Catch-Up Bookkeeping and Unfiled Returns in Los Angeles
MangoBooks, a Los Angeles CPA firm, brings books that are months or years behind up to date and then prepares the business and personal tax returns that were not filed. Catch-up bookkeeping starts from $1,500, depending on how many months are behind, the number of accounts and the condition of the records; each unfiled business return is a separate return at $2,000–$3,500 per year, and monthly bookkeeping continues at $650–$1,400 per month once the books are current.
Felix Park, CPA, MBA, a licensed California CPA, leads the catch-up work and the returns that follow. The books come first: a business return that includes a balance sheet (Schedule L) should agree with the company's books and records, so every account is reconciled to its statements before a return is prepared.
Situations We Handle
Two years behind on the books and the returns. We record and reconcile each bank and credit card account to its statements for the missed months, close each year, and prepare the business return for every unfiled year, Form 1120-S with Form 100S for an S corporation or Form 1065 with Form 568 for an LLC taxed as a partnership, with a Schedule K-1 for each owner, followed by the owners' personal returns from the same figures. See Business Tax Preparation.
An LLC that filed nothing and had no income. Every LLC organized or doing business in California owes the $800 annual tax each year until it is cancelled, even if it is not conducting business, and files Form 568 for each year. We prepare the missing Forms 568 and work out the tax and penalties owed for each year.
Payroll and contractor forms that were never filed. Form 941 is due for each quarter, the DE 9 and DE 9C go to the EDD each quarter even when no wages were paid, and Form 1099-NEC is required when a contractor is paid $2,000 or more in a year, starting with 2026 payments, due January 31 (February 1, 2027 for 2026 payments). We prepare the missing payroll returns, W-2s and 1099s from the payroll and payment records. See Payroll.
A City of Los Angeles business that never registered. The Office of Finance receives information from the Franchise Tax Board and writes to businesses that may owe city tax. A business that has never registered and has not yet been contacted can apply for the city's Voluntary Disclosure Program, which limits the look-back to five years instead of up to eight and allows delinquency penalties to be waived. The gross receipts the city tax is figured on come from the caught-up books. See CPA in the San Fernando Valley.
A sole proprietor or individual with unfiled returns. If a return is not filed, the IRS may file a substitute return that may not give credit for deductions and exemptions. We prepare the missing federal and California returns from the records: an individual return with a business typically costs $1,100–$1,800, a return with W-2 income and the California return $650–$900, and a return with K-1s $2,500–$4,500. See Individual Tax Preparation.
How It Works
- Consultation. We talk about which years are open, what records exist and which notices have arrived.
- Engagement letter. We send a written engagement letter that sets out the catch-up period, the returns to be prepared and the fee for each before work begins.
- Document exchange. You send bank, credit card and loan statements for the missed months, the last return that was filed, any notices and payroll records electronically.
- Catch-up and reconciliation. We record the missed months and reconcile every account to its statements, then close each year.
- Returns. We prepare the business return for each unfiled year and then the owners' personal returns from the completed books, and file them.
- Monthly bookkeeping. Once the books are current, monthly bookkeeping continues so the next return is prepared on time.
Penalties and Relief
- IRS failure-to-file penalty. 5 percent of the tax due for each month or part of a month the return is late, up to 25 percent. When a return is more than 60 days late, a minimum penalty applies: the lesser of a set amount or 100 percent of the underpayment.
- IRS failure-to-pay penalty. 0.5 percent of the unpaid tax for each month or part of a month, not more than 25 percent.
- Late Form 1120-S. $255 for each month or part of a month the return is late, up to 12 months, multiplied by the number of shareholders when no tax is due, plus 5 percent of any unpaid tax per month when tax is due, up to 25 percent of the unpaid tax.
- California late-filing penalties. The Franchise Tax Board charges 5 percent of the amount due, after payments and credits, from the original due date, for each month a return is late, up to 25 percent, and $18 per partner or shareholder for each month a partnership or S corporation return is late, up to 12 months.
- IRS penalty relief. First-time penalty abatement and administrative waivers, reasonable-cause relief and statutory exceptions, requested by following the instructions on the notice; the IRS accepts some requests by phone.
- California One-Time Penalty Abatement. For individuals only, for tax years beginning on or after January 1, 2022, once in a lifetime. The taxpayer must be compliant with all filing requirements, must not have been granted one before and must have paid or arranged to pay what is owed; it covers the failure-to-file and failure-to-pay penalties.
- Substitute returns. If a return is not filed, the IRS may file a substitute return that may not give credit for deductions and exemptions.
- Records. The IRS advises keeping records that support a return for three years and employment tax records for at least four years.
Where We Work
We catch up books and returns for businesses throughout Los Angeles, including the San Fernando Valley communities around our office in Woodland Hills and the Conejo Valley. Meetings are scheduled in advance, and documents are exchanged electronically. A business in the City of Los Angeles that fell behind on its city business tax renewal, due by the last day of February each year, or the following Monday when that day is a Sunday, has the same look-back and Voluntary Disclosure rules described above; see CPA in the San Fernando Valley and CPA for the Conejo Valley.
Services Involved
- Bookkeeping: the catch-up period, then monthly books
- Business Tax Preparation: each unfiled year's federal and California return
- Individual Tax Preparation: the owner's or sole proprietor's unfiled returns
- Payroll: missing Forms 941, DE 9 and DE 9C, W-2s and 1099s
- Tax Planning: estimated payments once the filings are current
- Financial Statements: statements from the caught-up books for a lender
Fees
| Service | Typical range |
|---|---|
| Catch-up bookkeeping | From $1,500 |
| Monthly bookkeeping, once the books are current | $650–$1,400 per month |
| Business tax return (1120-S, 1065 or 1120 with the California return), each unfiled year a separate return | $2,000–$3,500 per year |
| Individual return, W-2 and California | $650–$900 |
| Individual return with a business or rental properties | $1,100–$1,800 |
| Owner's individual return with K-1s | $2,500–$4,500 |
Fees depend on the scope of work and are set out in a written engagement letter before work begins. See the Fee Guide.
Frequently Asked Questions
How far behind can the books be?
Months or years. Catch-up bookkeeping starts from $1,500; the fee depends on how many months are behind, the number of bank and credit card accounts and the condition of the existing records. Once the books are current, monthly bookkeeping continues at $650–$1,400 per month. See Bookkeeping.
Can MangoBooks file several years of unfiled business returns?
Yes. Each unfiled year is a separate return, typically $2,000–$3,500 per year for an S corporation, partnership or corporation with its California return, and it is prepared from that year's completed books, because the balance sheet on the return (Schedule L) should agree with them. An LLC also owes California's $800 annual tax for each year it was organized or doing business in the state, even with no income. See Business Tax Preparation.
What penalties apply to a late return?
The IRS failure-to-file penalty is 5 percent of the tax due for each month or part of a month the return is late, up to 25 percent, with a minimum penalty once the return is more than 60 days late, and the failure-to-pay penalty is 0.5 percent of the unpaid tax per month, up to 25 percent. A late Form 1120-S costs $255 per month, up to 12 months, multiplied by the number of shareholders when no tax is due. California charges 5 percent of the amount due per month for a late return, up to 25 percent, and $18 per partner or shareholder per month, up to 12 months, for a late partnership or S corporation return.
Can the penalties be reduced?
Sometimes. The IRS offers first-time penalty abatement and administrative waivers, reasonable-cause relief and statutory exceptions, requested by following the instructions on the notice. California's One-Time Penalty Abatement is for individuals only, for tax years beginning on or after January 1, 2022, once in a lifetime; the taxpayer must be compliant with all filing requirements, not have been granted one before and have paid or arranged to pay what is owed, and it covers the failure-to-file and failure-to-pay penalties.
What happens if the returns are never filed?
The IRS may file a substitute return, which may not give credit for deductions and exemptions, and the tax is assessed on that basis. In the City of Los Angeles, the Office of Finance receives information from the Franchise Tax Board and writes to businesses that may owe city tax; a business that never registered and has not yet been contacted can apply for the city's Voluntary Disclosure Program, which limits the look-back to five years instead of up to eight.
What records are needed to catch up?
Bank, credit card and loan statements for the months being caught up, the last return that was filed, any IRS, Franchise Tax Board or city notices, payroll reports if there were employees and a list of contractors paid. The IRS advises keeping records that support a return for three years and employment tax records for at least four years. The full list is in our New Client Checklist.
Schedule a Consultation
Call (213) 255-4665 or send us a short message about your situation.
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