I Love Messy Books

Hello All,

One of my favourite things to do as an accountant is clean up a messy set of books.

I admit that it is a bit nerdy, but I think it comes from a love of solving puzzles and finding patterns. There's something deeply satisfying about the transformation that happens in the process.

An accounting cleanup usually involves reconciling bank accounts, matching CRA/RQ payments to sales tax reports and income tax filings, untangling personal and business expenses while ensuring shareholder loans are correct, trying to remember what a bank transaction from nine months ago was for, and making sure that that transactions are allocated to the right accounts and appear on the right reports. In short, it requires dismantling the puzzle, with pieces in the wrong place, and reassembling it.

Of course, while I very much enjoy the cleanup process, this is not a desirable or fun situation for the clients that I have helped. They did not actively choose to be in the situation. Rather, the demands of their business meant that their bookkeeping gets pushed aside (I'm certainly guilty of this) and before they know it, they're trying to reconstruct months of financial history.

One of the main reasons this happens is that business owners don't set up systems at the beginning since they're not really sure how to go about it. Instead, these are cobbled together based on when a need arises e.g. invoicing or when an event triggers it e.g. an audit or year end tax returns.

A good system will help you to keep your books organized and save time throughout the year. They also reduce accounting fees because less time is spent reconstructing the past. They ensure you don't overlook deductible expenses or lose important records. And if the CRA ever asks questions, having organized documentation makes the process much easier.

Most importantly, good systems reduce stress. Instead of wondering whether your records are complete or whether you've missed something important, you feel much more certain that you are making informed financial decisions based on your data.

In my latest podcast/video episode, I walk through Setting Up Your Corporation's Accounting from Day One.

Watch the episode
Listen to the Podcast

Spending an hour creating a solid foundation is far easier, and much less expensive, than spending days trying to clean everything up later.

Of course, I still enjoy a good cleanup project. But it might be more rewarding to help someone build a system that never needs one.

I'd love to hear about your own challenges with setting up your system. Simply reply to this email.

Ronika