The halfway point of the year is the perfect time for a financial check-in, and one of the best ways to get ahead is by conducting a mid-year bookkeeping cleanup. This month is an excellent opportunity to tidy up your bookkeeping, which can save your bookkeeper from major headaches come tax season and might even lead to some unexpected savings.
At Cultivate Consulting, we frequently hear from clients wanting to get a head start on tax planning during the summer or early fall. However, many people don’t realize that if your books aren’t clean and up to date, your tax projections could be incredibly inaccurate. That’s why comprehensive mid-year bookkeeping is more than just a “nice to have”—it’s a necessity.
Many business owners handle the basics of bookkeeping by recording income and expenses, and occasionally reconciling the main bank account, but often, that’s where it stops. Unfortunately, that’s not enough if you want to maintain a real grasp on your numbers.
At mid-year, reviewing and cleaning up your financial records provides a much more accurate picture of your current financial health. It also ensures your tax projections are built on solid ground. If your books contain errors or are missing key data, your estimated tax payments might be too low, leading to surprise tax bills, or too high, which means you’re overpaying and tying up cash unnecessarily.
Here are the seven areas we recommend reviewing during your mid-year bookkeeping check-in:
Many business owners are familiar with reconciling their primary business checking account, but it’s crucial to take an extra step. Ensure all your accounts — including savings and merchant accounts — are reconciled correctly through the end of the most recent month.
Just like your bank accounts, your credit cards should be reconciled on a consistent basis. Skipping this step can result in missed transactions, duplicate entries, or uncategorized expenses that can disrupt your profit and loss reports.
Your books should reflect not only the payments you’ve made on loans but also the current balance. Incorrect loan balances can misrepresent your balance sheet and distort your financial snapshot.
Ensure that your reported sales match your invoicing system or point-of-sale data, and confirm that your income is accurately captured and categorized.
If you manage physical products, your inventory should be up-to-date and accurately reflect your records. Discrepancies in inventory can impact both your cost of goods sold (COGS) and your net income, which are two critical figures for tax planning.
Payroll is often one of the most significant expenses for a business. It’s essential to ensure your payroll records match what’s been reported to tax agencies and that any payroll liabilities are accurately reflected on your balance sheet.
In general, don’t overlook your balance sheet! Many business owners focus solely on their profit and loss statement, but your balance sheet provides the other half of the story. Ensuring your assets and liabilities are accurate now can prevent significant cleanup later.
The mid-year point presents an excellent opportunity to strategize for a strong finish to the year. The sooner you address any bookkeeping gaps you uncover, the stronger your numbers will be for the second half of the year. Whether you’re aiming to minimize your tax liability, boost profitability, or simply avoid the year-end scramble, completing a mid-year cleanup lays the groundwork for success.
At Cultivate Consulting, we help our clients effectively plan ahead with our full-service bookkeeping and tax planning services. Our goal is to empower you to make informed financial decisions with accurate information, not to drown you in accounting jargon or leave you to figure it out on your own.
If you’re uncertain where to begin or want a second set of eyes on your books, we’re here to help. Contact us at grow@cultivateconsulting.co to ensure your numbers are working for you, not against you.
Christine Gervais
Christine Gervais is a licensed CPA, using her skills to help businesses grow and achieve their fullest potential. Christine has a Master’s degree in accounting from Southern New Hampshire University in addition to holding her CPA license for over a decade. Notably, Christine is a nationally recognized speaker providing education to other CPAs on how to best serve clients as well as instruction on a wide variety of topics for business owners on how to maximize success. Christine prides herself on the value she can bring to clients with her extensive tax knowledge and provides strategic, forward-thinking financial strategies to help clients grow. When not behind her desk, you can find Christine spending quality time with her daughter and stepson or tending to the family’s excessively loved farm animals.
