What is the best way to catch up on bookkeeping?
Oldest month first, one account at a time, each month matched to its statement before the next. Starting with this month feels productive and leaves the years that carry penalties undone.
Short answers
I'm a few months behind. Is that a problem yet?
Not a tax problem until a return is due. For an S corporation that is the 15th day of the 3rd month after the tax year ends, so a few months behind in autumn is a deadline problem by winter.
I'm two years behind. What now?
File the late returns even if you cannot pay. The IRS asks for every return that is due, whether or not you can pay in full.
What goes on a catch-up checklist?
Statements for every account and month, payroll reports, loan statements, the Forms 1099-NEC the business issued, the income forms it received, and the last return filed. The full list is in the checklist below.
Why the oldest year goes first
5 percent of the amount of such tax if the failure is for not more than 1 month, with an additional 5 percent for each additional month or fraction thereof ... not exceeding 25 percent in the aggregate
The penalty is counted per return, per month: 5% of the unpaid tax for each month or part of a month, up to 25%. The oldest unfiled year has run longest, so it is the most expensive one to leave.
An S corporation or partnership owes a penalty per owner even when no tax is due: $255 per shareholder per month for a late Form 1120-S and $255 per partner per month for a late Form 1065, each for up to 12 months. A two-owner company a year late can owe more in that penalty than in tax.
Not filing at all is worse than filing late. If you do not file, the IRS may file a substitute return for you, and that return might not credit the deductions you are entitled to.
Catching up a quarter or a few months
A few months is a weekend of work if the statements are downloadable. Enter the missing months in order, match each to its statement, then set a date each month to close the last one. If the business collects Utah sales tax, the returns are due the last day of the month after each filing period, so the catch-up has to finish before the next one.
Bookkeeping catch-up checklist
- List every account the business used: bank, card, loan, merchant processor, payment app.
- Download every statement for every month since the books were last right.
- Pull payroll reports and the Forms W-2 and 1099-NEC the business issued.
- Collect the income forms the business received from customers and payment platforms, and the last return filed.
- Enter the oldest month, match it to the statement, and only then move on.
- Mark personal spending as owner draws or loans, never as expenses.
- Close each year before starting the next, and hand it to whoever prepares that return.
How long to keep what you rebuild
Keep it all. The IRS says to keep records 3 years in general, 4 years for employment tax records, and 7 years for a bad-debt or worthless-securities loss.
In Utah
Utah charges its own late-filing penalty on a state return: the greater of $20 or 2%, 5% or 10% of the unpaid tax, depending on how many days late it is. The federal and state returns for the same year come from the same books, so one catch-up serves both.
When to hand this to a preparer
Hand it over once the books are closed and the return is the next step, or sooner if a deadline is inside a month.
Excite Tax prepares this; a licensed CPA at TBD CPA LLC reviews and signs the return.
Sources
- 26 U.S.C. § 6651, Failure to file tax return or to pay tax · retrieved September 2026
- 26 U.S.C. § 6699, Failure to file S corporation return · retrieved September 2026
- 26 U.S.C. § 6698, Failure to file partnership return · retrieved September 2026
- IRS, Instructions for Form 1120-S (2025) · retrieved September 2026
- IRS, Filing past due tax returns · retrieved September 2026
- IRS, Instructions for Forms 1099-MISC and 1099-NEC (12/2026) · retrieved September 2026
- IRS, Instructions for Form 1065 (2025) · retrieved September 2026
- Utah State Tax Commission, Sales and Use Tax · retrieved September 2026
- IRS, General Instructions for Forms W-2 and W-3 (2026) · retrieved September 2026
- IRS, How long should I keep records? · retrieved September 2026
- Utah Code § 59-1-401 (effective 1/1/2026), Offenses and penalties · retrieved September 2026
Ranked and explained on the sources page.