How do I prepare my books before handing them to an accountant?

Why “preparing your books” matters before your accountant gets them

Handing a shoebox of receipts to an accountant is a classic image, but it’s rarely the cheapest or least stressful way to get your accounts done. Preparing your books before you pass them over is about making sure your financial records are accurate, complete, and easy to understand. The cleaner your books are, the less time your accountant spends untangling transactions, and the more time they can spend on higher-value work like tax planning, identifying savings, spotting trends, and advising you on cash flow.

Preparation also protects you. Good bookkeeping reduces the risk of filing errors, missed deductions, misclassified expenses, and compliance problems. If you ever face questions from a tax authority, well-organised books make it far easier to explain what happened and provide backup evidence. Think of it as creating a clear story of your business year: what you earned, what you spent, what you own, what you owe, and why.

This guide walks through a practical, accountant-friendly way to prepare your books. You don’t need to be a finance expert. You just need a consistent method, a bit of discipline, and a willingness to resolve uncertainties before they land on someone else’s desk.

Step 1: Get clear on what your accountant needs (and what you’re delivering)

Before you start tidying anything, define the scope. “My books” can mean different things depending on your business type, your accounting basis, and your goals. Some accountants will take raw bank statements and do everything from scratch; others expect you to deliver reconciled bookkeeping files and only handle year-end accounts and tax submissions.

At minimum, aim to provide a complete set of records for the period your accountant is working on (typically your financial year or tax year). Ideally, you’ll deliver a neat package that includes:

1) Your bookkeeping ledger (from software or spreadsheets) for the period.

2) Bank and credit card statements for all business accounts covering the period.

3) Evidence for income and expenses (invoices issued, bills received, receipts, mileage logs, and any relevant contracts).

4) Payroll and pension records if you have employees.

5) Loan statements, finance agreements, and interest summaries.

6) Details of major assets purchased or sold (equipment, vehicles, computers, property improvements).

7) VAT or sales tax returns and supporting reports, if applicable.

8) Notes about anything unusual (one-off transactions, disputes, insurance claims, large refunds).

If your accountant has a checklist, use it. If not, create your own as you go. The goal is simple: deliver a complete picture with minimal missing pieces and minimal mystery.

Step 2: Separate business and personal transactions (and fix mixing if it happened)

One of the biggest time-wasters is mixed transactions—personal spending from a business account or business spending from a personal account. It happens, especially in early stages, but the clean-up can be painful if it’s not handled promptly.

If you have mixed transactions, handle them deliberately:

- Identify personal transactions in business accounts and mark them as owner drawings, director’s loan movements, or another appropriate category based on your structure.

- Identify business transactions paid personally and record them as owner contributions, expense reimbursements, or similar entries so the business accounts reflect the real cost of running the business.

- Avoid guessing. If you can’t identify a transaction, investigate it now while it’s still recent enough to remember.

Going forward, consider setting clear boundaries: separate bank accounts, separate cards, and a consistent process for reimbursing expenses. Even if you’re a sole trader, separation makes reporting easier and reduces the risk of missing legitimate deductions.

Step 3: Make sure every business account is included

Before you reconcile anything, list every account that touches your business finances. Missing an account can produce underreported income, duplicated expenses, or incomplete liabilities. Your list might include:

- Business current account(s)

- Savings or deposit account(s) used for tax reserves

- Business credit cards

- Payment processors (Stripe, PayPal, Square, Shopify Payments, Amazon payouts, etc.)

- Loan accounts and finance agreements

- Any foreign currency accounts if you trade internationally

Pull statements for each account for the full period. If your bookkeeping software connects to the bank feed, still download PDF statements as a backup. Bank feeds are helpful, but statements are authoritative for reconciliation and audit trails.

Step 4: Reconcile bank accounts and credit cards (this is the backbone)

Reconciliation is the process of matching your ledger to your bank and card statements. This is one of the most valuable preparatory steps you can do because it verifies completeness and accuracy. If you skip reconciliation, your books may look fine at first glance but still be missing transactions or contain duplicates.

How to reconcile in practice:

- Start with the opening balance. Ensure your ledger’s starting balance matches the statement balance at the beginning of the period (or the ending balance of the prior period).

- Match each statement line to an entry in your books. Every deposit, payment, fee, and refund should appear once, in the correct amount, on the correct date (or at least in the correct period).

- Investigate differences. Common culprits include bank charges not recorded, card payments recorded gross instead of net, duplicate imports, pending transactions, and transfers recorded only on one side.

- Mark reconciled items clearly (most software does this automatically).

Be extra careful with:

- Transfers between accounts (they should not inflate income or expenses)

- Card repayments (the repayment itself is not an expense; the expense is at the purchase line level)

- Merchant fees (processors often deduct fees before you receive payouts)

- Cash withdrawals and cash expenses (these need documentation and categorisation)

A fully reconciled set of accounts is the single most accountant-friendly thing you can deliver.

Step 5: Clean up your income records so they tie to reality

Your accountant will want confidence that your reported income is complete and properly classified. The best approach depends on how you get paid.

Income from invoices (service businesses, B2B work)

If you issue invoices, confirm that:

- All invoices for the period are recorded and numbered consistently.

- Your invoice dates and amounts match your invoice copies.

- Payments received match invoices, including part-payments.

- Any unpaid invoices at year-end are flagged (important for accrual accounting and for chasing debt).

- Credit notes, discounts, and write-offs are recorded properly.

If you’re using accounting software, run an Aged Receivables report and sanity-check it. Any ancient outstanding invoice could be a missing payment, a duplicate invoice, or a debt that should be written off.

Income from ecommerce or platforms

For ecommerce and marketplaces, gross sales rarely equal cash received due to fees, refunds, chargebacks, shipping charges, and taxes. To prepare your books:

- Download sales reports from your platform for the period.

- Record income in a way that distinguishes gross sales, fees, refunds, and taxes where applicable.

- Ensure payouts match the bank deposits (net of fees and adjustments).

- Capture refunds and chargebacks with clear references to the original sales.

This is a common area where books drift from reality, so even a basic reconciliation between platform reports and bank deposits can save hours later.

Income classification

Review how you categorised income. If you have multiple revenue streams—consulting, training, products, subscriptions—separate them. This helps your accountant and it helps you. It makes profitability clearer and can affect how taxes apply in some cases.

Step 6: Tidy expenses: categorise correctly and remove duplicates

Expense classification affects both tax and financial insights. Misclassified expenses can inflate profits (missing deductions) or create compliance risk (claiming non-allowable costs). Your goal isn’t perfection down to the penny; it’s accurate, consistent categorisation and clear support.

Start with a review of high-volume categories:

- Office supplies and equipment

- Software subscriptions

- Advertising and marketing

- Travel and subsistence

- Professional fees

- Rent and utilities (if applicable)

- Repairs and maintenance (if applicable)

Look for patterns like:

- Duplicates caused by importing transactions multiple times

- Transactions stuck in “Uncategorised” or “Ask My Accountant” buckets

- Personal purchases incorrectly coded as business expenses

- Big purchases coded as day-to-day expenses when they may be capital assets

If you use bookkeeping software, set bank rules carefully but cautiously. Rules are great for recurring transactions, but they can also auto-code things incorrectly if they’re too broad.

Step 7: Attach receipts and create a simple evidence system

Your accountant doesn’t necessarily need to see every receipt for every small purchase, but you should have evidence available—especially for larger expenses, travel, meals, and anything that could be questioned. A well-organised evidence system also helps if you’re ever asked to justify claims.

Practical ways to organise evidence:

- Use a receipt capture app or your accounting software’s receipt feature.

- For each transaction, attach a photo/PDF of the receipt or invoice where possible.

- If you’re working from a folder structure, keep it consistent: Year > Month > Supplier or Category.

- Use meaningful filenames: YYYY-MM-DD Supplier Amount Description.pdf.

If attaching everything feels overwhelming, prioritise:

- Large purchases

- Travel and accommodation

- Meals and entertainment (where rules can be strict)

- Contractor invoices and professional services

- Anything unusual or one-off

Step 8: Deal with cash, petty cash, and reimbursements properly

Cash spending can be legitimate, but it tends to create gaps because it’s easier to lose track of. If you handle cash:

- Maintain a petty cash log: date, purpose, amount, and receipt reference.

- Record cash withdrawals from the bank as transfers into petty cash, not as an expense themselves.

- Record each petty cash purchase as the expense entry with a receipt.

For reimbursements (you paid personally and the business repaid you):

- Match the reimbursement payment to the underlying expense records.

- Make sure you’re not double-counting by recording both the original card purchase and the reimbursement as expenses.

For staff reimbursements, keep submitted expense claims and approvals together, and ensure the business purpose is clear.

Step 9: Review payroll, contractors, and other people costs

If you run payroll, payroll reporting can be complex, and it’s worth making sure it’s tidy before your accountant starts year-end work. Provide:

- Payroll summaries for the period (gross pay, tax withheld, employer costs).

- Evidence of payroll payments leaving the bank.

- Employer pension contributions and confirmations (if applicable).

- Any benefits, bonuses, or termination payments with clear notes.

For contractors and freelancers:

- Make sure you have invoices or agreements.

- Ensure payments in the bank tie to specific invoices.

- Confirm correct categorisation (contractor costs vs wages).

People costs often have special rules and reporting requirements, so clear documentation here pays off quickly.

Step 10: Track assets, capital purchases, and depreciation clues

Not every business purchase is treated the same way in accounts. A large item that will benefit the business for multiple years—like a laptop, camera equipment, machinery, or office furniture—may need to be treated as a capital asset rather than a day-to-day expense. Your accountant will ultimately decide the correct treatment, but you can make their job easier by flagging likely assets.

Create a simple list of major purchases and sales during the period:

- Item description (e.g., “MacBook Pro 14-inch”)

- Purchase date

- Supplier

- Cost

- Business use percentage if mixed-use is relevant

- Whether it replaced something old (and if the old item was sold or scrapped)

Also note any asset disposals—selling a vehicle or equipment can have tax implications. If you’ve made improvements to property you rent or own, separate those out as well because the accounting treatment can differ from routine repairs.

Step 11: Handle loans, interest, and financing consistently

Loans and financing often look confusing in raw transactions because the bank shows a single payment, but that payment may include both principal repayment and interest. The principal portion reduces a liability; the interest is typically an expense. If everything is recorded as “loan expense,” your profit will be wrong and your balance sheet may not reflect what you still owe.

To prepare this area:

- Collect loan statements showing opening balance, payments, interest, and closing balance for the period.

- Identify any arrangement fees or one-off charges.

- For finance agreements (vehicles, equipment), keep the contract and payment schedule.

- If you have credit facilities or overdrafts, provide statements and clarify how they’re used.

If you can’t split principal and interest in your bookkeeping, at least provide the statements so your accountant can do it efficiently.

Step 12: Confirm taxes collected and paid (VAT/sales tax, PAYE, corporation tax, etc.)

If you are registered for VAT or sales tax, your accountant will want your VAT returns and the underlying reports that support them. Before handing over:

- Ensure your VAT returns are saved and clearly labelled by period.

- Ensure payments or refunds in the bank match the VAT returns.

- Check that VAT treatment is consistent on income and expenses (especially for mixed-rate items, imports, or reverse-charge scenarios if relevant).

- Identify any unusual VAT adjustments you made and explain why.

Also gather evidence of other taxes paid during the year, such as payroll taxes, corporate tax instalments, or any industry-specific levies. Clear tax records reduce end-of-year surprises.

Step 13: Prepare a “year-end notes” document for anything unusual

Your accountant doesn’t live inside your business the way you do, so context matters. A short notes document can prevent misunderstandings and back-and-forth emails. This doesn’t need to be long—often one to two pages is plenty.

Include items like:

- New business activities or revenue streams you started this year

- Any grants, subsidies, or insurance payouts received

- Major one-off purchases or projects

- Disputes, chargebacks, or legal costs

- Any periods of closure or unusual trading conditions

- Changes to how you get paid (new payment processors, new bank accounts)

- Any transactions you’re unsure how to categorise

This document is also a good place to list questions you want answered: “Can I claim this as an expense?”, “Should I register for VAT?”, “What profit can I safely take out?” Treat your accountant like a partner, not just a form-filler.

Step 14: Run basic reports and do a reasonableness check

Even if you’re not an accountant, you can still do a sensible “does this look right?” review. Run a Profit & Loss (income statement) for the year and ask:

- Does the total income feel plausible given your activity?

- Are any expense categories unusually high or low?

- Are there large “uncategorised” amounts?

- Do you see negative expense balances (which can indicate mis-posted refunds)?

- Do any categories include clearly personal items?

Then check your Balance Sheet (if you have one) at the end of the period:

- Does cash match your bank statements?

- Do you have “mystery” balances in suspense or clearing accounts?

- Do loans roughly match what statements show you owe?

- Are receivables and payables sensible?

You’re not trying to find every technical accounting adjustment. You’re trying to catch obvious mistakes and missing data before professional work begins.

Step 15: Ensure your books are “closed” for the period

Accountants struggle when clients keep changing the past. Once you hand over a set of books for a financial year, try to freeze that period. If you discover something later, that’s okay, but communicate it clearly as an adjustment rather than quietly changing entries behind the scenes.

Ways to lock things down:

- Export a backup copy of your ledger as of the handover date.

- Download and save all statements and key reports in a “Year-End Pack” folder.

- Stop posting transactions into the closed period unless you’re deliberately correcting something.

If your software supports closing dates, use them. It’s far easier to manage adjustments with clear visibility than to reconcile a moving target.

Step 16: Export and package everything neatly

Presentation matters. Your accountant will work faster if your records are easy to navigate. Create a structured folder (digital is fine) and label it clearly. A simple structure could look like:

- 01_Bank_Statements

- 02_Credit_Cards

- 03_Sales_Invoices

- 04_Purchase_Receipts

- 05_Payroll

- 06_Tax_Returns

- 07_Loans_and_Finance

- 08_Assets

- 09_Year_End_Notes

Within each folder, name files consistently and keep them chronological. If you’re providing access to accounting software instead of files, still consider exporting key reports and statements, because it creates a snapshot and a shared reference point.

Common trouble spots to fix before handover

Some issues come up so often that it’s worth checking them specifically:

1) Payment processor payouts recorded as income

If you record only the net payout as sales, you might understate revenue and hide fees. Ideally record gross sales, then fees separately.

2) Owner payments mislabelled as expenses

Transfers to yourself, personal purchases, or tax set-asides are not business expenses. They belong in drawings, dividends, salary, or loan accounts depending on your structure.

3) VAT/sales tax treated inconsistently

Sometimes amounts are entered gross (including VAT) and other times net. Decide on a consistent approach and stick to it.

4) Missing bills or supplier invoices

Especially where you have payables at year-end, missing bills can overstate profits.

5) Fuel, mileage, and vehicle use not documented

If you claim mileage, keep logs. If you claim actual vehicle costs, keep records and note business-use proportions.

6) Subscriptions and annual payments

Annual insurance, licences, and software often span periods. Your accountant may adjust these, but you can help by flagging large prepaid items.

A simple checklist you can follow every time

Use this as a repeatable end-of-period routine:

1) Gather statements for every business bank, card, and payment platform account.

2) Reconcile each account fully to statement end dates.

3) Categorise all transactions; clear uncategorised and review rule-based coding.

4) Ensure income ties to invoices or platform reports; check refunds and chargebacks.

5) Attach or organise receipts and invoices, prioritising larger and higher-risk categories.

6) Prepare payroll summaries and contractor invoice lists if relevant.

7) List major assets purchased or sold and keep documentation.

8) Gather loan and finance statements; identify interest and fees.

9) Compile VAT/sales tax returns and proof of payment/refund.

10) Write year-end notes explaining unusual items and open questions.

11) Export key reports and back up your books as a snapshot.

12) Package everything in a clearly labelled folder and hand over.

How this saves money and improves your accountant’s work

Accountants often charge based on time, complexity, and risk. When your books are incomplete, they have to do detective work: identifying unknown transactions, chasing missing statements, correcting mis-postings, and repeatedly asking you for context. That time costs money and can also delay deadlines.

When your books are prepared, your accountant can move faster and with more confidence. They can spend effort on things that benefit you directly: ensuring you claim allowable expenses, deciding the best way to handle assets, reviewing profitability, advising on tax-efficient extraction, and helping you plan for the next year.

It also improves the relationship. Instead of an annual scramble, you create a smoother process where questions are answered quickly because you have the paperwork and the logic behind each entry.

If you’re behind: a realistic way to catch up without chaos

If your bookkeeping is months behind, don’t try to fix everything in one perfect sweep. Use a staged approach:

- Start with bank and card statements and make sure every transaction exists in your books.

- Categorise the easy, recurring items first (rent, subscriptions, known suppliers).

- Then tackle income and match payouts to reports.

- Finally, resolve the messy edge cases: cash, mixed transactions, unclear payments, and missing receipts.

If you truly can’t identify a transaction, park it in a clear “to review” category with a note. The worst thing you can do is guess silently and hope it doesn’t matter. Uncertainty is fine if it’s visible and flagged.

Final thoughts: aim for clarity, completeness, and consistency

Preparing your books before handing them to an accountant is less about “doing their job” and more about presenting a clean, trustworthy set of records. Reconcile your accounts, ensure income and expenses reflect reality, organise evidence, flag unusual items, and package everything neatly. Those steps reduce stress, cut costs, and lead to better advice and better outcomes.

Once you’ve done this a couple of times, it becomes routine. And the routine is what makes your business finances feel manageable: you always know where you stand, you can answer questions quickly, and you walk into tax season with far less dread.