A composite case study based on real patterns seen in Estero and Southwest Florida businesses.

The Situation

A general contractor based in Estero had been running a steady residential business for several years. Custom remodeling, kitchen and bath work, a few whole-home projects each year across the communities around Tice and Buckingham. The work had grown year over year. The bookkeeping had fallen behind the pace of it.

The books weren’t neglected. They were maintained — just not current. A few months of transactions not fully categorized. Bank reconciliations a couple of months behind. A balance sheet that hadn’t had a careful review since the previous year-end. The business was running well. The books had just fallen behind the pace of the work.

When the CPA engaged in late November, the first question was about retainage. The owner had a number in his head. The books had a different number. Neither matched the lender’s records. That was the beginning of a longer conversation than anyone had planned for.

The Challenge

The year-end review worked through the books systematically and surfaced four patterns that had accumulated over the course of the year.

Retainage withheld by clients had never been set up as a separate liability account. The amounts were sitting in regular accounts receivable — mixed in with amounts that were genuinely owed and collectable. The receivables balance was overstated, and the liability the business carried to its clients wasn’t visible anywhere in the books.

Subcontractor costs from two spring projects had been posted in the period they were invoiced rather than the period the work was completed. Both jobs had wrapped in April. The invoices arrived in June and July and were entered on the date received — as cash basis requires — but without any notation connecting them to the jobs they belonged to. The margin picture on both completed jobs was understated when the jobs finished and overstated when the invoices arrived.

Deposits collected on an active project in late summer had been recorded as income at the time of collection. Under cash basis, income is recognized when received — but the project wasn’t complete. The P&L was showing revenue that hadn’t been fully earned yet. Year-to-date income was higher than the completed work supported.

The “Ask My Accountant” balance had grown to just over $14,000. The last time anyone had touched it was February. Eleven months of transactions that needed homes were sitting in a placeholder account, invisible in any meaningful report.

The Approach

The cleanup addressed each issue in sequence. Retainage was pulled out of accounts receivable and moved to its own liability account, with the client and project documented for each balance. Subcontractor costs were traced back to the jobs they belonged to, with notes connecting the invoice date to the completion date. The deposit on the active project was reclassified to a liability account to be recognized as income on completion. The “Ask My Accountant” balance was worked through transaction by transaction until it reached zero.

None of the corrections required changing what cash basis showed. The method was right. The work was building the context around it — so that what the books showed corresponded to what the business had done.

For business owners in Estero, Tice, and Buckingham who work in project-based trades, this kind of timing gap is the most common year-end finding. Cash basis is the right method. Reading it accurately in a project-cycle business takes a little more than the month-end totals. If you’d like to understand what a cleanup engagement involves for a situation like this, the cleanup services page walks through the process: https://primeentrybookkeeping.com/cleanup-services

The Outcome

• The receivables picture was clean. Amounts withheld by clients were visible as liabilities, separate from collectible receivables, and the lender’s records reconciled.
• Job cost accuracy improved. The two spring projects had accurate margin histories. Future projects had a clear model for how subcontractor costs would be recorded.
• Revenue was stated accurately. The active project’s deposit was reclassified and would be recognized on completion — income for the period the work belonged to.
• The uncategorized balance reached zero. Eleven months of placeholder transactions had homes.
• The CPA conversation changed. Instead of working through what the books held, the conversation moved to planning — what the year showed and what the next one should look like.

The Insight

None of what the review found was catastrophic. The business had run a good year. The owner’s instincts about how the projects had performed were largely right. What the review added was accuracy — the specific numbers beneath the general sense of how things had gone.

What made it more expensive than it needed to be was the timing. Found in October, these were bookkeeping tasks — a few days of organized work. Found in late November, with the CPA already engaged and year-end arriving, they became a compressed cleanup project with a deadline attached.

October is the right moment because the urgency of year-end is close enough to feel real and the calendar still has room to act. A review before the CPA engages isn’t pessimistic — it’s the difference between the CPA finding the picture and the CPA building it.

Downloadable Resource: Your Year-End Bookkeeping Review

A practical checklist covering seven areas to review before year-end — reconciliations, balance sheet, income and expenses, payroll, job costing, what to flag for your CPA, and what to do if gaps are found. Built for owner-operated businesses preparing for the review ahead.

👉 Download the guide for free: https://primeentrybookkeeping.com/resources

Also available: Getting CPA-Ready: 10 Things to Think Through First

What This Means

If your books haven’t had a careful review before year-end arrives, the question worth asking is what they might be holding — and whether finding it in October costs less than finding it in December. The answer is almost always yes.

If You Want to Talk Through Your Own Books

If your books haven’t had a careful review before year-end arrives, a Clarity Call is a calm, no-pressure place to start. We’ll look at what’s there and talk through what getting ready would involve. Schedule one at calendly.com/jim-primeentrybookkeeping.

Next Week’s Theme: When the Business Feels Solid but the Numbers Don’t Confirm It

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