Messy books
A QuickBooks File Nobody Trusts
The software is fine. The file was set up in a hurry, the bank feed was accepted without checking, and the reports stopped making sense. That is a repair job with a known sequence.
The signs a file needs cleaning up
- Accounts that have never been reconciled, or a reconciliation that was forced to balance
- A large balance in Undeposited Funds, or Payments to Deposit, that never clears
- Opening Balance Equity with a balance in it
- Uncategorized Income, Uncategorized Expense or Ask My Accountant holding real money
- Customers showing as unpaid who paid long ago, and bills showing as unpaid that were paid
- A bank balance in the software that does not match the bank
- Negative balances where they cannot exist, such as negative inventory or a negative asset
- Income that looks doubled, because deposits were added on top of invoices already recorded
- A payroll liability balance that grows every month
- A chart of accounts with dozens of near-duplicate accounts
Most of these trace back to two causes: bank feed transactions accepted on the software’s suggestion, and sales entered once as an invoice and again as a deposit.
How a file is cleaned up
- Take a backup or an export first, so nothing is lost
- Review the setup: entity type, accounting method, chart of accounts, sales tax and payroll settings
- Find the last point the file agrees with a filed return, and lock everything before it
- Tidy the chart of accounts and merge duplicates
- Reconcile every bank, card and loan account from that point, month by month
- Clear Undeposited Funds by matching received payments to the deposits that contained them
- Clean up receivables and payables, so open invoices and bills are real
- Empty the suspense accounts by recategorizing what is in them
- Agree payroll and sales tax liabilities to the returns that were filed
- Review the financial statements against the last return, and document what changed
Step three matters most. Changing entries in a year that has already been filed makes the books disagree with the return, so closed years are locked and any correction to them is made deliberately.
Repair it or start a new file
Most files are worth repairing, because the customer, vendor and invoice history has value. A new file makes sense when the old one is damaged beyond economical repair, was kept on the wrong accounting basis from the start, or mixes more than one business. Fix the file or start over sets out how we decide.
We also work in Xero, and the same sequence applies. If you are choosing between them, see QuickBooks vs Xero.
After the cleanup
We set bank rules that match how your business actually spends, close each period once it is reconciled, and either keep the file monthly or hand it back with written notes on how to keep it clean. Staying caught up covers the routine.
Frequently asked questions
Can you fix my existing QuickBooks file, or do I have to start over?
Most files can be repaired, and that is usually the better route because it keeps your customer and vendor history. Starting a new file is recommended only when repair would cost more than rebuilding. See fix the file or start over.
What is Undeposited Funds and why is mine so large?
It is a holding account for payments received but not yet deposited. It grows when a payment is recorded against an invoice and the bank deposit is then entered separately as new income, instead of being matched to that payment. The result is income counted twice and a holding balance that never clears.
Do you need access to my QuickBooks file?
Yes. For QuickBooks Online you invite us as an accountant user, which does not use up one of your own user seats. For a desktop file, we will tell you the simplest way to share a copy.
Will a cleanup change tax returns I already filed?
Not on its own. Years that have been filed are locked. If the cleanup shows that a filed year was materially wrong, we tell you the size of it and whether an amended return is worth filing.
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
Fix the file or start over
When a file is worth repairing, when a clean one is better, and what carries over.
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 moreThe bookkeeper left
They quit, were let go or stopped answering. Securing access and finding out what was really done.
Learn moreHow a cleanup works, step by step
The seven stages from first call to current books, and what each needs from you.
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.