02/02/2026
Bookkeepers need to take an Oath to "do no harm."
Small business bookkeeping can get messy very quickly. Some cases stem from well-meaning people with little training or experience who got drafted into the role. Sometimes it’s an accounting firm that doesn’t really keep the books up to date, but rather goes in and makes a series of adjustments after the year is over to make it “good enough” to put on a tax return.
At a bare minimum bookkeeping knowledge needs to involve the following:
* understand a car loan is a liability account and NOT an auto expense 🙄
* know a loan is set up with the credit balance for the loan, and payments paid made are entered in the liability account thereby reducing the balance. News flash, if your liability accounts have a negative balance, you've set them up incorrectly
* Understand a purchase > $2500 like a vehicle, equipment, property, etc is set up as an asset (in addition to the loan) with its purchase price so it can be depreciated over time.
ASPIRING BOOKKEEPERS: you can learn. Get training. There are lots of options, but please don't claim to be a bookkeeper and work for business owners if you don't know what you're doing.
These are just a few of the things we’ve seen with small businesses.
~Over $500k in Undeposited Funds
~Over $400k open AR
~Negative amounts in Liability accounts
~Negative amounts in Accounts Receivable
~Financed equipment or vehicle payments entered as expenses, not assets and liabilities
~Negative amounts in bank accounts (-$200k). If reports had been prepared, it would have been SEEN easily.
~Loan payments being reported as expenses.
~Rent paid to the business owner. You can’t pay rent to yourself. (There ARE ways to do this, but you have to know what you are doing.)
Seems like some business owners never got reports or looked at their books. I don't know how their tax preparer got anything right!
They trust us to be compliant with the IRS. Not all businesses’ books are handled the same way so if you don't know, you better find out.
We have come across business owners who were victims of employee embezzlement sometimes totaling hundreds of thousands of dollars. And they had no idea until it was too late! TRUST, BUT VERIFY.
BUSINESS OWNERS, you should have the kind of relationship with your bookkeeper to be able to ask anything and see anything and everything in YOUR books. Require reports and get your bookkeeper to explain them to you!
Our firm has been around since 1961. We have a responsibility and we take it seriously.
Thanks for listening. Its been one of those days! 😉
And if you would like to explore your options, give us a call at 419-222-6355