As a small business owner, if you’ve fallen behind on your bookkeeping or tax filings, you can get into a bit of trouble. However, falling behind is relatively common. Lots of work goes into running a business, and sometimes you and your accountant just aren’t on the same page.
What do you do to get yourself back on track? Find a reliable accountant to do your back work.
Accounting back work - often referred to as back taxes - is when a professional either catches you up on bookkeeping and tax filings, or they go back and correct prior work that was done wrong.
At CSI Accounting & Payroll, we’ve met with countless small business owners who have fallen behind on their books over the past 50+ years. We know exactly what questions they want to have addressed in their first meetings with us - and here they are:
A more accurate description of this would be back work though - because an accountant is doing much more than just your taxes. Accounting numbers can’t be estimated; they build off of each other month over month. When is the last time that a professional outside of your company touched your books?
If you haven’t accurately completed every month of your bookkeeping and taxes, you need to do back work. Each month of records that you’re not confident in needs to be finalized chronologically before you can move forward.
If you need your back work done, don’t try to find an accountant who will skip it! Let’s explore the three main benefits of getting your back work done by a professional.
1. Year-Over-Year Comparisons
When you don’t have back work in place, you’re missing gaps in your records. When you have gaps, you’re not able to accurately compare your performance year over year - but you can if you get your back work done!
Are you doing better or worse? Where are we seeing higher costs or a lower margin so we can help you correct them? If we don't do that back work, we don't have any historical data to provide that guidance.
Don’t assume that your business is growing and becoming more profitable if you don’t have the records to show it. Do your due diligence as the owner of your business and have the evidence to back up your decisions.
2. Ensured Tax Liability
When your back work is done, your accountant can give you a more confident estimate of your tax liability (also called a tax projection). A tax projection can take a set of assumptions to help you reduce your tax liability, eliminate tax season surprises, and guide your business decision-making.
An extra bonus here would be if your accountant discovers more deductions for you to take as they go through your records. You may even find your taxes minimized!
3. Audit-Proofed Books
Not many accountants will do this, but some will - including CSI Accounting & Payroll! We “audit-proof” your books in the process of doing your back work. We also pay any interest or penalties for errors that were done by our company.
In order to guarantee free audit representation for our accounting clients, we need to ensure the data is correct. We can’t represent data that is incomplete or that was done by someone outside of our organization.
Speaking of which, we also cannot do a prior-year tax return without doing the books for it. If another accountant did your bookkeeping for that year but did not do the taxes, we need to check their work to guarantee the accounting data for the tax forms is correct.
How CSI Prices Back Work
The basic formula to determine the price of your back work is:
Back Work Price = Number of Prior Months to Work On * Monthly Fee
How do we determine when your books stopped being accurate or completed? We find the last verifiable tax return or financial statement that was prepared by a party outside of your company. If the last completed item was a tax return for a certain year, then your books are likely accurate through the end of December for that filed year.
Once your monthly accounting fee is determined, it applies to both future months and prior months that need back work done.
Some prospective clients ask, “Why would my back work fee be the same as your monthly accounting service moving forward? I’m not getting the monthly financial statements or meetings for these prior months.”
While this is true, they aren’t considering the amount of work that goes into putting together prior records. For example, accountants gain efficiency with your account over time by understanding your business more and how it compares to your industry. It can be slow-moving at first.
They also can usually only freely download up to three months’ worth of bank statements, and some banks don’t have electronic statements or downloading capabilities, leaving your accountant manually entering every transaction into their system.
With back work, we are doing what we can to get your information into our system. Speed is important - but without accuracy, what’s the point?
How CSI Bills for Back Work
If you have a lot of back work that needs to get done, you know that your back work fee is probably going to be high. How would you be billed? We bill for all back work upfront - otherwise, a payment plan for up to twelve weeks may be an option.
Why do we bill regular work moving forward each month, but we need to collect the back work fee in a shorter time frame? There are a couple of reasons for this:
It’s pre-payment for the work we are going to be doing. As we mentioned, back work can be a lot of heavy lifting.
Not only that, but we are simultaneously doing back work and as much current work as we can.
While we can give an estimated timeline of 90 days for back work, there are outside factors. We don’t truly know how long it will take if we’re waiting for a client to give us the information we need. The upfront fee persuades clients to prioritize helping us in this way.
Work With CSI Accounting & Payroll to Get Your Business Back on Track
Falling behind on bookkeeping or tax filings is common for small business owners, but it can create a lot of trouble. To get back on track, a reliable accountant can help with back work.
Now that you know about back work benefits, fee determination, and billing, you may want to take the next step in getting your books right.
To see if CSI Accounting & Payroll can be a good fit for your business, click the button below to schedule a free consultation:
Not ready to talk yet? That’s okay! In the meantime, learn more about the different types of advice a monthly accountant can provide:
Brian began working at CSI in 1996, and he purchased the business in 2002. As Owner, his primary role is in the management and growth of the firm. Since 2002, the firm has more than quadrupled in size. In 2009, Brian started CSI’s payroll service to complement CSI’s accounting and tax services. Brian received his Bachelor’s degree from the University of North Dakota, with a double major in Accounting and Financial Management. He’s a member of both the National Society for Tax Professionals and the National Society for Accountants, and he serves on the board of directors for the Professional Association of Small Business Accountants, where he was once president. Brian also serves on the business advisory council for Opportunity Partners, an organization that helps people with disabilities find employment. He’s also contributed to several business books, including Six Steps to Small Business Success and The Lean Mean Business Machine. Fun Fact: To help put himself through college, he used student loans, delivered pizzas, and worked summers in a salmon processing plant in Alaska.