The many demands of running your small business can leave you short on time and struggling to prioritize your tasks. One of the functions that often suffers is bookkeeping. Too often, business owners find themselves trying to run things on the fly, with only a general idea of where they stand financially. Not only does this make it difficult to manage cash flow and expenses, it also becomes a headache at tax time.
Feeling overwhelmed by the enormity of it, you may want to ignore the problem. Luckily, QuickBooks makes it almost as easy to catch up on your bookkeeping as it was to have fallen behind in the first place.
Current Information Comes First
Your first inclination is likely to go back to the last date you had reliable financial statements and start making your bookkeeping entries. What you really need to do is to get your most recent information entered so you can begin properly managing your business. Once you have the current entries completed, you can go back and recreate the historical information as time permits.
QuickBooks allows you to choose the date for each entry, so you can ensure that everything is recorded as of the proper date.
Prioritize Your Work
It’s tempting to start at the top of your balance sheet and enter all your bank account information. However, if you consider that majority of your banking information flows from your accounts receivable and accounts payable entries, it makes more sense to enter your current information in the following order:
- Invoices issued
- Payments received
- Bills and payments due
- Checks cut and payments made
Once you have completed these entries, your cash accounts are nearly complete. You can then go back to your most recent bank statement and enter any remaining information, such as bank fees and interest earned.
After you’ve completed entries for the current month, you can begin working on the historical records, following the same formula for each month. Make sure you continue to keep up with recording current entries as you do this so you won’t fall behind again.
Your QuickBooks records won’t be totally accurate until you have completed entering all the bookkeeping records from prior months, but at least you’ll have the information on hand for managing your business more effectively.
Entering Historical Data
As you begin catching up on your bookkeeping, it is important that you record your entries on the correct date. QuickBooks will default to today’s date, so be sure to check the date before each posting. If you realize you’ve made a mistake, you can always go back and change it.
Making sure your QuickBooks records agree with the physical invoices, deposits, checks and other documents will make it easier to locate records and create meaningful financial statements.
What if You are Way Behind?
Entering historical data month by month works best if you are only a few months behind in your bookkeeping. If you are a year or more behind, you may want to consider a short cut method of bringing your records current. This method below should only be used if you are seriously behind in bookkeeping and need to have a financial statement in order to prepare taxes. To book this shortcut entry, you will:
- Find documentation to support all account balances.
- Create a journal entry to force all account balances to agree with that documentation.
- Make the entry balance by using the Quickbooks “reconciliation discrepancies” account to record the difference.
This method will ensure that you have good balances to go forward, but the historical data should not be relied upon. Once you’ve created this entry, you should maintain your records by regularly recording transactions.
QuickBooks makes it easy to bring your accounting records up to date by allowing you to enter both current and historical data simultaneously. Having reliable financial statements will make it easier to make decisions and develop your business into the future.