Teaching Tax Flow: The Podcast

0:00:04 Intro: Welcome to the Teaching Tax Flow podcast, where the goal is to empower and educate you to legally and ethically minimize taxes paid over your lifetime. Everybody, welcome back to the podcast. Today, episode 72. We are going to jump into bookkeeping 101 and really, why you shouldn’t even be doing it all, at least yourself. So before we get into it, let’s take a brief mode. As always, thank our sponsor on this episode.
0:00:34 Ad Read / Disclaimer: This podcast is brought to you by strategic associates. Are you a high income earner, real estate investor, or successful entrepreneur who is frustrated by having to pay $75,000 or more of annual tax liability? If so, strategic associates can help. Your first step to saving thousands, if not hundreds of thousands, is to contact Roger Roundy at Roger@strategicag.net or by calling 801-641-2956 and be sure to tell them TTF sent you.
0:01:05 John Tripolsky: Hey everybody, and welcome back to the Teaching tax Flow podcast. If you took the 13 seconds that it probably took you to listen to the intro of this show, you know what we’re going to talk about. So as we jump into this, this is a great topic where anybody at any stage of your business life, if you want to get into business, take a listen to this one because we’re going to talk about those bookkeeping basics or bookkeeping 101, why it’s important, maybe some things not to do and really just diving into why in the heck you should actually do this. So before we intro our guest, Chris Pikiro, welcome back to your own show, sir. How are we doing today?
0:01:43 Chris Picciurro: Thanks, John. You know, it’s always a pleasure being.
0:01:45 John Tripolsky: With is, as I mentioned in a previous episode, I do not pay him to do that. However, it is the ringtone when he calls me, or it should be say that.
0:01:55 Chris Picciurro: Well, I am very excited. I know I say that in every episode, but I’m very excited to have an amazing guest that I’ve known for probably 20 years, the Qob queen of bookkeeping. That’s a PG. That’s the PG version. But no, in all seriousness, from out of the box technology, Lisa McCarthy is an absolute amazing resource. We had to swindle her into joining us, but she’s graciously agreed. And she has worked with companies all the way from the startup mom and pops to Fortune 500 large organizations, and not only helping out with bookkeeping, but also, most importantly, designing bookkeeping infrastructures, systems, processes.
0:02:50 Chris Picciurro: But we’re just very fortunate to have her on the show and she’s put up with you and I for many years.
0:02:57 John Tripolsky: John, that’s very true. So, hey, Lisa, welcome to the party. Welcome to hanging out with these turkeys.
0:03:02 Lisa McCarthy: Thanks for the invite. Glad to be here.
0:03:04 John Tripolsky: And anybody that’s just listening to this, you can probably tell the tone of her voice. She’s like, oh, geez, how did I get cornered with these morons? But in all seriousness, Lisa, let’s talk about bookkeeping as a whole, right? So maybe start us off. And again, keeping it very high level. Again, if anybody is not in business for themselves, or if you are, this is a great topic. So really just talk us through a little bit about why it’s important. Maybe some of the components of bookkeeping or bookkeeping done right.
0:03:35 John Tripolsky: And really just how you got into this, too. It’d be super intriguing.
0:03:38 Lisa McCarthy: All right, well, it’s probably easier for me to start how I ended up here. So I actually hated accounting in fallet. I love numbers. I wanted to go into business, so I ended up in finance. I took the basic two accounting classes you had to take to get your undergrad in business. But I hated it. I’m like, oh, who wants to do this? This is horrifying. Posting stuff manually into these ledgers and making them balance. I’m like, this is mindless stuff. I don’t want to do it.
0:04:14 Lisa McCarthy: So I went into finance, worked in corporate America for a few years, and decided quickly that I didn’t want to do that either. So I went back to school to be a math teacher. Again, my love of numbers. And right about the time I finished getting my math degree and doing my student teaching in an inner city high school, I answered an ad for this woman who was trying to computerize her accounting, and she was doing it all by hand. This was back in. This will tell you how old I am. But this was back in 1992, and so she hired me on the spot. I said, oh, I can do that for you, and she hired me on the spot. And I left that meeting and went to egghead software and said, what do you have for small business accounting? And the guy behind the counter handed me the green box, the Quickbooks box that had been on the market two weeks.
0:05:07 Lisa McCarthy: And so I played with it, and pretty soon, I knew it better than anybody around me, and I was in the right place at the right time. I started working with business owners that were trying to move off of pen and paper or move off of clickin over to Quickbooks, and just my name got out there. And I met Chris as a result of doing a Quickbooks seminar for CPAs at the casino. Right. I think it was up north in Michigan.
0:05:38 Chris Picciurro: Yes. We met Bob almost 20 years ago, I would say, in the Michigan association of CPAs. I was just a newer member, just started my practice a few years before, and Lisa was one of the speakers that was presenting what’s new with Quickbooks, probably, what, 2004, 2005? Somewhere in that range.
0:05:59 Lisa McCarthy: I don’t even know. It was a long time ago.
0:06:03 Chris Picciurro: The room was packed, obviously, but we actually met watching the Detroit Tiger game in the hotel lobby bar or the bar at the casino.
0:06:13 Lisa McCarthy: Right. We were both sitting at the bar having a cocktail. He’s like, oh, I was just in your class, and we started talking, and what do you do? What do you do? So I explained to Chris what I do for a living, and he was interested, and we kept in touch. And I don’t know, ten years later, he pulled my card out of his wallet or wherever he kept it out of his desk drawer, and said, I need help with a client and with the architecture because it’s kind of complicated. The bookkeeping is kind of complicated. So that’s an example of something that was complicated.
0:06:49 Lisa McCarthy: Most bookkeeping is not complicated. Even though I didn’t like it, I did go back to school again, a third time to get a master’s in accounting. I never quite finished because I started teaching quickbooks classes all over the country and was way before virtual learning existed. You had to physically be present, which wasn’t possible. But I almost finished it, and all the light bulbs came on, and I was like, I totally got this. I can have intelligent conversations with cpas and intelligent conversations with business owners and trace through all the debits and credits and understand a little bit of tax law and so on and so forth. Although I never try to do what Chris does, I don’t try to advise people on tax law. That’s when I pick up the phone and call Chris and go, how should we handle this?
0:07:38 Lisa McCarthy: But, yeah, from the architecture standpoint, from the implementation standpoint to a new business owner, bookkeeping is usually the thing they fear the most about buying a business. We work a lot in franchising, and if you think about a typical franchise owner, they’re buying a business, and they’re expecting everything to be handed to them. This is how you do this, this is how you do that. And accounting is one of those things. It’s just like having to learn how to make the pizza or change the oil in the car or whatever it is that you’re selling as a franchise.
0:08:16 Lisa McCarthy: A general business owner doesn’t necessarily have the resources that a franchise would have. A franchise system knows enough, the good ones know enough that they need to define an accounting bookkeeping process and provide the tools and resources to their franchisees when they start their business so that they start off on a good foot forward.
0:08:40 Chris Picciurro: Well, and that’s something to understand, is that bookkeeping, and this gets confused a lot as someone that is a CPA and runs a private practice, is that bookkeeping and tax are different functions, totally in different specialty areas, and they need to complement each other. And if you’re interested in getting the best result possible on your tax return and doing tax planning and strategy, you need the proper bookkeeping. You need chocolate chips to make chocolate chip cookies.
0:09:05 Chris Picciurro: So that’s why for someone like myself and other cpas, it’s essential that we work with bookkeeping firms that provide great service to our clients so that we can do what we do. So it’s amazing. Lisa, think where you’re at right now versus if you would have stuck with teaching, pretty crazy.
0:09:25 Lisa McCarthy: Bookkeeping is a specialty, and it’s different than accounting. Even the terms accounting and bookkeeping are used interchangeably, but they’re completely different. So bookkeeping is just essentially the recording of business transactions. So everything you do as a business owner, buying a material or supply, or making a sale, or transferring money between bank accounts, or paying your employees, or paying a subcontractor, anything you do, there’s an underlying business transaction that happened, that transpired and that has to be recorded in a systematic way.
0:10:07 Lisa McCarthy: And that’s what bookkeeping is. And it’s not sexy, it’s not fun. It’s kind of boring, actually. So as a business owner, we say, why do it? I mean, I certainly know how to do it, but I have a team that does it internally for me. And if you’re not big enough to have an internal team, then you should outsource it, because you can spend a lot of time and a lot of effort doing things incorrectly and then creating a mess for your accountant who’s trying to advise you on taxes and do your tax returns and give you strategies, but they have no good information to base their recommendations on. So it is the foundation of your business, recording those transactions in the right way so that you have accurate financials. It’s not just about a tax return. It’s about every decision you make as a business owner.
0:11:03 Lisa McCarthy: Do I spend more money on marketing? Do I spend less money on marketing? Am I pricing my products or my services correctly to get the right margin? Am I paying my bills on time? Am I going to have cash flow problems? Because I can’t see the numbers. I can’t see the forest through the trees. So a bookkeeping service or a bookkeeper plays a very important role for the business owner. And the biggest mistake I see business owners making is they try to take their receptionist and turn them into a bookkeeper.
0:11:39 Chris Picciurro: Oh, gosh. Or their spouse.
0:11:41 Lisa McCarthy: Or their spouse.
0:11:42 Chris Picciurro: That’s a recipe for disaster.
0:11:45 Lisa McCarthy: It is a recipe. I sometimes end up being the negotiator or the counselor between the husband and wife who, the wife got stuck doing the bookkeeping and had no interest in doing it. But the husband trusts that person more than anybody else on the planet, and so they want them doing that. So there’s a way you can fractionalize bookkeeping tasks to keep control of the things that you feel you need to keep control of and outsource the things that are kind of the busy work that it’s not really in your best interest to spend time doing. You should be outgrowing your business.
0:12:25 Chris Picciurro: Well, and that brings up a good point. So when should someone consider working with a bookkeeping firm or professional bookkeeper? Obviously, there are people that try to do it on a napkin, or they have drive around an f 250 and all their bookkeeping is on their dashboard with a coffee stain, or they use a spreadsheet. But when is the time? We’ve all started at some point in business. But I would even argue that if you look at your household as a business, it’s the same concept. Money coming in, money going out, and that sort of stuff. So there’s people that hire bookkeepers and accountants as a family office, and they just need that expertise. But just for what would be your trigger or your advice of when someone should consider hiring a professional bookkeeper?
0:13:19 Lisa McCarthy: You know what? It’s when you don’t want to do it anymore. So, like when you first start a business and you don’t have a lot of sales yet, you have time to tinker around, or it’s interesting to you because you’re learning a new thing. You want to be involved in your cash flow, you want to be involved in the money aspect of things, and it’s a new little venture in your world. And so there’s value to being, we call those people do it yourselfers. Okay, there’s a value to being a do it yourselfer at the beginning, but at some point it’s going to feel like it’s a chore and you don’t want it.
0:14:04 Lisa McCarthy: I mean, how many things do you have on your to do list that you put off and you put off. And you put off because you don’t want to do it. It’s a chore. You’re like, I know I got to do this, but I don’t want to do it. Right. When you start to feel that way about your bookkeeping, that’s a really good time to outsource it. And usually you feel that way because you’re really busy and you’ve got other things you’re trying to tend to that is more exciting, like making that next sale, like negotiating that next deal, like hiring new employees and training them on whatever it is that makes your business tick.
0:14:39 Lisa McCarthy: And this is not the sexy part of the job. This is the kind of boring, mundane, blah, blah, blah. Now, some people love doing it, and that’s the bookkeeping people. They love doing it. Right?
0:14:54 Chris Picciurro: Some people like doing that. But at some point, the opportunity cost. Pardon.
0:14:59 Lisa McCarthy: If you asked me to personally do bookkeeping all day, I would jump off of the nearest bridge, okay? But what I do love doing is training other people to do it or architecting a process for them to do it as simple as possible. I’m all about keep it simple, stupid. And so I try to take every workflow. How are the transactions coming in? How do you know about them? Do you have a front end point of sales system that’s ringing up sales or do you have a website that’s collecting dollars?
0:15:33 Lisa McCarthy: All of those are business transactions that have to get entered into a system.
0:15:38 Chris Picciurro: Before we ask a nice question, I think this is going to get more important. I called it for those of you that listen to the podcast on 1099 ks. I’m calling it the Taylor Swift ticket law. But now they’re 1099 k’s that got bumped another year. But the point is, there’s going to be a lot more 1099 out there, which essentially is going to create a large. You should be reporting all your income anyway, but might create a larger need for bookkeeping in issuing those forms.
0:16:09 Lisa McCarthy: Well, that was actually a big deal this year, Chris, because they changed it this year where if you had ten or more forms that you had to submit, you’re required now to do it electronically. And everybody’s used to doing them on paper. And so we had to do a lot of communications to our client base saying, yeah, no, you can’t do it that way this year. You got to do it electronically. Well, people don’t have the infrastructure to do it electronically or the tools to do it electronically. So the amount that we’re assisting business owners with the 1099, this year has drastically gone up because of the electronic filing requirement.
0:16:57 Lisa McCarthy: So just the fact that laws change around bookkeeping requirements and you can’t do 1099 until your books are up to date and reconciled and all the vendor records are assigned properly and set up properly. So there’s a whole process. And that’s just my biggest word of advice. If you want to learn to do bookkeeping, there’s nothing wrong with that when you’re brand new. But eventually it’s going to be too big of a task that you’re not going to find value in you personally doing it, and you’re going to have to think about outsourcing it.
0:17:34 Lisa McCarthy: It’s not a skill. You just pick up and inherently figure it out. That’s why people go to school for accounting, right? They don’t just figure it out. So you wouldn’t want your dentist to just figure it out. Well, I think I can clean teeth this way. Let me just get in your mouth wide. Let me get in there.
0:17:57 Chris Picciurro: Right? I mean, honestly, when I was young and dumb, when I was teaching accounting, bookkeeping and stuff like that in the colleges, the first day I. You got to consider this a foreign language. If I was teaching Spanish, French. What we talk about here is not going to make any sense to the normal person because it is a foreign language.
0:18:19 John Tripolsky: And, Lisa, it’s great that you really broke it down and separated out accounting, bookkeeping, and taxes, because, like you mentioned, a lot of people, myself included, for the longest time until I met you geniuses. You really look at it as, oh, well, an accountant does my bookkeeping, or as my grandparents used to refer to Chris 20 years ago as, oh, he’s my bookkeeper. Well, okay, well, apparently now your bookkeeper also is your accountant and also does your taxes. So it’s the terminology that gets kind of tossed around a lot. But then also, I’m glad you described how prevalent I guess we can say diyers are, right?
0:18:57 John Tripolsky: This could be anything from working on a house to working on a car to doing your taxes and running a business culture kind of drives people towards, well, you should be able to do it yourself. It seems like with everything we have where this is not one of the best things, probably, that you should dabble, it’s either do it, commit to it, do it right, or frankly, just outsource it. So that being said, as far as for softwares and tools that are out there, I mean, what’s really being used now? I mean, QuickBooks is probably the largest one, I’m going to guess, as far as for anything on there, yeah, that’s.
0:19:34 Lisa McCarthy: Got probably 96% market share. But it’s not usually just QuickBooks. Quickbooks, especially QuickBooks online is the backbone. But then there’s a whole tech stack that goes along with that. So people will use custom software for quoting, sending out estimates, getting signatures via docusign or inventory applications that are managing website inventory. Or it could be a thousand other things dispatching timesheet apps.
0:20:14 Lisa McCarthy: So we moved to where the industry has moved is it used to be you buy the QuickBooks desktop software and it was kind of an all in one application, it would do everything you wanted it to do. So you would architect in that one piece of software everything you possibly could. Right now, the world is all about a tech stack. And so QuickBooks is just one little piece of the total tech stack and it’s all web based.
0:20:50 Lisa McCarthy: Everything is software as a service. If you’re not in that world yet, you will be soon. Developers aren’t writing non web based software anymore. It just doesn’t exist. Right. And I fought the change, right. I wanted to stay with all the desktop softwares and buy it once and own it forever, but that’s just not the way of the future. Technology changes way too fast for that to be a long term solution.
0:21:19 Lisa McCarthy: And the only way to deliver change is through the web. So business owners are having to actually be way more tech savvy than they ever have, because they not only have to learn quickbooks, they have to learn accounting and bookkeeping, they have to learn other tech technologies, and they have to learn how they all integrate and talk to each other. It’s a stressful journey for a new business owner. So that’s why I was saying, in the franchise space in that industry, they take that journey, that figuring out of the journey, out of the process, because they’ve already figured it out.
0:22:09 Lisa McCarthy: This is the tech stack you should use. This is how you use it, this is how you do your bookkeeping, blah, blah, blah, blah. The general business owner doesn’t have that benefit of someone stepping in other than reaching out to a Chris or Lisa and saying, help me, help me navigate this, because it’s overwhelming and I don’t know what, I don’t know. And so that’s what.
0:22:34 John Tripolsky: And really a general business could, I could speak for know how I always like to poke fun at people like myself. In the marketing world, it’s almost like you’re just bombarded, right? Facebook ads, Google Ads, everything, trying the newest, latest, greatest, easiest. It’s. And really all that does is complicate the system, right? So then you got a million different things and you’ve changed tools every quarter for the past two years. All of a sudden you got a roadmap that’s off the charts.
0:23:03 Lisa McCarthy: You hit on something so wildly important that I see happen, too. You’ve got the business owner who’s probably already a serial entrepreneur, right? A lot of entrepreneurs, they see one opportunity and they go after it. And then they see another one. They go after it. Another one. Let’s start another business to do this. Let’s start another business to do that. They have ten different businesses going on. They do the same thing with technology.
0:23:25 Lisa McCarthy: They go, oh, I saw this really cool app that does blah, blah, blah, I’m going to go try it. Okay? And then they half implement it, doesn’t go anywhere. And, oh, by the way, they haven’t even figured out how it’s going to integrate with their bookkeeping and accounting, right? So now half their data is over here, half the data is over there, another data sets over there, nothing’s talking to each other.
0:23:47 Lisa McCarthy: And then they change the technologies, and now they lost the data that was in the first technology and they’re in a second technology. It’s crazy. It’s crazy. I can only imagine they pick out a technology that then is gone, they just stop supporting it. So some random technology that was so new, it didn’t make it and it’s gone. Right.
0:24:14 John Tripolsky: When you work with a new client or a client who’s been in business for a while, but new client to you guys, I know we can go into detail on this forever, so we’ll probably have to do a bookkeeping 201 podcast here soon. But as far as for when somebody comes to you, right. So they may have to get over that mental hurdle of, oh, well, I’ve been doing this myself and I failed. Well, it’s not really failing. Right? Like you’re moving along. It’s time to get somebody else on board and help you out.
0:24:41 John Tripolsky: I know we mentioned some of the tips that they could do, aka stay away from all the tools. There’s 15,000 of them out there. Pick a couple and go trek forward with them. But what are some of the things that you commonly see when clients do come to you? Or they say, I don’t know exactly where to even start. Do you guys approach it as like an analysis? Do you sit down, walk us through maybe that a little bit so we can get some of these people over that hurdle of not your fault. It’s good that you have a problem with bookkeeping, that means you’re growing, right?
0:25:10 Lisa McCarthy: So what? I always do. Not I, but our company, we start with, when was the last tax return you filed? Okay, so if they say, all right, I did my 2022 tax return, that’s our jumping off point. That’s our Gospel. Unless you plan on amending that return, we’re going to make the assumption that your CPA did a great job pulling together what they could. Sometimes they pull out all their hair. Like Chris, who doesn’t have any hair.
0:25:37 Chris Picciurro: Exactly.
0:25:39 Lisa McCarthy: But they do the best they can to pull together what they need to do a tax return. Okay, so we’re going to take that as their jumping off point. We’re going to make sure whatever system they have in place, those are our beginning numbers for the year in question. And then we’re going to go through. You start with the simple stuff, your checking account. We’re going to make sure, because most business transactions touch cash in one way, shape or another. Right. Check going out the door, money getting deposited in, money being transferred around.
0:26:13 Lisa McCarthy: Typically, 95% of the transactions that need to get entered affect cash. So we make sure that all transactions flying through all the business bank accounts are recorded and reconciled. That’s step one. Well, step one is tie out to the accountant’s beginning balances for the new year. Step two is make sure that the cash, everything that flowed through cash, is recorded and reconciled. When I say reconciled, that means it doesn’t mean you get the difference to zero and hit reconcile. Now, which is what people think. That’s the definition of a bankrupt.
0:26:53 Lisa McCarthy: It is. You’ve analyzed and compared everything that went through the bank accounts to what’s in your accounting system to make sure that they balance, to make sure that everything’s recorded and matches, and there’s no differences. But you’re also looking at the stuff that’s in your system that didn’t clear. What did you enter that never cleared the bank? And we see that all the time. They’ll have a business owner, will have ten deposits sitting there from three years ago.
0:27:23 Lisa McCarthy: You really think those are going to clear? When do you think that money is going to clear the bank? If it hasn’t cleared three years ago, you think it’s still going to. Why is that? Sitting there, you’re falsifying your presentation of your cash that you have in the bank with these fictitious deposits that never hit. Maybe because you pocketed the money and used it to go pay for something. Right? You needed the cash for something, or it got recorded twice, and guess what? You doubled up on sales, and now you paid too much tax.
0:27:56 Lisa McCarthy: Or you’ve got these 30 checks that never cleared. Well, maybe they’re sitting in your drawer because you didn’t have the funds to cover them and so you never mailed them. Well, guess what? They’re still recorded as expenses on your book. So we probably need to reverse that. Right? So if you just do that one thing, reconcile cash, then you start with the credit cards. What did you buy in credit cards? That was for business. We got to make sure all that’s recorded.
0:28:22 Lisa McCarthy: What do you own in assets? What are the vehicles you have? What is any fixed assets? Make sure that’s established. And little by little. Essentially, what you’re doing is you’re walking down the financial statement called the balance sheet. The balance sheet is the single most important financial statement in any business. It’s permanent. It follows your business from the day you start until the day you close your doors.
0:28:48 Lisa McCarthy: And if it’s wrong, it’s going to be forever wrong until you fix it. The P l, the income statement, is the other financial statement, but that’s temporary. Every year, you get to wipe the slate clean and start over again at zero. Okay. It’s a little more forgiving. So focus on the balance sheet. Everybody wants to know how much money to make. How much money do you make? How much money to make? What’s my profit? What are my taxes?
0:29:14 Lisa McCarthy: I don’t even want to look at your profit loss until we have analyzed your balance sheet and made sure that every single number on that balance sheet is an accurate number. If that number is right, then by definition, your income statement will be right. If even one number on that balance sheet is wrong, I can’t say with any confidence that your P l is wrong.
0:29:38 Chris Picciurro: That’s what we say all the time. Your balance Sheet’s right, your profits. Right now, there might be different categories for things, but Lisa nailed it. And that goes beyond just business. That could be your personal finances. That could be a simple rental property, because having good numbers, either personally or in business, is the way you plan. And like Lisa said, there’s a lot of times know your bookkeeping system.
0:30:09 Chris Picciurro: No matter what it is or how complex or how uncomplex it is, if it’s giving your tax professional the wrong numbers, you could have a very bad result, actually, a result that’s not accurate and did not go in your favor.
0:30:27 John Tripolsky: It’s almost like, Lisa, you really harped on the point in a good way, that if it’s not right at one point, it’s going to kind of stick with you the whole time. It’s almost like walking down the getting. And Chris, here comes another one of my stupid examples. You’re ready for this one. It’s like walking down the aisle and forgetting to tell your fiance that you have six kids over here, two over there, you got a farm, and you got a one legged dog, and being like, oh, well, life moves on. They’ll never find out, but, you know, forever.
0:30:55 John Tripolsky: So it’s good to get your house in order right out of the gate. And if you haven’t done it yet, I’m going to guess I was just going to say, is it never? I’m sure it gets difficult the longer. You know, we always like to bring my father into the mix here. Captain spreadsheet, very positive. He’s very good with the spreadsheets. He can’t be a bookkeeper on a spreadsheet, I’ll tell you that. So if anybody’s doing this on a Microsoft product, also known as Excel, it’s probably time to move on.
0:31:30 John Tripolsky: Cut the cord a little bit.
0:31:31 Lisa McCarthy: I would say, yeah, there’s nothing that worries us. I mean, like I said, we can start assuming you filed taxes, a very.
0:31:40 John Tripolsky: Important assumption, by the way.
0:31:42 Lisa McCarthy: Right. But sometimes we have to go back a few years, right, to the last tax return, but we just start there and move forward. And we don’t usually go backward because if we find a mistake, and tax preparers make mistakes all the time, it’s not usually because it was actually their mistake. It was usually a lack of accurate information that was given to them in the first place. Right. So they can only operate off of what is in front of them.
0:32:17 Lisa McCarthy: And if it’s not in front of them, they’re not like forensic scientists that can manufacture data, so they’re going to just deal with what they have in front of them and try to make the best of what they have. And sometimes it’s really bad, sometimes all they have are bank statements, and that’s it. And they got to make something work. So if you just go back to that point and work forward, don’t look back, just go forward. Now, if we find some huge, egregious piece of information that surfaces while we’re doing our job, we’ll bring it to the attention of the CPA and say, hey, is this worth amending a return?
0:32:58 Lisa McCarthy: How do you want us to handle it? Usually 99% of the time, the answer is just post the adjustment in the current year and we’ll deal with it.
0:33:06 Chris Picciurro: Right.
0:33:07 Lisa McCarthy: It’s kind of like your come to Jesus. People that have huge inventory numbers on their balance sheet, ginormous inventory numbers. And now they’re having that come to Jesus. I really don’t have a million dollars of inventory. That’s going to have to get adjusted. And it doesn’t just disappear. It has to hit the income statement.
0:33:30 Chris Picciurro: There is a taxpayer I know of someone in our teaching tax flow community. Unfortunately, they did not have good books the opposite way. And they had significant amount of inventory that was destroyed and had big problems with their insurance claim because their books were inaccurate and inventory was off. So I would know to kind of put a bow on it. If you’re listening to this, first of all, thank you.
0:33:58 Chris Picciurro: And second of all, don’t think about if you’re doing your own bookkeeping. Don’t think that you failed. John, you said that, and that’s really something to consider. You didn’t fail by bringing someone in. You just graduated off of doing bookkeeping into something that’s going to give you more enjoyment or more value within your. And even if you’re an individual without a business or rental property, you can start by just doing personal bookkeeping and keeping track of your finances. And like Lisa said, the most important thing is going to be that balance sheet. The balance sheet is a snapshot of all your assets, minus your liabilities.
0:34:37 Chris Picciurro: And that’s your awesome, awesome.
0:34:40 John Tripolsky: Well, thank you guys for jumping to this with us. Obviously, Chris, thank you for coming onto your own show, as always. And let’s do that. Let’s have another episode where we dive into this a little bit more in detail. I know, as always happens with these shows, we get questions after the fact. So I’m sure they’ll start coming in, we’ll populate them up, and then we’ll drag Lisa back here. Maybe even next episode we’ll know. Go back. I think it was. I’m drawing a blank. What episode? It was about hunting pigs. But Lisa’s got a fun pig story that still is part of her life, but totally unrelated to those passive income generators also known as pigs. But maybe we’ll bring that one up next episode.
0:35:20 John Tripolsky: Lisa, thanks for joining us, as always. I know you’re down in Florida now, enjoying your sunshine. I am, jerk. I’m in Michigan still. So as I’m chipping icicles, you southerners can enjoy the sunshine.
0:35:36 Lisa McCarthy: I’m chasing fish around the ocean. That’s why I’m doing.
0:35:39 John Tripolsky: Oh, now she’s just pouring salt in the wound. Do you hear this, everybody? You guys are witnessing this firsthand. The abuse that I have to take running this podcast with these guys. So enough about them. Let’s talk about you. Same time, same place. Back here next week on the teaching tax Flow podcast. Hey everybody, John Trapolski here from the teaching tax flow team. A little bit longer of an episode, but such good information. We didn’t want to cut it short.
0:36:10 John Tripolsky: So that being said, we know you took some great info from this. We did as well, and we’ve been doing this for a while. As Chris had mentioned and Lisa had mentioned on this show, we’ve known each other, obviously, me and Chris have known each other for about 20 plus years, and I’ve had the pleasure of actually traveling around the country a little bit with Lisa and really just seeing her in her element many years back. Actually some great times.
0:36:33 John Tripolsky: But that being said, fantastic episode, as always. There is that thing that you are empowered with, and that is called the play button or the rewind for us old folks. Rewind and play button. Go back, listen to this episode. If you had any specific questions on that, feel free to reach out to us here at the TTF team or lisa directly as well if you needed to. But we will see everybody back here next week with another great topic as we continue forward on our mission of defeating taxes.
0:37:09 John Tripolsky: Have a great week, everybody.
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