Being behind on bookkeeping is common and rarely as bad as it feels. What makes it feel bad is not knowing how big the job is, which is why the first thing worth doing is scoping it rather than starting it.
The sequence
- Establish an opening position, the last point at which the books were reliable, or the beginning if there is not one
- Import and categorise every bank and credit card transaction for the period
- Reconcile each account month by month, so an error is found in the month it happened
- Match receipts and invoices to the transactions that need support, particularly anything a reviewer would question
- Resolve the shareholder loan account, which is nearly always where the unexplained items have collected
- Produce corrected financial statements for each period, and identify any filings that need amending
What actually drives the cost
Not the number of years. Transaction volume and how much documentation survives. Two years of a business running four hundred transactions a month with clean bank feeds is a shorter job than eight months of a business paying cash for everything with no receipts.
- Transaction count across the period, the single biggest factor
- Whether bank feeds can reach back far enough, or statements must be entered by hand
- How many accounts and entities are involved
- Whether prior filings were made on numbers that will now change
The part worth doing regardless
Whatever the state of the history, get the current month right first. A business that is behind and falling further behind has two problems; a business that is behind but current from today has one, and it is a finite one.