Catch-Up Bookkeeping in Sugar Land, TX

We take on catch-up bookkeeping as part of our bookkeeping service. Catch-up bookkeeping means recording and reconciling the months that never got done, in order, until the books agree with the bank and card statements through last month.

The work starts from statements. The usual order is to record a month, check it against its statement and close it before starting the next one.

Thuy Nguyen, who leads the firm, is a CPA, and she works in English and Vietnamese.

You may not need anyone for this. If you're a few months behind, with one or two accounts and every statement to hand, you can catch up yourself by following the order on this page.

Start with a 15-minute intro call. Before a catch-up with any bookkeeper, it helps to know roughly which month your books were last reconciled, how many bank and card accounts the business uses, and whether any tax returns are still unfiled.

After that the order is the same for any set of books. Collect the statements. Record and reconcile one month at a time, oldest first. Close each month, then run the reports.

Catch-up bookkeeping is the work of recording and reconciling past months that were never done, so the books are complete through last month. Monthly bookkeeping keeps them that way afterward.

The IRS says everyone in business must keep records. Among the things it says good records help you do: monitor the progress of your business, prepare your financial statements, identify sources of your income, keep track of your deductible expenses, prepare your tax returns and support items reported on your tax returns (IRS: Why should I keep records). When the books are behind, each of those jobs waits.

Three things tend to force it. A tax return is due and there are no finished books to prepare it from. A bank or lender asks for financial statements. Or an IRS letter asks about a year whose books were never done. For a Sugar Land shop owner, that could be a loan application asking for a profit and loss statement the books can't produce yet.

Catch-up bookkeeping runs oldest month first, and each month is finished before the next one starts.

Step 1. Record the month. Enter every deposit and payment from that month's statements, and give each one a category.

Step 2. Reconcile it. IRS Publication 583 says that when you receive your bank statement, you should make sure the statement, your checkbook and your books agree. It also says you should reconcile your checking account each month (IRS Publication 583).

Step 3. Fix what the reconciliation finds. Publication 583 says reconciling lets you verify how much money you have in the account, make sure your books reflect all bank charges, and correct any errors in your bank statement, checkbook and books (IRS Publication 583).

Step 4. Close the month. Reconcile each card and loan account the same way, and deal with anything left uncategorized. Then close the month. After that, a change to a closed month should be a deliberate, written-down correction and not a routine entry.

Step 5. Move to the next month and repeat.

Step 6. Run the reports. When the last month is closed, run a profit and loss statement and a balance sheet for each year. The IRS describes an income statement as showing the income and expenses of the business for a given period of time, and a balance sheet as showing the assets, liabilities and your equity in the business on a given date (IRS: Why should I keep records).

Don't do the months out of order. Each month's opening balance comes from the month before.

If a return is past due, the books for that year come first, because the return is prepared from them.

The IRS says to file all tax returns that are due, regardless of whether or not you can pay in full. It says filing a past due return and paying now limits interest charges and late payment penalties. It also says you risk losing your refund if you don't file. If you are due a refund for withholding or estimated taxes, you must file the return to claim it within 3 years of the return due date (IRS: Filing past due tax returns).

If you fail to file, the IRS says it may file a substitute return for you, and that this return might not give you credit for deductions and exemptions you may be entitled to receive (IRS: Filing past due tax returns). Deductions come from your records. The IRS calls the responsibility to prove entries, deductions and statements made on your tax returns the burden of proof, and says taxpayers generally meet it by having the information and receipts, where needed, for the expenses (IRS: Burden of proof).

For wage and income information to help prepare a past due return, the IRS says to complete Form 4506-T and check the box on line 8 (IRS: Filing past due tax returns).

When IRS mail is already arriving about an unfiled year, read the tax resolution and IRS notice help pages. For the return itself, see tax return preparation.

The firm has not published a price for bookkeeping, so there is no figure on this page. Ask the firm what your catch-up would cost, and whether it is quoted separately from monthly bookkeeping.

What moves a catch-up quote is the same list that moves the timeline: the number of months behind, the number of accounts, how complete the statements are, and whether personal and business spending are mixed.

Before you agree to a catch-up quote from anyone, ask which months it covers, which accounts it covers, whether it includes the year-end reports, and whether tax returns are priced separately.