How do I prepare my accounts if I’m behind by several months?

How do I prepare my accounts if I’m behind by several months?

Falling behind on your accounts can feel like trying to catch a runaway train. Invoices pile up, bank transactions blur together, and every time you think about “doing the books,” your brain decides it would rather reorganize the spice rack. The good news is that being months behind is common, fixable, and usually far less catastrophic than it feels. The key is to stop treating it as one giant task and instead work through a calm, repeatable process that gets you from “messy and uncertain” to “up to date and confident.”

This article walks you through a practical method to prepare your accounts when you’re behind by several months. It’s designed for small businesses, freelancers, contractors, and anyone who needs their financial records to be accurate for decision-making, tax filings, or compliance. You’ll learn how to get organized, what to prioritize, how to rebuild missing information, and how to set yourself up so you don’t fall behind again.

Step 1: Reset your mindset and define the goal

When you’re behind, it’s easy to start with the wrong goal—like “fix everything perfectly.” That leads to overwhelm and procrastination. A better goal is: get your records accurate enough to be relied upon. Perfection can come later. Your first objective is to establish a clean, supported set of numbers: income, expenses, bank balances, customer invoices, supplier bills, taxes, and payroll (if applicable).

Before you touch any spreadsheets or software, decide what “caught up” means for you. For most people, it means:

1) All bank and credit card transactions are entered and categorized for the missing months.
2) All sales and invoices are recorded and matched to payments.
3) All bills and expenses are recorded and matched to payments.
4) You can reconcile (or at least tie out) balances to bank statements.
5) You can produce reliable reports for the period (profit and loss, balance sheet) and prepare for tax obligations.

Write down the months you’re behind, and set a realistic timeline. If you are behind six months, aim to handle it in chunks—one month at a time—rather than trying to “fix six months” in one sitting.

Step 2: Gather everything first (and stop the bleeding)

Trying to catch up while new transactions keep coming in can feel impossible. Your first move is to gather documents and put a simple system in place so new items don’t keep getting lost.

What to gather

Make a “catch-up folder” (digital or physical) and collect:

Bank statements for each bank account covering the missing months.
Credit card statements for each card used for business purchases.
Sales records (invoices issued, receipts, payment processor reports).
Expense records (supplier invoices, receipts, bills, subscription notices).
Payroll records if you have employees (pay slips, filings, pension contributions).
Tax records relevant to your country (VAT/GST returns, sales tax filings, payroll taxes, self-assessment estimates).
Loan statements (interest, payments, balances).
Merchant and platform reports (PayPal, Stripe, Square, Shopify, Etsy, Amazon, Upwork, etc.).
Petty cash notes if you use cash for small purchases.
Previous period closing balances (last reconciled bank balance, last filed tax return figures, prior year accounts).

Stop the bleeding

While you’re catching up, put a “minimum viable bookkeeping” process in place immediately:

Daily or weekly capture: Put every receipt in one place. Email receipts to a dedicated address or use a scanning app and one folder.
Turn on bank feeds (if available): Automatic importing reduces future backlog.
Record invoices as you send them: Don’t rely on memory later.
Schedule a weekly 30-minute finance admin slot: Protect it like a client meeting.

This doesn’t solve the backlog by itself, but it prevents the backlog from getting worse.

Step 3: Choose your method—software, spreadsheet, or hybrid

If you already use accounting software, your best approach is usually to catch up within that system rather than building a separate spreadsheet that you later try to import. However, if your software is a mess or you’ve been using nothing at all, a temporary spreadsheet can help you clarify what happened before you commit it to formal accounts.

Here are workable approaches:

Software-first: Import transactions from bank feeds or statement uploads, then categorize and reconcile month by month.
Spreadsheet-first: Build a clean income and expense list per month, then post summaries into your accounting system or deliver to your accountant/bookkeeper.
Hybrid: Use software for bank transactions and reconciliation, and a spreadsheet to track missing invoices, payments, and “what is this transaction?” notes.

The right choice depends on how many transactions you have, how confident you are with bookkeeping, and whether you need to produce formal reports quickly.

Step 4: Establish your “starting point”

Catching up is dramatically easier if you anchor your records to a known, correct starting point. That starting point could be:

The last month you reconciled (best case).
The last filed tax return or VAT quarter where figures were checked.
Year-end accounts prepared by an accountant.
A specific bank statement date where you know the balance is correct.

If none of these exist, choose the earliest date you can reliably document, then work forward. The most important thing is that your bank and credit card balances for the start date match real statements. If they don’t, everything downstream becomes harder.

Practical tip: print or save the bank statement for that starting month and treat it as your anchor document. If you later get confused, you can always return to this baseline.

Step 5: Reconstruct the timeline month by month

When you’re behind by several months, you’ll move faster and make fewer mistakes if you work one month at a time. Think of each month as a self-contained mini-project with a start and finish line.

Recommended monthly workflow

1) Import transactions for all accounts for that month (bank and credit cards).
2) Identify transfers between your accounts (these are not income/expenses, but movements of money).
3) Categorize expenses and link them to receipts where possible.
4) Record sales (invoices, receipts, daily takings) and match to deposits.
5) Record bills and match to payments (important for accrual accounting).
6) Reconcile bank and card balances to statements.
7) Review reports and sanity-check: does the month look plausible?

This sequence matters. If you categorize without identifying transfers, you may accidentally treat moving money between accounts as revenue or expenses. If you try to reconcile before sales and bills are recorded, you’ll be chasing ghost differences.

Step 6: Handle bank and credit card transactions efficiently

Most people fall behind because transaction processing becomes a daily micro-decision: “What is this charge? Which category? Do I have the receipt?” Multiply that by hundreds of transactions, and it’s no wonder the backlog grows. The trick is to simplify decisions and batch similar items.

Use rules and batching

If you’re using software that supports rules, create rules for recurring transactions:

Subscriptions: Software, cloud services, memberships.
Utilities: Internet, phone, hosting.
Payment processors: Fees and payouts.
Fuel/transport: If you have consistent suppliers.
Rent: Workspace or home office contributions (where relevant).

Batch processing also helps. For example, categorize all the “office supplies” and “software” transactions in one pass. Then do travel. Then do meals. Your brain stays in one context, making decisions faster.

Be consistent, not perfect

If you don’t know the exact category for a transaction, don’t stall. Create a temporary category like “To Review” or “Unclear.” The priority is to get everything into the system so you can reconcile and see what’s missing. You can refine categories later once the backlog is under control.

Step 7: Rebuild missing receipts and documentation

When you’re months behind, you will almost certainly be missing some receipts. That doesn’t mean you can’t record the expense. It means you need a practical approach to documenting it appropriately.

Where to find missing receipts

Email search: Search your inbox for the merchant name, “receipt,” “invoice,” or the amount.
Vendor accounts: Log into supplier portals (Amazon Business, software dashboards, phone providers) and download invoices.
Payment processor records: PayPal/Stripe often includes merchant descriptors and can help identify purchases.
Bank statement details: Sometimes statements show a reference number you can use.
Ask the supplier: Many vendors can reissue invoices if you provide date/amount.

If you still can’t find a receipt, you can often still categorize the expense based on the bank transaction and merchant name, depending on your local tax rules. If you’re unsure, keep it in a “Missing receipt” bucket and discuss with your accountant or tax adviser.

Step 8: Get sales right—this is where errors hurt most

Expenses are important, but sales are usually the bigger risk. Understating income can create tax problems, and overstating it can lead to overpaying tax and misunderstanding your true performance. Make your sales process robust.

Common sales sources to reconcile

Invoices: If you invoice clients, ensure every invoice is recorded with date, customer, and amount.
Card payments and online checkouts: Match gross sales, fees, refunds, and net deposits.
Cash sales: Ensure daily/weekly totals are recorded and deposited amounts align.
Marketplace sales: Platforms often pay out net of fees and returns, so reports matter.

A common mistake is recording only the deposits you see in the bank. For payment processors and marketplaces, deposits are often net of fees, chargebacks, and refunds. If you only record deposits as income, you’ll understate gross sales and hide fees, which distorts margins and can complicate taxes. A better approach is to record:

Gross sales (what the customer paid).
Fees (processor or platform fees).
Refunds/chargebacks (reductions to income).
Net payout (what hits your bank).

Even if you don’t go into detailed entries for every transaction, you can use monthly summaries from the platform to record accurate totals.

Step 9: Decide on cash basis vs accrual (and be consistent)

One reason backlogged accounts become confusing is mixing methods. Under cash basis accounting, you record income when you receive payment and expenses when you pay them. Under accrual accounting, you record income when you earn it (invoice date) and expenses when you incur them (bill date), regardless of when cash moves.

For many small businesses, cash basis is simpler, but your tax rules and reporting needs determine what’s appropriate. The important part is consistency across the period you’re catching up. Switching methods midstream creates misleading comparisons and reconciliation headaches.

If you’re not sure which method applies to you, choose the approach you have used previously (if any) and stick with it for the catch-up period. You can review and adjust later with professional support if needed.

Step 10: Reconcile every account—this is your truth test

Reconciliation is where you compare your accounting records to your bank or card statements and confirm they match. If they don’t match, something is missing, duplicated, or misdated. This is the single most powerful way to validate that your catch-up work is correct.

How to reconcile effectively

Use statement dates: Reconcile to the end date shown on the statement, not an arbitrary month end if your statement cycles differ.
Check opening balances: If your opening balance is wrong, reconciliation becomes impossible until corrected.
Match every transaction: Ensure each statement line appears exactly once in your books (or is explained as a transfer).
Investigate differences systematically: Look for duplicates, missing entries, or transactions recorded in the wrong month.
Don’t force a reconciliation: Avoid “plug” entries just to make it match unless you have a documented reason.

When you reconcile each month, you reduce the chance that a mistake in March quietly contaminates April, May, and June.

Step 11: Watch out for common backlog traps

When you’re behind, there are a few recurring issues that create hours of extra work if you don’t catch them early.

Transfers misclassified as income or expenses

Moving money from your business account to a savings account is not an expense. Paying your credit card from your bank account is not an expense either—it’s paying off a liability. If transfers are misclassified, your profit can look wildly wrong.

Personal and business mixed together

If you use a personal card for business purchases (or vice versa), you need a consistent way to record it. Options include recording the business expense and posting the other side to an “owner contribution/drawings” category. Mixing without a method leads to inaccurate profit and confusion at tax time.

Duplicate transactions from imports

Sometimes transactions get imported twice, especially if you upload statements and also have bank feeds running. If your expense totals suddenly look doubled, duplicates are a top suspect.

Refunds and chargebacks ignored

If you have online sales, refunds are normal. If you don’t record them properly, your income and customer balances will be off. Make sure refunds reduce sales (or post to a refund account) and are matched to the bank movement.

Loans recorded as income

A loan deposit is not business income. It increases cash and increases a loan liability. Only interest is typically an expense (depending on your accounting method and tax rules).

Step 12: Do a “reasonableness review” before you declare victory

After you’ve caught up and reconciled, don’t immediately assume everything is perfect. Run a simple reasonableness review to catch glaring issues.

Questions to ask

Does revenue trend make sense? Compare month to month. If one month is near zero unexpectedly, sales may be missing.
Do key expense categories look plausible? If “travel” suddenly spikes, check for miscategorization.
Are gross margin and profit realistic? If you sell products, does cost of goods align with sales? If you sell services, do costs align with activity?
Do bank balances in your books match statements? This should be yes if reconciled.
Do you have unusual balances? For example, large negative liabilities or strange receivable balances can signal posting errors.

This review is not about perfection; it’s about avoiding obvious mistakes that could cause trouble later.

Step 13: Prepare for tax and compliance implications

Being behind can affect taxes in multiple ways. Depending on where you live and how your business is structured, you may need to consider income tax, VAT/GST, sales tax, payroll filings, and more. Catching up your books is often the first step before you can confidently file or correct returns.

Here are practical actions to take once your records are updated:

Confirm what has already been filed: Identify which returns (if any) were submitted during the months you were behind and what numbers they were based on.
Identify gaps: Note any returns not filed or filed with estimates.
Separate bookkeeping from tax decisions: Your records should reflect reality. Then you decide how to file, amend, or pay based on rules and deadlines.
Set aside funds if needed: If catching up reveals higher profit than expected, plan for tax payments to avoid a cash shock.

If you suspect you’ve missed deadlines or underpaid tax, it can be worth speaking to a qualified professional. The earlier you address it, the more options you usually have.

Step 14: If the backlog is huge, use triage

Sometimes you’re not behind by “a few months”—you’re behind by a year, and transaction volume is high. In that case, you may need triage: doing the most important work first to reduce risk, then refining later.

A triage approach that works

Priority 1: Bank and credit card reconciliation
Get all transactions in and reconciled. This builds the foundation.

Priority 2: Revenue completeness
Ensure all sales are captured correctly (including processor fees/refunds).

Priority 3: Large or tax-sensitive expenses
Handle payroll, rent, subcontractors, and major purchases carefully.

Priority 4: The long tail
Minor expenses and perfect receipt matching can be cleaned up later if time is tight.

Triage is not cutting corners; it’s focusing effort where mistakes are most costly.

Step 15: Consider professional support (and how to make it worth the money)

If you can afford help, a bookkeeper or accountant can dramatically speed up catch-up work. But you’ll get better value if you prepare properly before handing things over.

How to prepare for a bookkeeper/accountant

Provide access: Bank statements, credit card statements, accounting software login (if applicable), payment processor reports.
Explain your business model: How you make money, main expense categories, how you invoice, and how you get paid.
List your accounts: Every bank account, card, loan, and payment platform.
Document anything unusual: One-off grants, big equipment purchases, insurance payouts, unusual refunds, personal transactions.
Share prior year accounts or last tax return: This gives them a benchmark and helps with continuity.

Even if you do most of the work yourself, an hour of professional review at the end can be a smart way to catch problems before you file anything.

Step 16: Build a simple maintenance system so you don’t fall behind again

The best catch-up plan includes a “never again” plan. The aim is not to become a bookkeeping hero; it’s to make staying current boring and automatic.

A low-friction monthly routine

Weekly (30 minutes):
Import and categorize transactions, upload receipts, send invoices, chase overdue payments.

Monthly (60–90 minutes):
Reconcile bank and credit cards, review profit and loss, review outstanding invoices and bills, set aside tax money if applicable.

Quarterly (optional):
Review categories and rules, check pricing and margins, tidy up the chart of accounts, review tax estimates.

Put these sessions on your calendar. Treat them like client work. If you only do one thing, do reconciliation monthly—because it prevents small errors from becoming multi-month mysteries.

Step 17: A practical “catch-up checklist” you can follow

If you want a straightforward checklist, here’s one you can copy into your notes and tick off:

Preparation
- List the months you’re behind.
- Gather bank and credit card statements for the entire period.
- Gather sales records (invoices, platform reports, POS summaries).
- Gather expense records (receipts, bills, subscriptions).
- Set up a single receipt capture method going forward.

For each month
- Import all bank transactions for the month.
- Import all card transactions for the month.
- Identify and label transfers between accounts.
- Categorize expenses; flag unclear items for review.
- Record sales accurately (gross sales, fees, refunds where relevant).
- Match payments to invoices and bills.
- Reconcile each bank and card to the statement.
- Review reports and sanity-check totals.

After catch-up
- Review year-to-date performance and cash position.
- Identify any missing tax filings or corrections needed.
- Set a weekly finance admin slot and a monthly reconciliation date.

Final thoughts: progress beats panic

If you’re behind by several months, the most important thing you can do is start in a way that reduces stress rather than increases it. Don’t open everything at once and spiral. Gather your documents, set a clear starting point, and work month by month with reconciliation as your guardrail. Expect a few mysteries along the way—unknown transactions, missing receipts, confusing transfers—but treat them as solvable, not shameful.

Once you’ve caught up, your accounts become more than a compliance task. They become a tool: you can see what’s working, what’s costing more than you thought, which clients pay reliably, and how much you can safely reinvest. Getting back on track is not just cleaning up the past—it’s buying yourself clarity for the future.