Financial Statement Reviews for Law Firms

Welcome to Accountants LawPod, where accounting professionals and law firms converge. Hosted by Lynda Artesani, Sarah Prevost, and Stephen Libhardt. Welcome back to the podcast, everyone. Today's topic is financial statements. What are they? How do you read them? Kind of, Sarah's laughing. I'm gonna pick on her first, Steve.

No, no, you're not gonna. It's so simple, but it's not. I get it. It's hard.

Well, it's hard, you know. Well, first of all, we had a very lovely attorney tell us one time, look, I live in a world of words. I hate numbers. So there's that. And then I think they don't go to school for this. So the balance sheet, we, hey, we've had it with staff. It's confusing. What is the balance sheet? Why is this balance so big? It's like, well, it's on the balance sheet. So it's a little different than a balance looking on the P&L, right?

And how come I don't have any money in the bank when the balance sheet says this?

Or why am I paying taxes and where does it go? How does this relate to my tax return? I'm like, that's— those are great questions. I mean, sure.

But most of the files come to you, they're not, they're not booked to tax, so they don't correlate to their tax return, which is why it's confusing. So what would you say is the financial statement that most attorneys understand?

Profit and loss.

Profit and loss.

Oh, I won the race.

To a degree though. You know, in the profit and loss, some law firms really like to go super deep and they want 8 million, you know, chart of account lines.

It depends on if they were the certain coaching firm too. You get that. We look at it and we're like, oh, there's the ringmaker. I know who their coach is.

Exactly. And you know, the kill what you eat scenario. You want to eat the cane. You want to eat the cane. Eat what you kill.

Even grab the cane back like a—

Yeah, yeah.

What famous silent actor that was again? I forgot, but— Come back over here.

Charlie Chaplin.

Charlie Chaplin.

Yeah. With the hook.

But— Looking at different ways to how they, you know, are they accrual or cash basis? What does that report look like? You know, as an example, when you're running the balance sheet and sometimes you have to change it to accrual to get all the numbers that you need, you know, to get the real picture.

Hybrid method. What can you—

Well, you know, one of the things, Sarah, which we kind of found out, well, we knew, but We are working with a tax and a consulting financial consultant with a client and they specifically talked about looking at the books on accrual basis because you have AR, which we've had multiple conversations with clients that they say, I am cash basis. Do you have accounts receivable? Yeah. Okay. You have invoices. Okay. Well, so it's a hybrid world that you live in. You're just—

Right.

Tax time. But, and then you have to explain that why that is, but I think you can ask an attorney. We've asked attorneys, are you cash basis or accrual? And sometimes they don't know.

We've had that.

More often than not, they don't.

It's okay. I mean, I understand.

No.

I get it. Like, we're not saying that that's your forte and you have to know all these things.

They shouldn't. That's why they hire us.

Yeah.

The benefit of having someone be a part of your financial team and leadership group in that space is the understanding of that moment and what does it correlate to your business as far as efficiency of running. Like Steve, you brought up KPIs. How intricate is it to the moment of time when you're bonusing people out? The proficiency of understanding, like, does this align? Did you write out a simple goal? Does it even kind of align with the goal? Like, I, you know, I'm okay with like a business owner saying, hey, look, I have just this revenue goal that I want to make. Great. What comes behind it? We help you with those things. Most most accounting firms of any size would be able to help with those things.

And sometimes you can ask them their goal and they're like, oh, they're so head down in their work that they, they might generally have an idea, but they don't really have an idea. And then you can help extract that by just shifting the conversation to a more personal one. Like, well, okay, so you don't really have a number earmarked for this year. And you'll say, well, and they might know their sales from the prior year, but then Well, what do you think? You want to go 10%? They'll go, oh yeah, yeah, that sounds good. But they don't really—

What's the path?

They don't— yeah, they don't see like, yeah, okay, 10%. Are you going to lower expenses to get that 10%? You're looking for 10% more on the bottom line. Do you lower expenses? Are you going to raise your rates? How are you going to get there? Are you going to have more customers? Like, how are you going to get there? And I think sometimes when you ask them about what their goals are, they might not really have a set goal. In mind, but then you really kind of need to think about it. But you might say, well, is it within a year? Is it 2 years? You know, maybe set a parameter on the date so they can look at it short-term, long-term. I don't know.

Go ahead. Here's a tip that works. I'm sorry, I just get so excited about this.

Yeah, yeah.

That I'd started doing this year is I, right after month end, right after those bank reconciliations are done, but before you clean everything up, I like to send a report that says preliminary in big fat letters. And I send that off to them and they stop and look at it. They're like, oh, this isn't the final, but how did I do? It seems to catch their attention more.

Good idea.

Yeah. I'm finding that it works. And so they get that preliminary report and then they might call me and say, well, this number needs to be over here, over there. And I've got them then. I'm not chasing them for a meeting.

Yeah, yeah.

No report. And so we can make all those adjustments and then give them their final report and they're involved in the process and I'm educating them. Off the preliminary report. I'm like, you're right. I'll tell them, you're right. I just need to reallocate this one. But I wanted to get— it doesn't affect your bottom line. I just wanted to get this report to you so you could start seeing where you were last month and start planning for this month, next quarter, whatever. Just a little tips and tricks thing that I like to do.

The big thing I feel like one huge takeaway is when you're looking at a set of financials is you're looking at a prior month. But then when you're looking at the year to date? Where does it tie into some of the compliance work that needs to— like, are your revenue goals in a space where you might hit a tax bracket that you otherwise would have not thought about on a personal level, whether it be a business level? Because certain states tax differently, and I feel like this will be more and more held true sometimes in cleanup time, which we've all experienced. And I was going to ask you this, Steve, is it's really hard for us to say this is a true financial statement to your point of preliminary. But how do you reassure them like where we're sourcing that work? Because we may not have it in the right buckets, but we understand how much money you made, right?

Right. You're right. And, you know, a lot of times it's a tool because you've already asked them and maybe they haven't gotten back to you. And so that gives you— that just opens that door wide open to say, hey, we sent this question to you 3 times, so now's the time. Tell me, what is this? You know? And also, I like that early hit, if you will, using that word, with them getting that preliminary report to them, because if they are in a negative situation that month or a very low number, immediately I can get on that receivables discussion with them and say, hey, I see $500,000 in collections sitting out there in your receivables. What are you doing to bring that in to increase your cash flow? And they're like, really? We have that much out there? You looked and saw that? And I'm like, yeah, yeah, you know, there's that much cash sitting out there.

What about Lynda's favorite thing? Can you guess what Lynda's favorite thing on a chart of accounts is? Her number one thing I always see her go for— she's smiling, I know it. I'll help you. She likes to know what money is in transit, where, what's not been received, but never put in the bank. Where the heck is that darn money? And she beats it up. She's the first thing she does.

Well, you know, I'm losing my touch there because we were looking at a client file the other day and I noticed that the chart of accounts had some missing. And one of the things, my pet peeves, my staff knows, if a chart of accounts, like they've added a new account, make sure the number is there, make sure it's in the right numbering order. I don't want it out of order and all that. I don't like to see things and I didn't even notice on this one.

Oh, you, you don't want revenue to be 3000s?

No. And this was, this client had it like they started with 3000 and they, it ended at 3000. It just was like 3001, 3002, 3003. And I'm, Sarah's like, oh, they're all 3000. And I'm like, oh no. And that's just, that's your first tell that there's, eh, something's not right on this file. Yeah, yeah, definitely.

How, what do you both think about the presentation? I know that, you know, financial statements are just really a running list of numbers, right? And extrapolating the details to understand it. What does it mean? Giving some assurances. How do you all feel about displaying it differently in graphs and/or other bite-sized chunks? I mean, what do you think of that?

I like that if I have a firm who's embracing KPIs, Okay. Who is setting goals, who is, who really gets it, what a balance sheet is and what a P&L is. Because otherwise pretty pictures just don't mean much to 'em either. That can backfire on you, I think. Interesting.

You know? That's interesting.

I like the pictures because a lot of them get glazed over with numbers. And I thought it was fascinating, Sarah, that our friend Jacob from Ascend Consulting, he's, they're using Fathom at the firm. And we now have a combined client. And it's interesting that they use that because one of the things I really liked about that was you could set goals and then you could, you could set the goal and then you had this slide thing and it helped you figure out, okay, if I increase my revenue to here.

Oh, I like that.

Yeah. It got you there. Or I decreased my expenses here and it got you to where you were trying to get to. It was like a slide rule thing. It was really cool. And I think the way they set up their KPI system, it's, it's a very It's not a complex platform. I think that the presentation's good. We've been using management reports in our firm, the ones that are in QuickBooks. We use the management one. We kind of bake and build out our own per client, whatever one, like some of them have coaches, they have a specific set that they need. But I find that that one, it's, it's a better looking presentation coming from us than just straight up giving them financials. Don't you think, Sarah, that that looks better?

Yeah, the reason why I ask this is because there's a couple things I personally feel like it's nice to have these external tools be drivers.

Yeah.

But that's all that they are. Part of it is the missing dialogue about the application. What does it take to get there?

Yeah.

But I think, and I feel like if you're in the space, like Steve was saying and what you're alluding to, Lynda, is like if you have a set of records, to me it's like big clean records, financial supporting documentation, like, does, does the alignment of those reports match with what the way you think and feel?

Mm-hmm.

It may not completely. They might be in buckets that don't make sense, right? So understanding that, and then the next step would be, okay, what I'm hearing you say as a goal would be to turn that on and want to drive it. Some people Sometimes when you take what, even just the basics of the financials, and you circle and highlight year-to-date differences or prior year comparisons, which some of the tools that we use internally, we can see because it gives us these percentages I like. But when you highlight them and really start to talk about them, and I feel like Lynda, you've done this very well, when someone is telling you something and you're like, well, let's go in and take a look. Well, that's not what this is telling me, but your practice management is saying this. So I think it's learning the, the myriad of tools that you have available to you currently. If you feel confident in understanding those, then yes, it makes sense to get into these what is possible situations. But I really feel like you first need to make sure, because some people are in business for different reasons. They're not in business for what we think. Some are happy with that solo firm. Yeah. That's fine. And they know and they maintain the same space. That's for them. The other noise and whistles of everything else doesn't make sense because ultimately they're looking at their personal wealth, right? Right. It really drives to their personal wealth. So I feel like when you're looking through the lens of financials, it's how— what is it? What are you looking for? If you're not goal-oriented, that's okay. Let's just— you get the standard set. We, you, we learn how to talk about it, have a meaningful conversation. The problems I see is when people are looking at the two financial statements and how they correlate, is that, that lesson of what does it mean in my cash in the bank, which I think Steve, you brought that up.

Exactly.

Right.

90%. Well, if I have this much profit, why don't I have that in the bank?

That's amazing. Yeah. Where, where did that money go? That money comes up all the time.

Oh, let me tell you. Because of the corporate—

Distribution. Yeah.

It's my company.

It's my company.

Yeah, exactly. But they don't, but you can see how that mindset, I mean, I had that when my own husband used to ask me that question. I don't get this. I said, are we paying the mortgage? Few mortgages here. We pay 10, 15 grand a month on a mortgage. Like some of that cash is going there. So I think that a lot of times they want to tie it back. We've had 'em even with the revenue, they've gone, some of them will go back and just add all their deposits for the year somehow on the bank statement.

Oh yeah, I've seen that.

And then they'll go and say, why is my revenue in Clio doesn't match what I have here? I'm like, wait a minute. Didn't you? Like, they want it to match to the penny. Well, didn't you get a refund on your workers' comp insurance? Is that in there? Did you get a refund, like a return? Those came in as deposits. So that's why it doesn't exactly match to the penny.

Going further, that like we're going to net deposits, you're paying merchant fees on stuff. Or the other thing is you marked something as paid, but you marked it on the wrong date, friend.

Yeah, that's a big one.

That's huge. Especially—

I didn't know dates were that important, Sarah. Close enough. It's only up by 3 or 4 months, you know.

Well, in the game that your smaller firms and solo firms tend to play more, I think at year end they get that idea in their head that they have got to spend down cash for tax purposes.

Yeah.

Buy, buy, buy, buy, buy this, buy that. And then they get into the next year and they're hurting and, you know, or they're hanging on to deposits and not depositing them in the bank, which is not legal. You know.

They better not do that or better not let us know they're doing that. But yes, it's a practice because I've seen that over my years, mostly with contractors.

Yeah.

That they have, you know, all of a sudden January 2nd, there's like a whole giant deposit.

Or they'll post the payment for some reason but not put it in the bank. I never do get that one.

You know, ultimately though, if you think about it, what you put on these financial statements is what's considered a general ledger. And that general ledger has all the details of what hits what account. And those are available for any type of audit, state, any of them. So if you're a business owner and you're looking through that lens and you've got things in there that should not be, you should not be putting them on those cards.

Well, I never understood the whole hold it till the second of the month of January because you're just kicking the can down the road and you're gonna pay it eventually.

What's, what has that done? But again, but again, Lynda, it goes back to, that whole planning thing that we were talking about, where, where will your corporation or your LLC or what it is that it's going to fall. Your time of billing has a big piece to that. Your acceptance of payments, how it works. Like you always say this, if you are money poor, how, what forms of payments are you accepting?

Yeah.

You are not accepting credit cards, you're hurting yourself. Interesting enough, in the latest news thing I saw was you know, some pushback for a lot of retailers with American Express because they're charging such astronomical fees to those retailers. Costco took them off. Now eBay is taking them off.

Oh, wow.

Well, it's 4% chargeback.

I know it is 4%.

That's ridiculous. And so we talk about these ease of costs. But yes, there are ways in our businesses where we can still accept the electronic form of payment in the right way. We just need to make sure we're accounting for it. Just like what we see on surcharges. Anytime you see these, you know, a lot of things getting, you know, pushback or people wanting to sue large groups, ultimately who pays for this stuff? All that theft, who pays for this stuff? Let's be real. They're gonna find a way to have us pay for it again.

Yeah.

So it might be an instant gain here, but it's a loss leader somewhere else. So, Really, if you're kicking it down the curb, why don't you look at your systems first on how you're billing? What's the cadence of your billing? Why are you cash poor? And make sure you understand what that net income correlation is to the cash in the bank. Because you're— there's a deficit of date details that you're missing.

Especially if you're running payroll. I mean, your payroll's gotta come out or you have a big insurance bill where you pay that big chunk that happens in the beginning. You just gotta make sure you know the dates when all that language comes into your cash flow report, which is another important. You want to be able to know when, you know, the financial that you should be aware of. And I think that's kind of the mystery one that's kind of hard to explain. Mm-hmm. But I think that you as an attorney, they should know, and as an accountant, you should be looking at all of these. And profit and loss, everybody wants to look at and they all eyes draw right down to the bottom of the page. Nobody pays any attention in between until they look at the bottom and then like, okay, why is this? And a lot of times we do it through our closing of a month. We'll look at prior years' months equivalent, like April to April. We'll look at the year as a whole. We'll look at January, February, March, April and look at the different months, make sure things stay kind of in the same groove.

Yeah, we're looking for the trends.

Yeah, we're looking to see where things change.

Yeah.

Where things aren't quite the same. Is there— and then sometimes, you know, like you knew by looking at some records this week that Sarah, you said, "Oh, don't forget we lost so-and-so and they're no longer on staff, so we're down an attorney." So when you're looking at the fact that we lost one and there's a regrouping in place—

Oh yeah.

Those things happen, right? And so at the onset you might see something that's like a trigger, but then you realize, well, this happened. So if this happened in the firm, that might be the reason, the causality of of what happened in the story. And I think that sometimes you can take those and put some notes, which I was mentioning in the Law Lab meeting we just had, that ChatGPT is part of Write Tool, which Hector Garcia's add-on and to QuickBooks. And it's, I don't know how to use, not, I don't know how to use QuickBooks without it. And I've been having Chrome issues with problems with QuickBooks. It's just slow and clunky. And I know it's got to do with Chrome 'cause Sarah hopped in and we kind of tried to figure out what the heck's going on. Wasn't just QuickBooks. It's multiple things, and something's going on every day you log in. It's like, update your Chrome, update your Chrome. And I think that— and I went back. I, so I started using Safari, and it's working fine in Safari. So it's not QuickBooks problem. It was a browser problem. But I lose my Write tool there, so I can't use my Write tool, which I, I've trained myself now to use that menu bar, because every— all my hotspot, my shortcuts are right there. And I don't have them if I don't have my Write Tool. And Write Tool has this feature with ChatGPT that it will actually analyze. It's part of Write Tool. It'll analyze your financials and at a really high level look at where things are off and what's changed through the year or whatever. And it kind of gives you a little couple paragraphs and it's pretty, it's pretty accurate.

That's a tool for us, which there are so many tools. To use. That's—

Well, helpful for us because we can look at it, but now I don't have to type it all out because it's kind of just written and tells you what it is.

Again, with all disclaimers, everything you have to really make sure everything ties out correctly.

That actually—

Yes, that's the most important. That may not work. Actually, it might display something to you and it may not be the actual number.

Well, that's why you have to look at it. But if you look at it, you can— and you can tweak it to your own language, but you can kind of take it and kind of look at it. And it's just nice to add into a message to the client. Like we're in Lucio, this is what, here's your financials for the month. This is what we see. You could add to it because you might know more of the backstory that, that it doesn't see. But I, I, I thought it was a kind of, it's a faster tool than actually writing it all out ourselves, which is good. So.

Yeah, there's ways to, that's what I'm saying. Like there are tools out there. There are a myriad of different tools that anyone can use regardless of what we use. And I think ultimately it goes back to the basics, in my opinion, of regardless of what you can use to help you drive the bus, ultimately you have to make sure you're just basically understanding how everything—

Yeah, you have to understand what you're doing, right?

You have to understand those fancy objects that we were just talking about. Those are fancy objects that we can help digest. What, as a law firm owner, what you need to know is is very simply how I make money, how does it correlate, and how I spend money, and where does it land on which piece of financial statement, and ultimately why does it impact me at year end with my personal life. You— those are basics. That, that's basically what you need to follow. And if you, if you're not, there are people out there that can help you digest that and make sure you understand it. But what's important is to have it right. You can't just have bloated figures on there. No.

And you know, some of the larger firms, like one law firm that I worked in, we had 52 cost centers, 52 different attorneys.

Wow.

And so we did class accounting because they wanted to know, we had to allocate like the utility bill among 52 cost centers and all that sort of stuff.

Oh.

And it got to be to where we could just do it in our sleep, but it was a monster to set up. But I'll tell you what, Yeah. Once we got that all set up, we were able to see productivity by attorney related to their cost center class accounting, what they cost for their square footage of the firm and all that sort of stuff and all the expenses. And they were able to, to really build their team by using those numbers. Now, not every law firm is that way. We only have one firm right now that's doing class accounting and we're stair-stepping it for them as they grow. But it really makes a difference for them in planning and also in the type of law. Your financial reports in the type of law that you're practicing, your personal injury law firm, their cash flow is going to totally suck until they get settlements. But your corporate attorney, you know, your corporate transactional type work is going to have pretty steady cash flow going on. So, you have to kind of learn the different nuances of the type of law that we are working with in preparing these financial reports and the tools that we can use to make the numbers make sense for them.

Yeah, that's really—

But you have to have a strong, you know, bookkeeping background, accounting background on what that is. You have to understand, you know, it's easy profit and loss, income versus your expenses. And then that's what you have for profit. That's what's plus or minus, that's your profit. You get to the balance—

Well, let me—

Totally different.

Let me use that. Exactly. And let me use like payroll as an example. The payroll journal for this, this one client that we're doing class accounting for comes over as maybe, I don't know, 10 or 11 entries on the payroll journal. In class accounting for this firm, it's up to almost 30 entries.

Oh yeah, because you have to class it out.

Class it out. Class the whole thing out. And you don't want to— you don't class and you have to explain to the client, we're not going to class your liability payments to the taxing entities because that money was already expensed on the other side and it's classed over there and so on. It's quite a puzzle, but it's a lot of fun.

Yeah, I love that you brought that up because Lynda, I mean, we, we see it and isn't that just an entry that you just put in and it's just going to go—

no. Yeah, the magic wand and poof, it's 30 entries now. No, I really have to stop and think every time there's a payroll, it's like, oh no.

Yeah. But we had one, we looked up one the other day and it's like minus $47,000. Well, something's wrong there. You should be seeing this really large negative number. But you know, sometimes I don't know where the, who backcodes them from other products, but sometimes they're just poorly managed across, or it could be just someone hasn't even integrated it and they're just plunking things into payroll expense.

Yeah.

We've all seen that. Oh, that's wages. Oh, that's the, you know, taxes. It's all expense.

Oh, that just makes my skin crawl.

Yeah. And you have a wrong financial statement now to the point you mentioned earlier, like Lynda's saying it's, well, everything goes up. Okay, but you did not pay yourself like this. This is not net payroll. This is not bloated payroll. Like, it's one or the other.

Or they take a distribution and they put the distribution in as the owner's pay. Oh my gosh, we've seen that.

And then they ask where their W-2 is at the year— at the end of the year.

Yeah, but I mean, they just don't know, right? So they don't know. Distributions is always kind of a tricky area, distributions and contributions. But most— mostly it's the distributions, the money that they're taking out of the firm Stay on top of that. You want to make sure that they know that it's there. You don't want to be hitting them up hard in December. This is what you've taken out all year because they take out a little bit, little bit. Also, it's a very big number. Now they're taxed on that. So they have to really— you have to kind of have the conversation. It's all about the conversations. But when you get to the balance sheet, you're going to get into the, you know, getting into the assets, which law firms don't tend to have a lot of assets on the books.

Yeah.

Yeah.

They really don't. So then, you know, and if you do, like website, maybe they paid $20 grand to have a website done. Then it can be depreciated. Sometimes vehicles, but not really. Sometimes office equipment. So anything over $2,500 should be up there. But then you get into the liabilities and now you're dealing with the trust. You got the bank and the bank and the trust and the trust accounts. There's also school of thought, well, why should I put that on my balance sheets? Not my money.

Bingo.

Gotta go somewhere.

That's the big elephant in the room with law firms.

They have two sets. Oh, you don't want to have another file of it. Who wants to do that? And then it's not—

You've got two sets of books within one.

Yeah, you're transferring the money in one. You really don't want to have it separated off to another file because then you're not going to be able to manage it back. It's too, I think it's too much of a risk. I do, I agree. But then you have equity and the equity can be the really big elephant in the room if you're trying to explain equity to somebody and it really depends on their entity. And how many times have you gotten a file in from a new potential client and you look and it's completely not what they are as a tax structure. And then you're like, whoa, what is this? Why did they have this here? You know? And then you, you have to rebuild that.

Also personal taxes. How many people like to pay it through the business? That's fine, but don't think it needs to live on the P&L, friends.

They do. It was just the tax I got from my profit. Why can't I pay with it? No.

Yeah, it's, it's all part of this bigger conversation of like just knowing these pieces that we can help digest and understand and help you stay on track as best as possible. But you also, you're, you're an engaged participant in this. Just because you told us the information doesn't mean it's just going to magically get into the buckets like Steve said. Yeah, there's a time and place to have conversations.

It's a learning curve with each client.

Yeah, yeah, it is. It is for sure.

You could run the same firm like Lynda and I've seen this before. Steve, you mentioned this earlier, different law firms, different practice areas. You could be the same practice area and have a completely set of different books.

Yeah, yeah.

As you choose a different compensation model, you choose a different tracking model, you choose a different model of understanding that revenue. Like, it's like, whoa, night and day. It's like you're the same, but you're not the same.

Well, you know, one of the big learning curves is when the client first comes to us, when they find us somehow or we find them or whatever, But they're, you know, my CPA said I need a bookkeeper. Here you go. Boom. And then they disappear and it's like, well, you know, it's— you've got to be a part of this. You have to be a participant in this. We're going to share information with you, you know, embrace it and learn it. Or you're— it's your business, you know.

And you see things on the financials, Steve, you're looking at them and you're like, And it says, right, that the tax preparer's initials, that's who put it in. And you're looking at like they just booked to undeposited funds that'll never go away.

There's no— It'll never go away.

Or they book to the accounts receivable, but they make an accounts receivable customer because they don't know who they're— they don't want to make all the individual entries, whatever they're adjusting. They just make one and they put the law name in under the customer just to get it up because you have to put a customer. So they don't book it out to where it belongs. They just stick it there so it stays on the books forever. There's a lot of things you see like that, that there are corrections. My favorite one is when they're trying to book the number to the bank balance because the bank balance doesn't align with the balance on, on in the checking account. So they just put an entry.

What about uncashed checks that are hanging out there? I mean, you know, that's always hiding and they're like, well, why is the balance different? Let me just plug that. No, you can't do that.

Or you're in, you know, two softwares. And one is, you know, your practice management software, but the money did come into the bank, but you didn't record it properly. And now you're wondering why there's a discrepancy between these two. Well, this is why. And that's what, that's what a part of the accounting thing is, is that we're checks and balancing multiple areas, not just, oh, just slap it all together and disappear and we'll give you a report and hope to God it's good.

I just said that yesterday to one of our staff there and I'm like, 'cause you know, we live in a black and white world and people live in a gray world, especially attorneys. So she said, yeah, somebody, one of the people she talked to the other day said, wasn't that good enough?

It's also, it's actually just business owners. It's really hard to understand.

Close enough.

Pieces make sense, right? Like, is this, if you just think, even if you're a creative or you're just starting out, is this an actual business expense or is this not? Like that decision-making process, that's a tool.

You mean every day at Starbucks isn't a business expense? Spencer, on my work. It's on my way to work.

Your mileage to your office.

Well, we, we talked about all this in a podcast recently. You know what you can expense, you know, can you expense your new shoes for court?

No. Yeah. Yeah.

You know, I got these amazing Birkenstocks on. They help me get from my house to my office. No, I'm kidding. Oh man, this was good. I'm glad we talked about this today. I think it's a basic that's important to know. Any aspect, I guess.

Well, and if you're an attorney out there listening to this, you know, we're here for a reason. If you're stuck on your financials, get some help. Don't just ignore it and wait till the end of the year and then give it to your tax preparer.

Don't try to YouTube it.

Right.

You don't know if the YouTube's the right— unless it's our YouTube, don't YouTube it because it might not be right. I mean, I have some things I'm like, what? Just say, yeah. Okay.

I mean, TikTok gave you advice on what you could use as a business expense, and then you're trying to ask me if that's real.

Have you seen that? I've seen that on TikTok. I'm like, that isn't true. But yeah.

Yeah. Yeah. We'll fact check you.

This was a good conversation. All right, Ms. Tiara.

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See you all next week.

Thank you, everybody.

Bye.