First, the thing nobody tells you.
Being a year or two behind on the books is the normal state of a small business, not a failure. The bank has every transaction. The card company has every transaction. Nothing is lost; it just has not been written up yet. The return is late, or about to be, and that is fixable in a way that "the records are gone" is not.
What "behind" costs if you leave it
- Penalties and interest on a late return grow by the month, and an extension only moves the filing date, not the payment date.
- Deductions you cannot prove. Without books, a preparer works from what you remember, and nobody remembers the equipment purchase in April two years ago.
- A loan or a sale that stalls. A lender or a buyer asks for a profit and loss; "we are catching up" ends the conversation.
- A CPA who says no. In February a firm that would gladly do your return cannot also type two years of statements, so you get turned away or quoted for the typing.
What you actually need to do
- Download the statements. Every bank and card account the business used, for every month of the years that are behind. OFX or QFX if the bank offers them, otherwise PDF or CSV. This is the only hard part and it takes an evening.
- Get them turned into books. A ledger, a profit and loss, a balance sheet; not a spreadsheet of categorised lines. A return is prepared from books.
- Answer the questions only you can answer. Who the $4,000 went to and why; whether a deposit was a sale or a loan from you. They are multiple choice and take seconds each; how many there are depends on how tidy the year was.
- Hand the books to whoever files. Your CPA, or a new one; they need a trial balance and a general ledger, and they are much happier to take you on when those exist.
Where Return Ready fits
Steps two through four are what it does. You upload the statements; the books are built and posted to a double-entry ledger; the questions come to you in plain words, on your phone if that is where you are; and your accountant gets a trial balance, a general ledger, a QuickBooks file and an Excel workbook that tie. A year of books is a matter of hours once the statements are in, not weeks. Accountants review the work before it goes out, because a bookkeeping AI can be wrong and a tax return is not the place to find out.
It costs $699 per business per year of books, and nothing until you decide to go ahead. Read how it works, or skip to getting started.
Questions people ask
- I'm three years behind. Is that too far?
- No. Each year is its own set of books and its own return; three years is three uploads. Banks usually keep statements online for seven years, and will send older ones on request.
- Some statements are missing. What then?
- Ask the bank; a closed account's statements can still be requested. A month with no statement shows as a gap on the books rather than being guessed, and your accountant decides how to treat it.
- I mixed personal and business spending on one card.
- Common. Personal lines are posted to owner draws, not expenses, and the ones that could go either way are asked about rather than assumed.
- Should I file an extension first?
- That is a question for your preparer, and the answer is usually yes if the deadline is close. An extension buys time to file, not time to pay, so a reasonable estimate of the tax still has to go in with it.
- Do I need QuickBooks?
- No. The books are built here. If your accountant wants them in QuickBooks, the import file is one click.