What does "clean books" actually mean?
Three things, all of them checkable:
| Test | What it means |
|---|---|
| Current | Transactions are entered every week, not caught up at year end. |
| Reconciled | Every bank and card account matches its statement. |
| Closed monthly | Each month is reviewed and signed off, so last month's numbers stop moving. |
What are the signs my books are behind?
If any of these sound familiar, the books need attention before anything else: you are weeks or months behind on entries; you are not sure the numbers in QuickBooks are right; you have no idea what you will owe at tax time; you do the bookkeeping at night, when you should be with your family; or you make big calls from the bank balance because you do not trust the reports.
Why not start with a fractional CFO straight away?
Because a CFO's forecast, pricing advice and hiring plan are all calculated from your books. If revenue is missing a month or expenses sit in the wrong place, the plan inherits the error, and you make confident decisions on wrong numbers. Fixing the books first is cheaper than unwinding a bad decision later.
What order should I fix things in?
The order I use with clients at Right Way Profits:
- Books first. Get current, reconciled and closing monthly (bookkeeping).
- Then cash. Organize money with Profit First so profit, owner's pay and taxes are set aside on purpose.
- Then direction. Add fractional CFO support to forecast and steer the business.
How far behind is too far to fix?
Rarely too far. Clients describe their own catch-ups, in their own words, on the reviews page. The first step is a look at where the books stand today.
Frequently asked questions
How often should a small business do its books?
Weekly is best. Entries stay current, problems show up while they are small, and each monthly close is quick.
What is a monthly close?
A review at the end of each month that checks every account is reconciled and the numbers are right, then locks the month so the reports stop changing.
Can I get CFO help while my books are being cleaned up?
Ask on the discovery call. Most of the CFO work depends on accurate numbers, so the books usually come first.
Related help
- Fractional CFO: I take the CFO seat part time: a forecast, a plan you run the business on, and straight answers on pricing, hiring and big purchases before you commit.
- Profit First: I set up and run Profit First with you, so profit, your paycheck and your tax money come off the top every time cash comes in.
- Bookkeeping: My team keeps your QuickBooks Online books current every week, and I review and sign off on every monthly close.
- How to Pay Yourself a Regular Paycheck From a Service Business
- The Five Profit First Bank Accounts, and What Each One Is For
- Bookkeeper vs accountant vs fractional CFO
Written by Debbie DeKnight of Right Way Profits. General information, not tax or legal advice for your situation.