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How to Prepare Your Books for a Real Business Review

Why this matters

A business review (with a lender, investor, buyer, or advisor) will focus on your numbers and records. Clean, organized books help you get better terms, faster answers, and avoid surprises. This guide gives clear steps you can do in a few hours or a few days, depending on how messy things are.

Quick checklist to start

  • Bank and credit card statements available for the review period
  • Profit & Loss (P&L) and Balance Sheet exported for the review period
  • Receipts or invoices for large or unusual transactions
  • Accounts receivable and payable aged reports
  • Payroll summary or payroll reports
  • Notes explaining one-off items or seasonality

Step 1 — Gather core documents (1–3 hours)

Action items:

  1. Download bank and credit card statements for the last 12 months (PDF or CSV).
  2. Export your P&L and Balance Sheet for the same 12 months, and year-to-date.
  3. Get last 3 months of payroll reports or payroll summary.
  4. Pull sales reports and customer invoices for the biggest customers (top 5 by revenue).

Example: If you use QuickBooks, go to Reports › Profit & Loss › Customize dates › Export. Download bank statements from your online bank portal.

Step 2 — Reconcile bank and cards (2–6 hours)

Action items:

  1. Run bank reconciliation in your accounting software for every month in the review period. Mark reconciled months as complete.
  2. If transactions don’t match, create a short list of missing items: uncleared checks, deposits in transit, bank fees, or duplicates.
  3. Fix only obvious mistakes: miscategorized amounts, duplicate entries, or missing payments. Don’t start a full clean-up project now—note issues and explain them in notes.

Decision rule: If unreconciled amounts are under 1% of monthly revenue, note them. If over 1% or repeated each month, plan a deeper clean-up before final review.

Step 3 — Clean up income and expense categories (2–6 hours)

Action items:

  1. Scan the P&L for odd categories: personal expenses in business accounts, large misc. expenses, or many entries in “Other” or “Misc.”
  2. Move personal expenses out into owner draws or shareholder distributions. Keep a bank transfer record.
  3. Group small similar expenses (e.g., office supplies) into one account for clarity.

Example: If you see a $1,200 charge labeled "Misc," find the receipt. If it was annual software, recategorize to "Software Subscriptions" and add a note "annual renewal".

Step 4 — Prepare aging reports and cash flow snapshot (1–2 hours)

Action items:

  1. Run Accounts Receivable aging and Accounts Payable aging reports.
  2. Highlight overdue receivables and any large unpaid bills. Prepare a one-page note: who owes what, reasons for delay, expected collection date.
  3. Create a 90-day cash flow snapshot: starting cash, expected cash in (from AR), expected cash out (bills + payroll).

Decision rule: If AR > 60 days and > 5% of annual revenue, expect questions. Have a collection plan ready.

Step 5 — Document one-off items and adjustments (30–60 minutes)

Action items:

  • List one-off or non-recurring items (sales of equipment, insurance refunds, tax credits) with date and amount.
  • Note any accounting adjustments made during the period (write-offs, bad debt, depreciation) and why.

Example note entry: "June 2025 — $8,500 equipment sale (old CNC machine) recorded as other income. Proceeds deposited June 3. Copy of bill of sale attached."

Step 6 — Prepare supporting docs for big line items (2–4 hours)

Action items:

  1. For the top 5 expense categories and top 5 customers, gather invoices, contracts, or receipts.
  2. For payroll, prepare a summary: total wages, payroll taxes, and benefits for the review period.
  3. For loans, prepare loan statements showing balances and payment schedules.

Tip: Put supporting docs in folders named "Salary_2025_Q2" or "TopCust_Acme_Invoice" to make them easy to send.

Step 7 — Create a short narrative for reviewers (30–60 minutes)

Action items:

  • Write a one-page summary: business type, recent performance (growth or decline), 3 main drivers of revenue, and 3 risks.
  • Attach a two-line note to any number that looks unusual: "May revenue down 12% due to shop closure for one week."

Step 8 — Make a tidy packet to send (30 minutes)

Action items:

  1. Include: Cover sheet, P&L, Balance Sheet, AR/AP aging, bank statements, payroll summary, loan statements, top customer invoices, one-page narrative.
  2. Export to PDF or a single ZIP file. Name files clearly: "P&L_2024_Q1-Q4.pdf", "AR_Aging_0625.pdf".
  3. Keep a backup copy in your cloud or local drive.

Common reviewer questions — be ready with answers

  • Why did revenue change? (Point to customer wins/losses, price changes, seasonality.)
  • Are there unusual or non-recurring incomes/expenses? (Refer to your one-off list.)
  • How reliable is cash flow? (Show AR aging and the 90-day snapshot.)

Simple decision rules to prioritize fixes

  • If issues affect cash (missing deposits, large unpaid bills), fix or explain before the review.
  • If issues are small (<1% of revenue) and isolated, disclose and plan to fix later.
  • If one customer is >20% of revenue, prepare contingency and diversification notes.

Final quick pre-review checklist (30 minutes)

  • All bank months reconciled for review period? Yes / No
  • P&L & Balance Sheet exported and dated? Yes / No
  • Top 5 customers and top 5 expenses supported by invoices? Yes / No
  • AR/AP aging generated and flagged issues? Yes / No
  • One-page narrative attached? Yes / No

If you don’t have time

Do the essentials: reconciled bank for the last month, P&L and Balance Sheet export, AR aging. Write a short note listing the biggest issues and when you’ll fix them. That shows control and saves time in the meeting.

Where to get help

If reconciliations are off by a large amount or payroll is messy, hire a bookkeeper for a focused 10–20 hour clean-up. Give them this packet and ask for a fixed deliverable: "All months reconciled and a short summary report."

Following these steps will make your business review faster, reduce questions, and improve your credibility. Tidy books shift the conversation from "what happened" to "what’s next."