Start early to be ready for Taxes!

Complex books take time to research, correct, and reconcile before tax deadlines arrive.

Start early—cleanups are rarely “quick fixes.”

• When tax deadlines are approaching, a bookkeeping cleanup is not something to leave until the last minute. A 12-month cleanup can often take 4–6 weeks, depending on the condition of the books, the volume of transactions, and how quickly missing information can be gathered.

• One of the biggest issues is when accounts haven’t been reconciled in several months or even years. In many circumstances, transactions may be categorized incorrectly, transactions may be missing, and year end activities such as addressing loan balances, payroll tax filings, accumulated depreciation and closing out owner’s equity cause your books to be off and not tax ready. Cleanups also consist of when bank and credit card balances do not match what is recorded in QuickBooks. When there is a gap, research is usually needed to determine the cause. Missing transactions, duplicate entries, unreconciled items, and mis-categorizations can all create variances that take time to resolve.

• It is also critical to keep personal and business transactions separate. When personal expenses run through the business, they are typically categorized as shareholder draws, which reduce equity. If taxes have not been filed yet, adjustments may still be made. Once taxes are filed, however, the tax return often becomes the source of truth for the business financial statements.

• Errors in prior tax periods may require amended returns and could even result in penalties for underpayment. Prior-year bookkeeping adjustments are generally recorded through the equity section of the balance sheet, and those changes can affect the financial value of the business.

• Bulk actions can speed up certain corrections, but they do not solve every issue. Inventory, accounts payable, and accounts receivable often require detailed review and cannot simply be corrected with journal entries. These areas are more complex and typically take additional time.

• The best approach is to plan ahead. Starting early gives you time to research variances, make accurate corrections, and file taxes with confidence. Clean books support better decisions, stronger financial reporting, and fewer surprises when deadlines arrive. If your books need attention, give yourself the gift of time by starting now.

Need help getting your books cleaned up? Lomax Bookkeeping can help research variances, separate personal and business activity, reconcile accounts, and prepare your books for cleaner financial reporting and tax-time readiness.

Lomax Bookkeeping | Bookkeeping Cleanups, Reconciliations & Financial Reporting Support