The 10-Point Books Health Check Every Founder Should Run

In our experience reviewing accounting files for founder-led businesses, roughly 9 out of 10 have at least three serious issues — problems that are either costing the owner money right now or will surface at tax time. The tricky part? Most of these files look fine on the surface.

"It runs" isn't the same as "it's right." Here's a 10-point self-assessment. Go through each one honestly and tick the box only if your answer is a confident yes.

1. Are all accounts reconciled through last month?

If your bank and credit card reconciliations are more than 30 days behind, you can't trust any report coming out of your books. Every day you wait, the backlog gets harder to fix. Red flag: last reconciled date older than 45 days.

2. Is your "Uncategorized" balance zero?

When transactions import without a category, they get parked in placeholder accounts. Every uncategorized item is either misstated income or a missed deduction. Red flag: any balance in Uncategorized Income or Expense.

3. Does "Opening Balance Equity" sit at zero?

This account should always be empty in a well-maintained file. A balance here almost always means something was set up wrong. Experienced CPAs spot it instantly. Red flag: any non-zero balance.

4. Is your Chart of Accounts lean?

A clean setup has maybe 50–80 active accounts. A messy one has 200+ with duplicates like "Meals," "Meals & Entertainment," and "Business Meals" all at once — which makes your P&L impossible to read. Red flag: obvious duplicate categories.

5. Is your A/R aging clean?

Invoices that are 90, 180, or 365+ days old and still marked open distort your revenue and inflate your tax liability. If a customer won't pay, write it off properly. Red flag: stale invoices with no collection activity.

6. Is your A/P aging accurate?

The opposite problem: unpaid bills that were actually paid outside the system and never cleared. They make you look more indebted than you are and wreck your cash projections. Red flag: old unpaid bills from active vendors.

7. Are personal and business expenses separated?

The #1 cleanup issue we see. Personal charges running through the business card hit your P&L as "office supplies" — inaccurate, and an IRS audit trigger. Red flag: personal spending on the business card with no owner-draw offset.

8. Does your sales tax liability match what you've remitted?

If your books show you owe $4,200 but you filed and paid $3,800, something is wrong — and it snowballs. Red flag: any unexplained variance with your filed returns.

9. Does your year-over-year P&L make sense?

Pull a P&L comparing this year to last, by month. If categories shifted or margins swing wildly for no reason, your categorization has drifted and you're deciding on bad data. Red flag: unexplained category or margin swings.

10. Do you have a documented monthly close?

This separates professional bookkeeping from amateur. A real close is a repeatable checklist, run on a consistent date, with a review step. Red flag: "I get to it when I can."

How to score yourself

• 9–10: Excellent. Your books are in great shape — focus on adding CFO-level insight.
• 7–8: Mostly healthy. A few focused fixes will tighten things up.
• 4–6: Warning zone. Material issues are costing you money or will at tax time.
• 0–3: Critical. Your books need professional cleanup before any major decision.

If you scored 6 or lower, don't panic — but don't ignore it. The longer you wait, the more expensive it gets to fix, and the more likely something bites you at year-end. Most files can be fully cleaned up in 2–4 weeks by someone who knows what they're doing.