incorrectly expensed)
-This ensures accurate financial reporting.
5. I Review and Verify Payroll & Liabilities:
-Payroll entries match payroll reports
-Payroll taxes are recorded correctly
-Sales tax is properly tracked and payable
-Loans and credit cards reflect correct balances
6. I Clean Up the Chart of Accounts
-Remove duplicates
-Merge similar accounts
-Rename accounts for clarity
-Align accounts with tax reporting needs
7. I Make Adjusting Journal Entries and Post Entries for:
-Depreciation
-Loan interest and principal
-Accruals or corrections
-Owner contributions and distributions
(Usually coordinated with or reviewed by a CPA.)
8. I Review and Produce Financial Statements
-Profit & Loss
-Balance Sheet
-Cash Flow Statement
-Then review them for reasonableness and consistency across periods.
9. I Lock Periods & Document Work Once They are Accurate:
-Closed periods are locked
-Notes are documented explaining changes
-Ongoing bookkeeping processes are recommended
