#28: How do I get back on track if I’ve been slacking on my bookkeeping?

About This Episode

We’re halfway through 2020 and you may have just had the epic realization that you’re totally behind on your bookkeeping. I feel your pain- I’ve been there too (like, really, really behind on) and it’s nothing to be ashamed of. 

But, you’re probably ready to get your books caught up before they fall further behind. And you’re probably also wondering where to even start! Let’s dive into how you can catch up on many months of your bookkeeping!

Get ready to get back on track with your bookkeeping! 

What we’re talking about

•  Assessing What Needs To Get Done In Your Bookkeeping
• Doing The Prep Work – Have What You Need Before You Start
• Getting Started With A Method For Your Bookkeeping
• Batching Your Work – Macro Batching and Micro Batching
• Last Steps To Catching Up On Your Bookkeeping

Assessing What Needs To Get Done In Your Bookkeeping

It’s tempting to jump right into doing your bookkeeping, but before you begin you should make a list of what needs to get done. This small but mighty step will help you work more efficiently when you actually start doing your bookkeeping. 

Identify all of the components of your bookkeeping that are undone, including what accounts you need to do. Write out all of your accounts, such as your bank accounts, Venmo, PayPal, and credit cards. Remember, a business account is anywhere you have business transactions. 

Once you have your accounts listed out, focus on things you track, such as mileage, home office expenses, split expenses, such as your cell phone, internet, and cash receipts. You will need to include all of these items in order to get caught up! 

Doing The Prep Work – Have What You Need Before You Start 

You now have a map of where you need to go on your bookkeeping journey. Now, it’s time to gather the supplies for your expedition. Having everything you need before you start on it will make it easier to batch process your bookkeeping.  

If you are using a spreadsheet to track your income and expenses, then you’ll need to download your bank statements year-to-date. If you’re using a digital accounting program, like QuickBooks Online, make sure your bank is connected and update the system, so that your transactions download properly. If you don’t want to download PDFs ahead of time, have your login details available and make sure you can easily access your accounts. 

Getting Started With A Method For Your Bookkeeping

We have now reached the doing phase of things! 

You have what you need and you know what needs to get done. So now you just start doing your bookkeeping for every month right? Wrong! 

Most people want to approach their bookkeeping catchup by doing one month at a time. This is a great method if your bookkeeping is already caught up. BUT, if you need to catch up on a lot of months, you’ll be switching between too many accounts and it breaks the flow.  

Instead, try batching by account, not by month. In other words, only focus on one account at a time. 

Batching Your Work – Macro Batching and Micro Batching

Macro batching is the high level batching in which we focus on one account at a time. Since you’ll have a variety of deposits, checks, and transactions, it’s going to be easier to work through an entire account at once, rather than toggling between multiple accounts. When you toggle between multiple accounts you interrupt your workflow and that eats into your bookkeeping time. 

Micro-batching is working within each account. An example of working in the account is by doing all of the deposits at once. Start by tackling all of the easy transactions (like recurring subscriptions that are easy for you to identify). 

Then move on to transactions that take more investigation, like checks where you have to look up the check image or number. Finally, work through transactions that require you to open another account, like Venmo transactions. 

Last Steps To Catching Up On Your Bookkeeping 

The last step is to do the easy stuff first and skip the hard stuff. Hard stuff are the transactions that:

• You don’t know what it’s for (and you need to investigate)
• You don’t recognize the vendor name (and you need to investigate)
• You don’t know how to categorize the transaction
• It’s an unusual transaction and you don’t know how to handle it

If you come across a transaction that meets the above conditions, skip it and just focus on the transactions you can easily process. If you stop to investigate you’ll likely go down the rabbit hole of bookkeeping questions and lose all your bookkeeping time!

At the end, once everything is batched, spend a day or two to find the answers to your questions. 

Do you feel motivated and less stressed about getting your bookkeeping back on track?