No Bookkeeping for 5 Years?! Help Needed!
Hello everyone!
I’m seeking guidance on how to set up a Bookkeeping system for my parents’ small C Corporation, which has unfortunately not filed taxes or maintained proper records for the last five years since its inception. The business primarily handles online sales through eBay.
While I understand that I will ultimately need to consult a CPA, I’m eager to establish a solid record-keeping system on my own first, especially since funding for professional assistance may be limited.
I’m encountering a few hurdles and would greatly appreciate any advice you can offer! The business is definitely struggling financially, so any tips would be invaluable.
Thanks so much for your help! I have a basic understanding of Bookkeeping and Accounting principles, enough to manage a sole proprietorship, so I hope that context helps in your suggestions.
One response
It’s great that you’re taking the initiative to set up a Bookkeeping system for your parents’ C Corporation! Here are some steps and tips that could help you get started, especially given the unique challenges you’re facing:
Choose the Right Software: Consider cloud-based Accounting Software like QuickBooks Online, Xero, or Wave. These platforms are user-friendly and often have features specifically designed for small businesses, including invoicing, expense tracking, and financial reporting.
Gather Financial Documents: Start collecting any financial documents you can find from the past five years. Look for bank statements, receipts, sales records (eBay transactions), and any invoices. This will help you get a clearer picture of the business’s financial status.
Establish a Chart of Accounts: Create a chart of accounts that categorizes income, expenses, assets, liabilities, and equity. This will help you organize the financial data more effectively.
Set Up a Record-Keeping System: If the business has inventory, create a system to track it, including purchases, sales, and current inventory levels. Also, set up a method for recording expenses, like a spreadsheet or a virtual folder for receipts.
Document Everything Moving Forward: As you set up the system, ensure that all transactions moving forward are documented. Establish a routine for entering data regularly, whether weekly or monthly, to avoid falling behind again.
Consider Retail Accounting for eBay Sales: Since the business operates on eBay, familiarize yourself with how eBay handles sales tax and transaction fees in your reporting. Make sure to keep records of these transactions for accurate reporting.
Consult with a CPA: While you’re trying to handle things on your own initially, it’s crucial to still consult with a CPA as you get closer to filing taxes. They can guide you on how to correct any past errors and what steps to take for compliance going forward.
Prioritize Catching Up: If you decide to rectify five years’ worth of filings, break it down into manageable steps. Start with the most recent year and work backwards or tackle one year at a time to avoid overwhelm.
Utilize Free Resources: There are many free resources online, including tutorials and forums focused on small business Accounting. Websites like SCORE or the Small Business Administration (SBA) can also provide valuable insights.
Stay Organized: Use digital tools like cloud storage for easy access and organization of documents. Keeping a tidy, organized system will help immensely down the road.
Remember, while it’s important to save costs where you can, investing in professional help may ultimately save you and your parents a lot of stress and potential fines. Good luck, and feel free to reach out here if you have more questions!