Years behind on bookkeeping: where to start

Find the last month you can trust

For each business bank and card account, find the last statement that was reconciled to a zero difference. That is your starting line. If an account was never reconciled, the line is the day QuickBooks started tracking it, or the first day of the oldest year you still have to file.

Intuit explains why the line matters. Each reconciliation starts from a beginning balance that should match the ending balance of the last reconciliation and your bank statement. Intuit lists a reconciled transaction that was later edited, deleted, voided, moved or unreconciled as a cause of beginning balance problems. So check that the last good reconciliation still holds before you build on it.

Source: Fix beginning balance issues when reconciling ↗

Read next: How to catch up on bookkeeping when you are months behind

Work the oldest open year first

Finish one year before you start the next. The ending balances of one year are the starting balances of the next, so a mistake left in an early year carries into every year after it.

Inside each year, take one account and one month at a time. Make sure every transaction on that statement is in QuickBooks and categorized, then reconcile the month until the Difference is $0.00 before you move on.

If a tax return, loan application or IRS letter is setting the deadline, ask your accountant which year they need first, and agree the order before you start.

Source: Reconcile an account in QuickBooks Online ↗

Read next: How to reconcile an account in QuickBooks Online for the first time

The bank feed will not reach back that far

Intuit notes that when you connect a bank account, download timespans vary by bank, from 90 days up to 24 months. When the books are years behind, the feed covers only the recent part of the gap.

Download every monthly statement for every business account from the starting line to today. Name each file by account and month. If your bank’s website does not go back far enough, ask the bank for copies.

Source: Connect bank and credit card accounts to QuickBooks Online ↗

Bring the older months in from files

For months the feed cannot reach, Intuit’s manual upload is for adding transactions from before you connected the account. QuickBooks accepts an account statement as a PDF or image, or a list of transactions as a QBO, QFX or CSV file.

Watch the overlap. Intuit stresses choosing how far back the file goes so you avoid duplicate transactions. A file that covers dates the bank feed already downloaded puts the same lines in twice.

Source: Manually upload transactions into QuickBooks Online ↗

Read next: Duplicate transactions in QuickBooks Online: find them and remove them safely

File what is due

Late books do not change the filing rule. The IRS says to file all tax returns that are due, regardless of whether or not you can pay in full. It also says that if you fail to file, it may file a substitute return for you, and that return might not give you credit for deductions you may be entitled to.

The same IRS page points to Form 4506-T for wage and income information to help prepare a past due return, and to Get Transcript for information from a prior year return. Your accountant can tell you which returns are open for your business.

Source: IRS: Filing past due tax returns ↗

Do not throw anything away

Old statements, receipts and invoices are what the catch-up runs on. The IRS says to keep records indefinitely if you do not file a return. Keep everything for the unfiled years until your accountant says otherwise.

Source: IRS: How long should I keep records? ↗

When to get help

Get help when more than one year is open, when more than two accounts are involved, or when an IRS letter, a loan application or a sale is setting the deadline. You can still do the first steps yourself: find the starting line for each account and gather the statements. That is what the first conversation needs.