Cleaning Up Your Books: Simple Accounting Fixes That Boost Value
- Peter Lopez
- Sep 21, 2025
- 5 min read
Updated: Jan 11
If you're thinking about selling your business someday, here’s a reality check — messy books can cost you thousands, or even tens of thousands, in lost value. Buyers translate clean financials into lower risk, which directly influences pricing.
The good news? Most accounting fixes are straightforward and don't require a CPA degree.
Clean books aren't just about looking professional. They're about building buyer confidence and demonstrating that your business runs on solid systems. When everything adds up correctly, buyers can focus on your business's strengths instead of worrying about hidden problems.
Cleaning Up Your Books - Start With the Basics: Bank Reconciliation
This is accounting 101, but you'd be surprised how many businesses skip it. Bank reconciliation means making sure your accounting software matches your actual bank statements, down to the penny.
Here's how to tackle it:
Pull your bank statements for the last 12 months and compare them line by line with your accounting records. Look for transactions that appear in one place but not the other. Common culprits include bank fees you forgot to record, deposits that cleared on different dates, or checks that never got cashed.
Don't panic if you find discrepancies. Missing transactions happen, especially during busy periods. The key is identifying and fixing them systematically. Start with the most recent month and work backward. Once you're caught up, make monthly reconciliation a non-negotiable habit.
Clean Up Your Chart of Accounts
Think of your chart of accounts as the filing system for your money. If it's disorganized, your financial reports will be too. Buyers reviewing your books want to see logical, consistent categorization that makes it easy to understand where your money comes from and where it goes.
Common fixes include:
Consolidating similar expense categories (do you really need separate accounts for "office supplies" and "supplies"?)
Creating clear naming conventions that anyone can understand
Eliminating outdated accounts you no longer use
Adding missing categories for expenses that keep getting lumped into "miscellaneous"
The goal is a chart of accounts that tells a clear financial story. If your accountant handed your books to a complete stranger, they should be able to understand your business model just by looking at your income and expense categories.
Fix Your Accounts Receivable
Sloppy AR management sends red flags to potential buyers. It suggests you might have cash flow problems or struggle with customer relationships. Plus, inflated AR from uncollectable invoices makes your business look less profitable than it really is.
Your AR cleanup checklist:
Review every outstanding invoice older than 90 days
Follow up on past-due accounts or write them off as bad debt
Verify that invoice amounts match what customers actually owe
Clean up any duplicate invoices or credits
Be honest about what you're likely to collect. If a client went out of business six months ago, keeping their invoice on your books doesn't help anyone. Write it off and move on. Buyers appreciate realistic AR numbers more than inflated ones.
Organize Your Expenses
Random expense categories like "miscellaneous" or "other" drive buyers crazy. They want to see exactly where your money goes, and vague categories make them wonder what you're hiding.
Quick expense cleanup:
Go through your "miscellaneous" or "other" categories and properly classify each expense
Create consistent categories for regular expenses (marketing, professional services, equipment maintenance)
Make sure personal expenses aren't mixed in with business ones
Separate one-time expenses from recurring operational costs
This isn't just about looking organized. Properly categorized expenses help buyers understand your true operational costs and identify potential areas for improvement or cost savings. Clear cost visibility makes it easier for buyers to evaluate margins, scalability, and efficiency.
Standardize Your Financial Reporting
Consistent monthly financial statements show buyers that you run your business professionally. If your profit and loss statements look different every month: different formatting, categories appearing and disappearing, inconsistent date ranges: it raises questions about your financial controls.
Create a standard reporting package:
Monthly P&L statements with consistent formatting
Balance sheets that actually balance
Cash flow statements showing money in and money out
Year-over-year comparisons to show trends
The key word here is "consistent." Use the same format, same categories, and same date ranges every month. This makes it easy for buyers to spot trends and understand your business's financial patterns.
Handle Payroll and Tax Records
Payroll mistakes aren't just embarrassing: they can create legal liabilities that scare away buyers. Make sure your payroll records are accurate and complete.
Payroll cleanup basics:
Verify that tax withholdings match what you actually paid to tax authorities
Confirm that benefit deductions are properly recorded
Make sure contractor payments are properly classified (not as employees)
Organize all payroll tax filings and payment confirmations
Tax compliance issues are deal-killers. Buyers don't want to inherit your tax problems, so make sure everything is properly filed and paid. If you're behind on payroll taxes or have outstanding tax issues, address them before putting your business on the market.
Review Your Fixed Assets
Your equipment, furniture, and other fixed assets should be properly recorded and depreciated. This affects your balance sheet and shows buyers what physical assets they're getting with the business.
Asset record cleanup:
Create a list of all business assets and their current values
Make sure depreciation schedules are accurate and up-to-date
Remove fully depreciated or disposed assets from your books
Take photos of major equipment for potential buyers
Accurate asset records also help with insurance coverage and can support higher valuations if you own valuable equipment or property.
The Value Impact
Clean books do more than make you look professional: they directly impact your business value. Here's why:
Buyer confidence: When your numbers are clean and consistent, buyers can trust your financial story. This reduces their perceived risk and can lead to higher offers.
Faster due diligence: Clean books speed up the buyer's review process. Less time spent untangling your finances means more time focusing on your business's strengths. Strong financial organization is one of the most important parts of sale preparation.
Reduced price adjustments: Buyers often demand price reductions when they find accounting problems. Clean books help you avoid these last-minute surprises.
Professional impression: Well-organized finances signal that you run other parts of your business professionally too.
Making It Stick
Once you've cleaned up your books, the key is maintaining them. Set up simple monthly routines:
Reconcile bank accounts within the first week of each month
Review and categorize expenses weekly instead of letting them pile up
Run standard financial reports monthly and actually look at them
Address discrepancies immediately instead of letting them accumulate
Good financial habits don't happen overnight, but they're easier to maintain than you might think. And when it comes time to sell your business, you'll be glad you put in the work.
Clean books aren't just about accounting: they're about presenting your business as a professional, well-run operation that buyers can feel confident investing in. The time you spend organizing your finances now will pay off when it matters most.
Clean books support stronger valuations
Organized, accurate financials don’t just make due diligence easier — they help buyers assess risk, cash flow, and confidence more clearly. Understanding how buyers interpret financial data can help you prioritize the fixes that matter most.
Comments