What to Do When You're Behind on Your Books

You're six months behind. Maybe twelve. Every time you think about catching up, you feel overwhelmed and put it off. Meanwhile, your shoebox of reciepts grows and tax season approaches.

Take a breath. You can fix this. Here's how.

Step 1: Stop the Bleeding

Before you try to catch up on the past, make sure the present is under control.

Open a separate business account (if you haven't). No more mixing personal and business. From today forward, every business transaction goes through a dedicated account. This makes catching up easier because you have a clean record to work from.

Start logging transactions from today. Don't worry about January through June right now. Start with July. If you tack everything from today forward, the gap stops growing.

Step 2: Gather Everything

Collect every financial document from the period you're behind on:

• Bank statements (download PDFs from your online banking)

• Credit card statements (same)

• Receipts (check email, phone photos, and yes, the shoebox)

• Invoices you sent

• Bills you received

• 1099s you collected

• Loan documents

• Any prior tax returns or bookkeeping files

Organize by month. Put everything for January together, everything for February together, etc.

Step 3: Work Backward - Not Forward

Start with the most recent month you're behind on and work backward. Why? because the recent months are fresher in your memory, the statements are easier to access, and you'll get immediate satisfaction from crossing months off the list.

For each month:

1. Download the bank statement

2. Download the credit card statement

3. Enter every transaction into your accounting software

4. Categorize each transaction

5. Reconcile - match your books to the statement

6. Move to the next month

Step 4: Accept Some Loss

Here's the hard truth: if you're a year behind, some transactions will be unrecoverable. you won't remember what a $147 charge from 8 months ago was for. Some receipts are gone.

Don't let perfection be the enemy of done. Make your best guess, note it, and move on. A 90% accurate set of books is infinitely better than no books at all.

For truly unidentifiable transactions:

• If it's a small amount, categorize it as "Miscellaneous Expenses"

• If it's large, dig deeper. Check your calendar, email, or bank app for details.

• If you genuinely can't identify it, don't claim it as a deduction.

Step 5: Get Help If It's More Than 3 Months

If you're 1 to 2 months behind, you can probably catch up yourself in a weekend. If you're 3 to 6 months behind, it's a project that will take multiple weekends. If you're more than 6 months behind, get professional help.

A bookkeeper can catch up months of backlogged transactions in a fraction of the time it would take you. They know what to look for, they won't make the same categorization mistakes, and they'll reconcile properly.

Step 6: Set Up a System So It Doesn't Happen Again

Once you're caught up, the goal is to never fall behind again.

• Connect your bank to accounting software - Automate transaction import

• Set a monthly bookkeeping date - Same day every month, no exceptions.

• Reconcile monthly - Don't let it pile up

• Use a receipt app - Snap photos so receipts don't get lost

• Consider hiring a bookkeeper - If you fell behind once, you'll fall behind again unless something changes

The Bottom Line

Being behind on your books is stressful but fixable. Start with today, work backward, accept some imperfection, and get help if the gap is too big. Then set up a system so you never have to do this again.

A. Bryson Bookkeeping specialized in catch-up bookkeeping for businesses and non profits that have fallen behind. Let's get you current by the weekend so you can finally enjoy it!