Tips from a Bookkeeping Cleanup Specialist: 3 Common Issues Found in Books
As a Bookkeeping Cleanup Specialist, I've worked on over 40 books for real estate investors, professional service providers, shops and cafes, e-commerce, and trades in the United States. Here are the top 3 most common issues I see and how they affect businesses.
Note: These examples are specific to United States bookkeeping.
1. Sales Tax Issues
Sales tax is so common that when a business owner tells me they have to pay sales and use tax, I expect to find an issue.
Common problems I see:
Businesses undercharging or not charging sales tax to customers
Collecting sales tax but not paying it to the tax agency
Overpaying sales tax due to incorrect revenue calculations
Real examples from my cleanup work:
A jewelry seller used Square to process payments but only charged 4% sales tax when their area required 8.25%. They had to pay the difference from their revenue. Solution: Updated their Square settings to charge the correct percentage.
A trades business collected thousands in sales tax but hadn't made payments for months. The owner didn't know their accountant wasn't handling the payments. Solution: Informed the owner and they resolved the issue with their accountant and started making payments.
A monthly client reported total sales including sales tax charged to customers, making revenue look higher than reality. Solution: Showed her how to properly file returns, leading to correct reporting the next month.
2. Invoicing Issues
Invoicing problems usually stem from missing steps or inconsistent workflows.
Common problems I see:
Not tracking invoices at all
Duplicate income on the P&L from incorrect workflows
Real examples from my cleanup work:
As a sign language interpreter, I didn't consistently track open invoices in my early days. During cleanup, I found hundreds in overdue payments I hadn't noticed. Solution: Created one central place to track all invoices.
A trades business had negative unpaid balances because they created duplicate invoices for jobs. Solution: Streamlined their workflow to use one invoicing system and trained staff on proper procedures.
3. Missing Expenses
These are easy deductions that often get overlooked. A good tax preparer will catch them, but if you don't have one, you're missing out on valuable deductions and a complete picture of your finances.
Common problems I see:
Unreconciled bank accounts missing expenses
Missing loan and credit card interest on P&Ls
Real examples from my cleanup work:
A monthly client's QuickBooks sync stopped mid-month, missing two weeks of transactions. Solution: Caught this during reconciliation and manually imported the missing data.
A trades business had multiple loans missing from their books for two years. This understated their loan balances and left thousands in interest off their P&L. Solution: Updated books to show correct interest expenses and loan balances.
The sooner you identify these issues, the easier they are to fix. Don't wait until they become a tangled mess.