Mike AndesFounder, Augusta Lawn Care and Homeworks · Founder of Homeworks and Augusta Lawn Care

You Have The Reports… But No Clue What They Mean

25 Apr 2026 · 2 min

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1:36

In this interview segment, Mike Andes asks Speaker B to identify common red flags that appear when reviewing profit‑and‑loss statements and QuickBooks reports for small‑to‑medium businesses (roughly $1 M–$5 M in revenue). Speaker B explains that many owners already have a bookkeeper or CPA but lack the financial literacy needed to interpret the reports. Key issues highlighted include: (1) owners receiving monthly reports they cannot act on; (2) confusion caused by seasonality, especially in industries like landscaping, leading to misleading month‑over‑month versus year‑over‑year comparisons; (3) misunderstanding net income versus cash availability, illustrated by a case where a business owner reported $300 k net income but could not locate the cash because he was taking large owner distributions that appear only on the balance sheet, not the P&L. The discussion underscores the need for accountants to not only keep tidy books but also educate owners on where to find cash, how to read balance‑sheet items, and why figures may differ across periods.

Chapters

What are some of the things that you see as like the obvious big red flags when you step into someone's P&L or their reports or their QuickBooks? What are some of the things people are doing completely wrong across the board?
What I'm seeing is that a lot of these people who have large, you know, I guess medium businesses who are doing under $5 million a year but over $1 million, they usually already have some type of bookkeeper or a CPA in their lives that they're using and they're getting these reports every month. And there's like a kind of this gap in financial literacy, like they have the report in their hand, but they don't really know what it means or how to take action on what they're seeing or anything like that. And I think that it's our job in a role like mine really to be working on not just being accurate and tidy with the bookkeeping, but also making sure that the owners are actually understanding what they're reading and understanding why there would be difference in periods. Obviously, particularly in landscaping, there's a lot of seasonality. So comparing like year over year versus month over month, that kind of thing. I did just talk to somebody yesterday who he, his net income was $300,000 and he was like, $300,000, where's the money? That's why everyone says that, right? Where's the money? I don't know. But he's not an S corp and he wasn't on payroll. So he was actually, he was taking distributions. Those aren't on the profit and loss, they're on your balance sheet. So then when you actually go to the balance sheet, he had taken probably $180,000, $200,000 in distributions for the year. So if you kind of work that back in, there should be $100,000 left over, right? And just not even, not even knowing where to find that or where to look and having those kind of mysteries, I think is a big thing.