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Initial Red Flags

When a busy attorney contacted me for a quote, she wasn’t looking for ongoing bookkeeping help. Her only goal was to learn to categorize a few checks correctly. She had been managing her own books and felt confident that things were in order. But something in our conversation started raising red flags. I had a gut feeling that there was more to the situation than she realized.

I had to push a bit to see the books myself before giving a quote. At first, she was hesitant. She assured me everything was fine, that she just needed help with a few checks. But after some back-and-forth, she agreed to let me take a look, and I’m glad she did.

As soon as I opened the books, I spotted a major issue—her trust account was set up completely wrong. For lawyers, handling trust accounts properly is non-negotiable. Mismanagement can lead to serious legal and financial consequences. If she kept her books the way they were, she was at risk of:

• Violating trust accounting rules
• Facing potential penalties
• Triggering compliance issues with her state bar association

On top of that, other areas of the books weren’t much better:

• Transactions were categorized incorrectly
• Expenses weren’t tracked properly
• No clear separation between client funds and operating funds

It was a mess that needed serious attention before tax season hit.

How I Fixed the Issues

• Corrected trust accounting issues to ensure client funds were handled in compliance with legal and ethical standards.
• Cleaned up the rest of her books by correctly categorizing income and expenses.
• Reconciled accounts to ensure accuracy.
• Set up a structured system that would be easy to maintain moving forward.

This wasn’t just about fixing past mistakes but setting her up for success so she wouldn’t run into the same issues again next year.

The Results

This was her first year filing a tax return as a business owner, so getting everything right was crucial. She had no idea how much trouble she had been about to get into, and once she saw the corrections, she was beyond relieved.

When we were done, she sent the updated books to her CPA. The response? Nothing but praise. The CPA raved about how well-organized and accurate the books were. They even told her this was some of the cleanest bookkeeping they had seen from a first-time business owner, an incredible turnaround from where she had started.

Key Takeaways

The lesson here? DIY bookkeeping can be risky, especially in industries with strict financial regulations. This client isn’t unique; I see the same fundamental issue time and time again. What seems “good enough” might actually be setting you up for a compliance nightmare.

A small investment in expert help now can save you from:

• Major stress
• Costly penalties
• Legal trouble

If you’re handling your own bookkeeping and aren’t 100% sure it’s done correctly, it’s time to take a closer look. Let’s discuss how I can help you avoid costly mistakes and keep your business finances in shape.

Not ready to do it on your own

The QuickBooks Guy offers not just bookkeeping services but a partnership in your financial journey. With a deep understanding of QuickBooks and a commitment to personalized service, ‘The QuickBooks Guy’ is your ally in navigating the complexities of financial management. By choosing us, you ensure that your business’s financial health is in capable hands, allowing you to focus on growing your business.

Don’t let bookkeeping challenges hold you back any longer. Reach out today at 678-923-5904 or drop an email to TheQuickBooksGuy@gmail.com.