I have worked at a few CPA firms and we often receive all sorts of paperwork from clients. We receive bank statements, receipts, unopened mail, excel spreadsheets, etc. I came to realize that accountants’ minds work differently from nonaccountants. What may seem like straightforward record-keeping to some is not clear to others.
“Hey, I submitted my paperwork in January, why are you filing an extension?”
Well, what we do not tell clients is “other clients submitted their information in a clear and precise manner that was easy to understand so I prepared their return before your return because I did not have to organize the information first.”
The comingling of personal and business income and expenses; colored highlights on an excel spreadsheet; no totals; leaving it up to your accountant to “figure it out” are all reasons that cause delays in preparing bookkeeping, financial statements, and tax returns.
With automation, accountants can upload documents or excel spreadsheets and import the information directly into accounting and tax software, and QuickBooks eliminating manual entry.
The picture above shows documents received from two separate clients. I was new to the firm (Death Nut Challenge), so the other accountants were aware of the unorganized mess that awaited whatever poor, ignorant soul stumbled across this heap of documents. I was that soul.
The bag full of documents sat for two months before I decided to venture in. All other returns were prepared or waiting on more information. The bag on the left looked daunting but was actually well organized. I was surprised that a lawyer if my memory is correct, would conduct her business in this manner.
She was puzzled why no one had contacted her for months about her tax return. “It was the presentation!” I wish I could have told her, “you dropped off your documents in a plastic bag!”
The box on the right was from a client who owned several properties and land in Mexico. The folders contained personal mail. The folders were not organized by property. The box also contained checkbooks(?) with notes scribbled on the sides. I do not know how many times I would open a folder, close a folder, open a folder, close a folder, move on to another client. The whole situation gave me anxiety. I even spoke to the client twice over the phone to try to understand what I was dealing with. My coworker stated, “yeah I dealt with both of those clients last year, I left that mess for you” with a snicker.
My advice to any client would be to organize your income documents before submitting them to your accountant. Use apps for expense tracking, no colors on your excel spreadsheet; remove all personal expenses; submit only yearly totals not monthly. Another tip, if you are a partnership do not submit separate excel spreadsheets for each partner. Keep those for personal use. Submit one spreadsheet per business. Hire a bookkeeper.
Attached are two spreadsheets I prepared as a record-keeping aid for your business. Also attached are checklists to make it easier to prepare your personal tax return.
*Note– Some CPAs are happy with an unorganized mess since they charge by the hour and can charge unorganized clients exorbitant fees.
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