That pile of receipts in the truck isn’t going anywhere. Neither is CRA.
Being behind on your books is one of those problems that gets bigger the longer you ignore it. Every month you skip is another month to rebuild later. And any GST return that’s late keeps costing you.
The good news? Catch-up is a known process. Here’s how it works.
What is catch-up bookkeeping?
It’s rebuilding your books for every month you missed, until they’re current.
That means, month by month:
- Reconciling every bank account and credit card against the statements
- Recording and categorizing every transaction
- Matching receipts and bills to what you spent
- Recording what you invoiced, and what you actually got paid
- Rebuilding payroll records, if you’ve got a crew
- Filing anything that’s late, starting with GST
It’s not glamorous. But when it’s done, you can see your real numbers again. And CRA stops being a mystery.
What does it cost to stay behind?
More than people think. You just never get one bill for it.
Late GST returns. If you owe, CRA charges a late-filing penalty of 1% of what you owe, plus 25% of that 1% for every full month you’re late, for up to 12 months. Interest runs on the overdue balance on top.
Here’s a made-up example, just to show the math. Say you owe $8,000 and you file six full months late.
The penalty is $80, plus $20 for each of the six months. That’s $200, before interest.
Ignoring a demand. If CRA sends a demand to file and you don’t, that’s another $250 penalty, on top of whatever else applies.
Lost GST credits. Every receipt that never makes it into the books is GST you paid and can’t claim back.
Flying blind. If your books are a year behind, you don’t know which jobs made money last year. So you’re quoting this year’s jobs on a guess. How do you price a job right when you don’t know what the last one cost?
What do you need to gather before you start?
Whether you do it yourself or hire it out, round up:
- Bank and credit card statements for every account, for every month you’re behind
- Receipts and bills, paper and email, as many as you can find
- Invoices you sent, and a list of who still owes you
- Payroll records, if you have employees
- Every letter from CRA, opened or not
- Your WorkSafeBC account details and any notices from them, since BC employers report payroll and contract labour to WorkSafeBC too
- Loan and lease statements for trucks and equipment
- Access to your QuickBooks file, if you have one
Missing receipts? Don’t let that stop you.
The bank statements are the backbone. Receipts fill in the detail.
And keep everything. CRA says to keep your records and supporting documents for six years from the end of the last tax year they relate to.
How do you actually catch up?
Here’s the order that works:
- Start a clean slate for this month. Keep current transactions flowing so the backlog stops growing.
- Go back to the oldest month you’re missing and work forward.
- Reconcile each month before you move to the next one. If the bank balance doesn’t match, fix it now, not later.
- File late GST returns as each period is done.
- Catch up payroll filings and remittances if those are behind too.
- Review the whole year once it’s rebuilt, before it goes to your accountant.
It’s tempting to start with the most recent month. It feels faster. But every month depends on the one before it, so you end up redoing work.
What if CRA has already sent a letter?
Open it. Today.
We get it. Nobody wants to open that envelope. But the letter tells you exactly what CRA wants and by when, and the deadline doesn’t move because the envelope stayed closed.
Then:
- Note the deadline and the period it’s about
- Don’t guess at numbers to make the letter go away
- Get the books for that period caught up first, so whatever you send is right
- Talk to your accountant if the letter is about a reassessment or an audit
A late GST return with a demand attached is a priority. A missing return for a quarter three years ago still matters, but it can wait a week while you get organized. Ignoring either one makes it worse.
How long does catch-up take?
Honest answer: it depends on how far behind you are and what shape the records are in.
For most businesses the first month is the heavy cleanup. The rough ones take longer, and we say so up front.
Here’s a rough one. A trades contractor came to us ten years behind on his books.
Not months. Ten years.
We rebuilt them year by year, reconciled everything and redid his CRA filings. That took about a year and a half.
Why bother? Every summer there’s government contract work in his trade that only CRA-compliant vendors can bid on, roughly $100,000 a year.
He’d watched it walk past him for years. He’s compliant now, and he bids on it again.
Real clients, not typical of every business.
Anyone who promises you a firm timeline before they’ve seen your records is guessing.
Should you catch up yourself or hire it out?
Do it yourself if it’s a few months, the records are all there, and you’re comfortable in QuickBooks. Block out a few evenings and grind it out.
Hire it out if:
- It’s a year or more
- There are late GST returns or letters from CRA
- You’ve got payroll or subcontractors to sort out
- You’ve started twice and stopped twice
- You need clean books soon for a loan, a lease or a bank review
Here’s the thing. Your time is worth more on a job site than at the kitchen table at 10 pm, coding receipts from last spring.
How does MBC Canada handle catch-up?
On our monthly bookkeeping, catch-up isn’t part of the monthly price. We look at how far behind you are and what shape the records are in, then give you a number before any work starts.
The Clean Books Year includes up to 12 months of catch-up. Anything further back is quoted separately.
Either way, you’ll know the plan and the cost before we start. And once you’re current, we keep you there. If you want to see where the time goes after that, start with job costing.
Our bookkeeping starts at $800 a month, and here’s what decides your number. Book a free 30-minute call and we’ll look at how far behind you are.