OneBooks helped a New Jersey sports, fitness, and recreational center owner catch up after falling four years behind on bookkeeping, sales tax filings, S-Corporation tax returns, and personal tax returns.
The situation had become critical after the State of New Jersey levied both the business bank accounts and the owner’s personal bank accounts due to unpaid sales tax liabilities. OneBooks reconstructed years of financial records, converted hard-copy statements into usable transaction data, rebuilt the books in QuickBooks Online, and helped prepare the financial records needed for overdue tax filings and payment negotiations.
What bookkeeping problem did the e-commerce company have?
The business was four years behind on bookkeeping and tax filings, and the State of New Jersey had levied both the business and owner’s personal bank accounts because of unpaid sales tax liabilities. The problem included several overlapping issues:
- Four years of missing bookkeeping
- Unfiled sales and use tax returns
- Unfiled S-Corporation tax returns
- Unfiled personal tax returns
- Sales tax collected from customers but not remitted to the state
- Closed bank accounts and credit cards
- Missing online access to old financial records
- New accounts opened in the owner’s wife’s name
- Limited supporting documentation for expenses
- A tax liability greater than the owner’s immediate ability to pay
This was not a simple bookkeeping cleanup. It required reconstructing the company’s financial history from the ground up.
What did OneBooks do to catch up the books?
OneBooks immediately explained that the first priority was to reconstruct accurate financial records and become current with all required filings. Once the books and filings were completed, the CPA or tax attorney could work with the State of New Jersey to negotiate payment arrangements and potentially request penalty relief. Because there were significant personal illness issues within the family during the period, those circumstances could potentially support penalty abatement requests.
Gathered Four Years of Statements
The owner first had to obtain four years of bank and credit card statements. Because many accounts had already been closed due to overdrafts and nonpayment, online access was no longer available. The owner had to request hard-copy statements directly from the financial institutions.
Converted Paper Statements Into Usable Data
OneBooks converted the paper bank and credit card statements into CSV files using specialized software. After the data was converted, the team organized, reviewed, and validated the transaction information before importing it into QuickBooks Online.
Rebuilt the Books in QuickBooks Online
Once the data was ready, OneBooks imported the transactions into QuickBooks Online and began reconstructing the books from the ground up. The project involved approximately 24,000 transactions that needed to be entered, categorized, reviewed, and reconciled.
Reconstructed the Sales Tax Liability
A major part of the engagement was reconstructing the sales tax liability. The business had collected sales tax from customers over the four-year period but had not remitted it to the state. OneBooks helped reconstruct the liability and account for estimated accrued interest and penalties that needed to be reflected in the financial statements.
Prepared Financial Records for Tax Filing
Because the business was an S-Corporation, accurate financial statements were required before the CPA could complete the overdue Form 1120S corporate tax returns. Those returns were also necessary to generate the owner’s K-1s, which were needed before the owner’s overdue personal tax returns could be completed.
What were the results of the catch-up bookkeeping project?
At the completion of the engagement, the business had current financial records, completed sales and use tax filings, completed S-Corporation returns, and completed personal tax returns. The cleanup process took approximately three months because of the volume of transactions, the manual statement conversion process, and the lack of supporting documentation for many expenses. Although the tax liability exceeded the owner’s immediate ability to pay, the CPA was ultimately able to negotiate payment arrangements with the state. This allowed the business to continue operating. The client’s CPA prepared and filed the income-tax returns; OneBooks completed the bookkeeping reconstruction and filed the overdue sales-and-use-tax returns as a one-time service for this engagement.
Why This Case Study Matters
E-commerce catch-up bookkeeping is often more complex than standard bookkeeping because bank accounts, payment proThis case study shows that even severe bookkeeping and tax problems can often be addressed once the financial records are reconstructed accurately. When a business falls years behind, the problem is rarely limited to transaction coding. In this case, the business needed bookkeeping reconstruction, sales tax liability cleanup, S-Corporation tax support, personal tax filing support, and coordination with a CPA to create a path forward. Even in situations involving levies, closed accounts, missing records, unfiled returns, and unpaid sales tax, accurate bookkeeping can give the business owner and their tax professional the information needed to move toward resolution.cessors, sales channels, payroll systems, and tax apps all need to match correctly before the books can be reconciled.
Full Case Study Details
A sports, fitness, and recreational center owner came to OneBooks after falling four years behind on bookkeeping, sales tax filings, S-Corporation tax filings, and personal tax returns.
The situation had become critical after the State of New Jersey levied both the business and the owner’s personal bank accounts due to unpaid sales tax liabilities.
Over the four-year period, the business had collected sales tax from customers but never remitted it to the state. Many of the original business bank accounts and credit cards had been closed because of overdrafts and nonpayment. Eventually, new accounts were opened in the owner’s wife’s name, creating additional complexity in tracing business activity and reconstructing records.
We immediately explained to the owner that the first priority was to reconstruct accurate financial records and become current with all required filings. Once the filings were completed, a CPA or tax attorney could then work with the State of New Jersey to negotiate payment arrangements and potentially reduce penalties. There were significant personal illness issues within the family during the period, which could help support penalty abatement requests.
The owner first had to obtain copies of four years of bank and credit card statements. Since many accounts had already been closed, online access was no longer available, and only hard-copy statements could be obtained from the financial institutions.
OneBooks converted the paper statements into CSV files using specialized software. After organizing and validating the data, we imported the transactions into QuickBooks Online and began reconstructing the books from the ground up.
The project involved approximately 24,000 transactions that had to be entered, categorized, reviewed, and reconciled. A major component of the engagement was reconstructing the sales tax liability, including estimating accrued interest and penalties that needed to be reflected in the financial statements.
In addition, because the business operated as an S-Corporation, accurate financial statements were required in order for the CPA to prepare the Form 1120S corporate tax returns and generate the K-1s needed for the owner’s overdue personal tax filings.
The cleanup process took approximately three months due to the volume of manual statement conversions and the lack of supporting documentation for many expenses.
At the completion of the engagement, the business had current financial records, completed sales and use tax filings, completed S-Corporation returns, and completed personal tax returns. Although the liability exceeded the owner’s immediate ability to pay, the CPA was ultimately able to negotiate payment arrangements with the state, allowing the business to continue operating.
This engagement demonstrates the importance of acting quickly when businesses fall behind. Even in severe situations involving levies, missing records, and multiple years of unfiled returns, accurate reconstruction of the books can create a path forward.
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