Bookkeeping Clean Up Checklist: A 5-Step Process

Bethany Mullinix
5 min read
Bookkeeping Clean Up Checklist: A 5-Step Process

When you’re building your business, you focus on attracting investors, establishing your brand, and managing logistics. Your company’s chart of accounts might not seem like a priority — until you notice a problem.   

Cleaning up your books isn’t a one-time project, but there are things you can do to get back on track. That said, we recommend working with an experienced professional for optimal results! Below we offer a bookkeeping cleanup checklist for startups and small business owners that aren’t sure where to begin. After all, no one wants messy books.

5-Step Bookkeeping Cleanup Checklist For Startups

1. Identify your goals.

If you’re looking for a bookkeeping checklist, you’ve probably identified a problem with your current strategy. By setting goals and acknowledging known issues with your bookkeeping practices, you’ll be able to determine an appropriate course of action going forward.

Startups might need to clean up their books for various reasons:

  • You need to file state, local, or federal taxes, and your historical data doesn’t align with bank account statements and other accounting records.
  • You’re unsure whether you’re accurately classifying income, expenses, inventory levels, or other important financials.
  • You’re pursuing funding, lines of credit or business loans, and outside parties require reliable financial statements to perform due diligence.
  • You can’t determine the source of discrepancies on balance sheets or other financial statements.

Ask why you need to perform a cleanup project, then prepare to discuss your objectives with your finance team.

2. Set reasonable expectations

Many startups think they can rely solely on Quickbooks all year and then make the mistake of hiring part-time contractors for year-end accounting cleanup and tax return filing, assuming that the project only takes a day or two. Unfortunately, bookkeeping cleanup takes time, particularly when historical data is inaccurate or incomplete.  To ensure long-term accuracy and avoid incomplete books, accountants or bookkeepers will need to:

  • Create a chart of accounts that aligns with your business operations 
  • Perform reconciliations for cash accounts and loans
  • Appropriately account for all assets and inventory
  • Ensure compliance with tax obligations and accounting regulations

In other words, you shouldn’t expect a contract bookkeeper to clean up your books in five to 10 hours. To keep the project within a timely manner (and avoid future accounting issues), work with a team with experience in your industry year around.

Zeni employs experts accountants, bookkeepers, and financial professionals with years of experience in various industries, and our AI-driven platform helps startups like yours automate common bookkeeping tasks. Automation both reduces your team’s workload and prevents future issues from occurring.

3. Be responsive and communicative.

Your finance team will build a proper bookkeeping document checklist, reconcile accounts, and evaluate financial statements to ensure your business is on the right track. However, they must understand how your company operates to build a chart of accounts structured specifically for your business. 

Once an accountant begins cleanup, they will have questions. They’ll need lists of outstanding debt, loan and credit agreements, tax return filings, and other financial documents. Providing timely, accurate responses will limit the cleanup timeframe, help you avoid tax penalties and improve your long-term results.

4. Resist the urge to “start over" or delay your cleanup.

You’ll need accurate historical data to qualify for loans, attract investors, pay taxes, and perform audits. While bookkeeping cleanup can seem intimidating, the process is essential — and you can’t avoid it by simply clearing your books and starting over. 

Likewise, you shouldn’t avoid cleanup because of concerns about the time frame or cost. The longer you use improper accounting methods, the more work you’re handing over to your finance team.

5. Be prepared to make long-term changes.

If you’re performing a major cleanup, your current accounting practices probably require significant updates. Eventually, you’ll need to present your financial statements to investors and other third parties. Those individuals will expect your statements to follow GAAP-compliant accounting practices and present information clearly and consistently. 

For example, many inexperienced bookkeepers add departments to accounting software incorrectly. Even if the books are balanced, this presents problems: Your financial statements should show the chart of accounts vertically and information about departments horizontally. 

This requires a significant realignment of your business’s accounting practices since you’ll need to change your habits for logging transactions — but since the change could attract investors and improve the accuracy of financial projects, it’s worth the effort.

Need bookkeeping cleanup? Zeni can help.

At Zeni, we require an initial bookkeeping cleanup for every client to check for common signs of incomplete books and misaligned data. Our experts have experience with startup accounting, and by assessing your business individually, we’ll address bookkeeping issues and build a chart of accounts that helps you run your business effectively.  

Zeni preserves a historical copy of client data, ensuring GAAP compliance and matching records accurately with bank records, investment records, and other documentation. Our platform also offers user-friendly access to comparative data over your business’s operational lifespan, providing essential information about long-term growth.

We're ready to get started if you need to clean up your books and establish a long-term strategy for accurate financial reporting. Learn more by scheduling a demo.

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