Years behind on your accounting.... We have you covered!
As a bookkeeper, there are few things scarier than when a new client approaches you and says they have a few tax issues. It is a cringeworthy moment. When it involves more than 5 years of unfurled taxes and missing financial documentation it can be overwhelming. The data entry alone on a multi-year backup could be a full-time job never mind trying to keep current on the day to day. Over the years we have seen this more times then we can count.
A bit of organization combined with a bit of technology makes it possible to recreate those financials, on a cash basis, in just a few weeks of work. Here’s how we tackled it…
First, you will need to find out exactly how far back the issue goes. Asking the client isn’t always going to get you an accurate result. We ask our clients to provide a tax transcript or their last complete return. This gives us a baseline for how far we must go back in the data reconstruction process.
Next, the collection of documentation comes into play. Often the period is far more than can be downloaded from the banking institutions. This often leaves you dependent upon paper copies of bank and credit card statements. These may need to be requested from the banking institution if the client doesn’t have copies in hand.
Once the documentation is received you can use a program like Scanwriter to convert PDF copies of the statements into data import files that are much like what you would download from the bank. By importing the transactions you will have an easily reconciled data set in a third of the time. This will allow only for cash basis reporting of income and expenditures, but when the accounting and taxes are this far behind it is often the only alternative.
You will need to add any cash transactions, or contributions that never flowed through the banking institutions, via journal entries.
You may need to make adjustments for payroll, loan interest, and depreciation as well. Inventory figures can be adjusted only if you have on hand counts for the various fiscal period end dates.
Once all accounts are reconciled and you have verified the balance sheet to be sure assets are all accurate and that all liabilities are represented the file should be ready to forward for tax preparation. If you are behind in filing your taxes, give Imagine Solutions a call so we can get you caught up!