9 Crucial Bookkeeping Clean-Up Checklist

As a bookkeeper, keeping your client's books accurate becomes essential. No wonder sometimes bookkeeping isn't that simple as it involves various critical activities.

The routine bookkeeping procedure consists of several processes, and in order to have a clean book, you must adhere to them each month. You can complete all the critical steps as a fine bookkeeper. That is where you need a bookkeeping checklist that can help you out.

In this blog, we'll go over everything, from collecting receipts and assuring tax law compliance to reconciling accounts and altering spending categories. You will have all the resources necessary by the end of this manual to approach your bookkeeping clean-up with assurance and comfort.

So have a cup of coffee, and let’s get started!

1. Reconcile Bank Accounts

Reconciling your bank accounts is the first step in bookkeeping. Comparing your bank statements to your accounting software to ensure all transactions are appropriately recorded is reconciling your bank accounts.

Deposits, withdrawals, and any fees or charges are all included in this. In order to identify any mistakes or discrepancies early on, you should balance your bank accounts at least once every month.

Use these methods to reconcile your bank accounts:

• To confirm that all transactions are consistent, compare your bank statement to your accounting software.
• You should look into all differences and, if necessary, fix them.
• Reconcile any unpaid deposits or transactions that still need to clear.
• Ensure that your accounting records correspond with your bank statement by making necessary corrections.

2. Review Accounts Receivable

The next step will be to check your receivables to ensure that all overdue bills have been accurately recorded. The sum of money owed to your company by clients who still need to pay their invoices is called accounts receivable.

Make sure to track down any past-due payments and correctly record them. Also, consider reminding customers or following up if they have unpaid amounts.

By auditing your receivables, you can ensure that all unpaid bills are appropriately recorded and that you follow up with clients/customers who still need to pay.

To review your accounts receivable, follow these steps:

• Generate an accounts receivable aging report that shows how much is owed and for how long.
• Follow up on any overdue payments and record them appropriately.
• Consider sending reminders or following up with customers who have outstanding balances.
• Write off any uncollectible debts as necessary.

3. Review Accounts Payable

The sum of money your company owes to suppliers or vendors is called accounts payable. By checking your accounts payable, you can ensure that all bills have been appropriately recorded and that any past-due invoices have been paid.

Use these procedures to review your accounts payable:

• Generate an accounts payable aging report that shows how much is owed and for how long.
• Pay any overdue bills and record them appropriately.
• Consider negotiating with vendors to reduce outstanding balances.
• Reconcile any discrepancies between your accounting records and vendor statements.

4. Review Payroll Records

The payments you make to your employees, such as salaries, wages, and deductions, are documented in your payroll records. By checking your payroll records, you can ensure that all payments and deductions have been appropriately documented and that you comply with all tax requirements.

To review your payroll records, follow these steps:

• Generate a payroll report that shows all payments and deductions.
• Ensure all employee information is up-to-date, including their contact information and tax withholding forms.
• Review tax obligations, including federal and state payroll taxes, and ensure they're paid on time.
• Reconcile any discrepancies between your accounting records and payroll reports.

5. Review Inventory Records

You must check your inventory records if you sell products to ensure that all purchases and sales have been appropriately documented. By reviewing your inventory records, you can ensure you're not stocking up on unnecessary items and that your prices are reasonable.

To review your inventory records, follow these steps:

• Generate an inventory report that shows how much inventory you have on hand.
• Reconcile any discrepancies between your accounting records and physical inventory counts.
• Identify slow-moving inventory and consider liquidating it to free up cash.
• Review pricing strategies to ensure that your products are priced appropriately.

6. Reconcile Credit Card Accounts

It's similar to reconciling your bank accounts to reconcile your credit card balances. It requires verifying that all transactions are appropriately recorded by comparing your credit card statements to your accounting software.

To reconcile your credit card accounts, follow these steps:

• Compare your credit card statement to your accounting software to ensure all transactions match.
• Investigate any discrepancies and correct them as necessary.
• Reconcile any outstanding transactions that haven't cleared yet.
• Make necessary adjustments to your accounting records to match your credit card statement.

7. Review Tax Filings

By checking your tax returns, you can ensure that all taxes have been paid on time and that all necessary paperwork has been submitted accurately. To avoid any fines or interest costs, it's crucial to constantly verify your tax files.

To review your tax filings, follow these steps:

• Review tax obligations, including federal and state income, sales, and payroll taxes.
• Ensure that all taxes are paid on time and that you file all required forms correctly.
• Take advantage of any available tax deductions or credits.

8. Clean Up the Chart of Accounts

The accounts used in your accounting software, such as assets, liabilities, revenues, and expenses, are listed in your chart of accounts. Your chart of accounts will be more logically ordered and understandable if you clean it up.

To clean up your chart of accounts, follow these steps:

• Review all accounts to ensure that they're necessary and relevant to your business.
• Merge duplicate or unnecessary accounts.
• Rename accounts to make them more descriptive and easy to understand.
• Create new accounts as necessary to better track your business transactions.

9. General Checks?

General checks in the bookkeeping cleanup checklist refer to the tasks needed to ensure that the financial records are accurate and up-to-date. The following are some general checks that should be performed during bookkeeping cleanup.

• Ensure that no transactions are recorded in Suspense/Uncategorized expense.
• Consult with the accountant & remember to look for the following:

?????????????*Misclassifications

????????????*Missing expenses

?????????????*Duplicate entries

• Confirm all the expenses are recorded in their respective categories and not at the parent GL level
• Look out for expenses that are capital in nature but are incorrectly recorded as an expense (some businesses have a cap of $2,500 under capitalization policy)
• ?Review new accounts created in the closing period and check for duplications.
• Address outdated records: Identify any outdated records, such as old customer or vendor accounts, and remove them from your records.?
• ?Address accruals and deferrals: If you use accrual accounting, ensure that all accruals and deferrals are accurately recorded and up-to-date. This can impact your financial statements and affect your business decisions.

The bottom line:

To sum up, a bookkeeping cleanup checklist is vital for ensuring that your financial records are correct and current. You can evaluate your accounts receivable and payable, payroll, inventory, and tax filings, clean up your chart of accounts, and back up your data by following these procedures.

Doing this lets you keep things organized, avoid costly errors, and make better financial decisions for your business. You can keep your books organized and set up your corporation or business for success with a little effort. Remember to frequently review your records and, if necessary, seek professional assistance.