Lynda ArtesaniLegal Accountant and Data Migration Specialist at The Proper Trust

Shocking Financial Mistake - Are You Listing Credit Cards As Assets? #chartofaccounts #lawfirms

5 Jan 2026 · 1 min

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0:44

In this segment of a discussion on accounting best practices for law firms, the speakers highlight a critical error in chart‑of‑accounts design: credit cards are sometimes recorded as assets—or even as expense lines—rather than as liabilities. This misclassification leads to inflated asset balances, incorrect expense reporting, and consequently, tax calculations based on faulty numbers, which can cause significant budgeting and compliance problems. The conversation then shifts to how owners should record capital infusions, debating whether such contributions should be treated as advances or other equity entries. The overall message stresses the need for a clean, well‑structured chart of accounts to avoid costly financial and tax mistakes.

Chapters

And so those all need to be super clean. They can't just be hodgepodged everywhere. We've seen, we have seen, I hate to say this and I'll have to say it, we have seen credit cards only listed in the assets and not in a liability. And I was like, wow, that's terrible. That's really, I mean, these are— Or as an expense line. These are taxes that are being paid on bad numbers. That's another thing, not just for budgeting. That's huge. That's a big reason. Huge. Glad you brought that up. So, and when you think about things as owners, like Lynda, what you brought up, and Steve, you might have a few words on this, is when an owner is infusing capital into it, is it an advance?