Lynda ArtesaniLegal Accountant and Data Migration Specialist at The Proper Trust

The Hidden Risks of Poor Legal Bookkeeping 🌟📊

15 Oct 2024 · 0 min

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In this brief dialogue, the speakers discuss how excessively detailed profit and loss (P&L) summary reports—filled with numerous sub‑accounts named after individuals or vendors—can alarm banks and tax preparers. They argue that such granular reporting gives a negative impression of a firm’s management quality, making external parties nervous about the firm’s stability. The speakers advise simplifying the P&L presentation to provide a clearer, high‑level view that inspires confidence among lenders and tax professionals.

You don't want to be giving something to a bank that the bank's going to look and say, gosh, this is so bad that how well is this firm run?
Well, that's a good point. The bank and the tax preparer both. And that's what I say to them. They're going to use this document, the P&L summary report. They're going to look at that and get their high-level look at what's going on. And if you water it down with all these extra subaccounts under people's names and vendors' names and all that, that makes them very nervous about what they're getting into.