Cleaning up a Quickbooks mess isn’t really any different than cleaning up any other kind of mess. You start by creating a very specific plan and then work the tasks one by one. However, order really does matter when starting out. Sometimes you can’t reconcile one account until another is done. The very first step is to make make a back up and label it “before clean up”. That way if you make a bigger mess, you can start over! The second step is to make sure your chart of accounts is set up correctly. This will help you categorize transactions appropriately.
The third step when I am cleaning up a mess is to try and find the right starting point! Generally, I try to start at the point of the last tax return filing. For example: If your taxes are done for 2010 and you have good beginning balances for banking, then I’d start with Jan 1 2011. However, every mess is unique. Some messes are so big you may have to go back into prior years. After you know where to start, then it’s time to gather all the paperwork.
You’ll need the following (at a minimum):
Bank statements ( for every account, every month), credit card statements (for every account, every month); payroll reports and returns; last tax return; any accountant prepared financial statements; receipts for expenses paid with cash; cancelled checks (unless you have a record of what checks were made out for); deposit records; loan documents; amortization schedules.
Generally, I would recommend at this point to start posting the bank account transactions and reconcile the bank accounts. However, there may be missing invoices, checks already posted or bills that should be paid versus just writing a check. These are all things a seasoned professional can help you sort out. I’ve coached many Quickbooks users on how to clean up their messes (and keep it from happening again). I wouldn’t recommend doing this without any support but you may be able do a lot of the legwork on your own with someone to check your work.