Messy books
Multiple Bank Accounts and Nothing Reconciled
Five accounts, three cards, money moving between all of them. It looks worse than it is. Most of the mess is transfers, and transfers are the first thing we clear.
Why many accounts make books look worse than they are
Every time money moves from one of your accounts to another, it appears twice: once leaving and once arriving. If those two sides are not matched to each other, the arriving side looks like income and the leaving side looks like an expense. Neither is true.
With several accounts and a few years of history, unmatched transfers can inflate both income and expenses by a large amount. The profit may be roughly right while every line that makes it up is wrong, and a return or a loan application built on those lines will not hold up.
This is also the first thing an examiner checks. When the IRS tests reported income against bank deposits, a transfer from your own savings account counts as a deposit until someone shows it was not income.
How we untangle it
- Build an account map: every checking, savings, card, loan and processor account, who owns it, and when it opened and closed
- Pull statements for all of them across the same period, so both sides of every transfer are available
- Match transfers between your own accounts and remove them from income and expense
- Identify card payments, loan payments and owner money, which also are not income or expense in full
- Categorize what is left, which is the real activity of the business
- Reconcile each account separately, month by month, to its own statement
The account map usually turns up one or two accounts the owner had forgotten: an old savings account, a closed card, a processor that held a balance. Finding them early is what keeps the reconciliation from stalling later.
What to send
- A list of every account the business has used, including closed ones
- Statements for each, covering the whole period. PDF statements are best; spreadsheet exports help as well
- Any personal account that paid business bills or received business income
- A note of which accounts belong to which business, if you have more than one
If business and personal activity ran through the same accounts, see personal and business money mixed together. If the accounts belong to more than one company, see several businesses or entities.
Do you need all those accounts?
Usually not. Once the history is clean we will tell you which accounts are doing a job and which are only adding work. A common setup is one operating account, one savings account for tax, and one card, with everything else closed. Fewer accounts means cheaper bookkeeping from then on.
Frequently asked questions
Does having many accounts make cleanup cost more?
Yes, because each account is reconciled separately for every month. The number of accounts is one of the main things a quote is based on, along with the number of months and the volume of transactions. See what cleanup costs.
Why do transfers between my own accounts matter?
Because an unmatched transfer is recorded as income in one account and as an expense in the other. Matching the two sides removes both. Until that is done, income and expenses are overstated and the books do not agree with the tax return.
I closed some of the accounts. Can you still get the records?
Usually. Banks keep statements for closed accounts for several years and can reissue them on request, sometimes for a fee. What to gather explains how to ask.
Not the question you had? The full tax FAQ covers more ground, and our client reviews say what the work is actually like.
Related situations and guides
Personal and business mixed
One pot for everything. Separating business activity from personal, in both directions.
Learn moreSeveral businesses, one tangle
Two or more companies paying each other’s bills. Separate books for each and clean entries between them.
Learn moreLoans and owner money booked wrong
Loan deposits as income, repayments as expenses, draws as wages. The balance sheet items that distort profit.
Learn moreThe errors we find most often
Twenty-one errors that turn up in almost every cleanup, and what each does to the numbers.
Learn moreCleanup Planner
Eight questions, then a plan: what comes first, what to gather, and which guides apply.
Part of Messy Books Help, alongside our catch-up bookkeeping service.
Tell us what you need
Send a short note about your situation and we’ll come back to you with a straight answer — whether that’s a quote, a next step, or a referral if it isn’t something we handle.
Prefer to talk it through first? Book a consultation and we’ll find a time, in the Easley office or virtually.
Send us the mess. We will send back a plan.
Call (864) 781-4035 or book a consultation, in the Easley office or virtually.