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Cleanup is different from catch-up
Catch-up means the months are empty. Cleanup means the months are full, but the numbers are not right. Many files need both: a few empty months at the end and a stretch of wrong entries before that.
The test is simple. Ask whether the cash balance in your software matches the bank statement for the same date. If it does not, and nobody can explain the gap, the books need cleanup before anyone relies on them.
Problems a cleanup usually finds
| Symptom | Likely cause |
|---|---|
| Cash in the books does not match the bank | Duplicate feed entries, deleted lines or a reconciliation that was forced to balance |
| Profit looks too high or too low for the year | Owner transfers, loan proceeds or deposits booked as income |
| A large balance in Ask My Accountant or Uncategorized | Feed items accepted in bulk with no review |
| Sales tax payable never goes to zero | Returns paid from the bank but booked as an expense |
| Loan balance differs from the lender's statement | Full payments booked as expense with no interest and principal split |
| Contractor totals look wrong at 1099 time | Vendors set up twice, or card payments mixed with check payments |
How the cleanup runs
- Review before changing anything The bookkeeper saves the current state, lists each problem and estimates how far back it goes.
- Agree on a trusted date Usually the last year end your CPA filed. The balance sheet at that date is the anchor.
- Fix balances first Cash, cards, loans, receivables, payables and sales tax are corrected before anyone touches income and expenses.
- Recode the profit and loss Miscoded lines move to the right accounts, and the bank rules that caused them are rewritten.
- Reconcile and document Each account ties to its statements month by month. You get a change log your CPA can read quickly.
Common San Diego cleanup situations
A North County landscaping company switched bookkeepers mid-year, and two people coded the same months in different ways. A Gaslamp restaurant had delivery app payouts booked as sales at the net amount, so commissions disappeared and food cost looked high. A Navy subcontractor had one big materials account and no way to tie costs to each contract.
A cross-border importer in Otay Mesa paid freight, customs brokers and duties from the same card and coded all of it to one expense line. Product cost was understated, and margins looked better than they were. Each of these is fixable. The order of the work matters more than the size of the mess.
What the finished cleanup includes
- Every bank, card and loan account reconciled from the trusted date forward
- A balance sheet with no unexplained suspense or clearing balances
- Income and expenses coded to a chart of accounts that fits your business
- Vendor records cleaned so 1099 totals can be pulled from the books
- A written change log listing what was wrong, what changed and which months moved
- A short list of open items, if a statement or receipt is still missing
After the cleanup
Clean books stay clean only if someone keeps closing them. You can take the file back with the new rules in place, or move to monthly bookkeeping so the next year starts from a reconciled balance. If your file is in QuickBooks and the problems are mostly software setup, see QuickBooks cleanup.
Where we work
We keep books for businesses across the City of San Diego, North County, the South Bay and East County.
- Carlsbad
- Chula Vista
- Downtown San Diego
- El Cajon
- Encinitas
- Escondido
- La Mesa
- Oceanside
- San Diego
- San Marcos
- Vista
Questions
How far back does a cleanup go?
To the last date both you and your CPA trust, which is often the last filed year end. If that date is unclear, the review finds it first.
Will a cleanup change my filed tax returns?
The books can change. Whether an earlier return needs an amendment is a decision for you and your CPA, based on the change log.
Can you work with bank statements only?
Yes. Statements are the base of any cleanup. Receipts and invoices help with coding, but missing receipts do not stop the reconciliation.
Is it ever better to start a new file?
Sometimes, when the old history is mostly useless and nobody needs it. A new file still needs correct opening balances, so the review comes first either way.