How Do I Know If My Books Are a Mess? Signs Your Bookkeeping Needs a Cleanup

By the SherOps Bookkeeping Team, Edmonton, AB

We open a new client’s books and know within about ten minutes whether they’ve been managing fine on their own or quietly falling behind. That’s not a guess. It’s a pattern we’ve seen across hundreds of Edmonton small businesses, from trades and contractors to consultants, property managers, and solopreneurs. The same handful of warning signs show up again and again. If a few of these sound familiar, it’s worth taking a closer look before small issues turn into bigger, more expensive ones.

Here are some common signs that your bookkeeping needs attention:

You have numerous uncategorized transactions

Your account has numerous uncategorized transactions, which means that your books need attention. Transactions that are not properly categorized can affect the accuracy of your financial reports. We see this often with Edmonton trades businesses running multiple job sites, where transactions pile up faster than they get sorted.

Your accounts have not been reconciled

Your bank or credit card accounts have never been reconciled, or they have not been reconciled for a while. Regular reconciliation is important to make sure your books accurately reflect your actual transactions.

Your bank or credit card balances don’t match your accounting software

The balance on your bank or credit card statement doesn’t match the balance in your accounting software. This might happen because of incorrectly recorded transactions, missing or duplicated transactions, unrecorded invoices or payments, or transactions recorded with the wrong date.

Your Accounts Payable or Accounts Receivable don’t communicate the truth about your situation

You don’t know exactly how much you owe your vendors, or how much your clients owe you. Your Accounts Payable and Accounts Receivable should give you a clear picture of these balances. For Edmonton contractors juggling several projects at once, this is one of the most common blind spots we see, and often the first thing that improves once the books are cleaned up.

You are not sure about your GST/HST balance

You are not confident about the balance of your GST/HST account, or your bookkeeping records don’t match the amounts of GST/HST reported on your CRA returns. Since Alberta has no provincial sales tax, GST/HST is usually the only sales tax Edmonton business owners need to track, which makes getting it right even more important.

There is no separation between personal and business transactions

You don’t clearly separate your personal and business transactions. Mixing the two can make your bookkeeping more difficult and prevent your financial reports from accurately showing how your business is performing.

You are not confident about your financial reports

You look at your Profit & Loss or Balance Sheet and aren’t confident that the numbers are correct. Your financial reports should help you understand your business and make informed decisions. In our experience, this almost always traces back to one root cause: a Chart of Accounts that was never set up to reflect how the business actually operates. We cover that in our guide to what a Chart of Accounts is and why it matters.

What to Do Next

If several of these signs sound familiar, you’re not alone. Fit Small Business’s bookkeeping cleanup checklist walks through a similar list from a general small-business lens (see their full cleanup checklist here), and we find the same issues show up locally, just with an Edmonton and GST/HST twist. A bookkeeping cleanup can get your records back on track without requiring you to relive every transaction from the past year yourself. If DIY bookkeeping is part of what got you here, it’s also worth reading our breakdown of what DIY bookkeeping really costs a small business before deciding what to do next.

Ready for a second opinion on your books? Book a free consultation with SherOps Bookkeeping and we’ll help you figure out where things stand.