The WAY to WOW Shows
Preparing a Business to Be Sold
July 6, 2026
Automatically generated from YouTube captions; names and wording may contain errors.

[0:02] Who are you [music] and where are you going? What do you want? [music] Hello and welcome to Trust and Estates Weekly. I'm your host, Kevin Bemel, and I'm here every Monday at 10:00 a.m. Pacific time to talk about estate planning and trust and probate administration uh from the standpoint of professionals uh like myself, of course, but also my guest Von Marie, who I'll introduce in

[0:37] in just a moment, but also for those of you who don't do this for a living. Maybe you were appointed as the, you know, executive under your parents will. now you're trying to figure out this rather obtuse process. And so hopefully this will give you some information that will help you and um help you also uh speak more cogently to to your advisors. So today I'm um really happy to invite back to the show um my friend Von Marie Thomas. Um Van Von Marie I think maybe

[1:13] it's a couple years ago since you've been on the show, right? Yeah, you von Marie was one of my earliest guests on this show. Um, she is a fractional CFO and bookkeeper based in New York City. uh this this this city that never sleeps from [laughter] from from what I've heard in song. Um and um and and and you know I I asked Von Reed to to come back on the show because there's a topic that um I I haven't we haven't or I haven't addressed on this show and that is dealing with a business that's an asset

[1:49] in an estate and and getting it ready for well figuring out what's going on with it and getting it ready potentially for sale. So, Von Marie, first of all, thanks so much for uh for coming back here on Trusted Estates Weekly.

[2:06] >> Thank you, Kevin, for having me and and for staying in touch all these years. I'm so glad that that you've grown the show to this point. It's so exciting to see. And yeah, so a little bit about myself. Um, I am a bookkeeper and fractional CFO and I help untangle and unravel the messes in accounting world so that you can live your best life. And I I love it. It's my favorite thing to do. [laughter]

[2:37] >> You know, this is an just to to digress for a moment. over my career, um I've I've worked with a lot of uh bookkeepers and accountants and such and um they're some of the nicest, friendliest people I've met in the business world. You know, the reputation is they're really dull or whatever because they, you know, they deal with numbers all day, but but the reality is very very different from from the stereotype. And you certainly fit, you know, fit fit that that um kind of vibrancy that you bring to uh what you do. So,

[3:11] >> so

[3:13] >> tell us before we get started um give us a a little bit about um just how you how a a fractional CFO uh works with uh you know a business so people can understand that as kind of a baseline before we get into the the sort of trust and and estate aspects of this.

[3:36] >> Yeah. So, a fractional CFO comes alongside the CEO or the executive team or the owner depending on what the setup is. and we essentially come in and and help with projections, help with establishing workflows on the accounting side, making sure that all the software talks to each other, making sure that um you have proper documentation to go to a bank, proper documentation and financial statements that that are valid, that are reconciled

[4:11] and that make sense to someone evaluating it from outside. whether that's an investor, right, that you have all your series uh shares all all of it is stated properly and distinguishable as well and and also traceable and so we come alongside businesses and their teams uh either running payroll uh it sometimes [clears throat] looks like a little bit of controllership depending on what the client needs. So this title essentially is a is a catchall for all of that all the operational side of of

[4:47] an accounting firm.

[4:49] >> Got it. And you know obviously for a you know for a publicly traded company okay they've got all kinds of you know financial controls that have to be set up because they're you know so heavily regulated. Um but but for closely held businesses which um as as I recall from you know from the various discussions we've had that that's typically what you're dealing with. It's a privately owned business. I it may be a corporation and has shares but they're not traded on a market. So what are the kinds of um um financial documents that

[5:28] um at least they should be preparing um periodically and and and what should that periodicity be and I'll I'll give you the background to the question which is um in in in my work you know there might be a business and I'll say so you know send me the you know financial statements from from the last 12 months and I'm kind of kind of go like huh the the what you know [laughter] I I know you know if somebody asked me that for my business it'd be like okay you know let's get a portal I'll upload

[6:04] them and you know we're done but but I don't know that that's something that a lot of you know small businesses do so talk to us about that aspect of it if you would

[6:15] >> well I I bet that if you were to ask for that you would get bank statements.

[6:21] >> That is that has been my my understanding from working with with the different clients that when I say something they they understand it differently. Uh it it registers differently in their world and I have to kind of bridge that gap and I do that often. Uh so you can imagine. Mhm.

[6:42] >> So, the financial statements look like a profit and loss statement, which is your your revenue and your expenses listed out uh and summarized by category. And then you'd have your your balance sheet. And that's your your assets, your liability, and then your equities section, which is the the equity section essentially is the is the holder and and the life of the business. So everything that ever happens would be captured and accumulated in that section essentially. Um and any shares, any shareholder

[7:20] equity transactions, those would all be reflected in that area as well. And so with that you and you would also have a cash flow statement, but that's not something that people use frequently unless you you're presenting and it's been requested more formally. Usually in tax world uh with the filing, people are just worried about what their net income is, which is like the difference between the the revenue and the expenses and that is what you're paying taxes on at time depending on the type of entity that you have. Um, I noticed that uh,

[7:59] and I'll get to the the when how often to do the certain things,

[8:05] >> but I I do notice that a lot of people don't even know what kind of legal entity they have.

[8:13] >> Oh, wow.

[8:14] >> Yeah. or if they are um on on their filings, right, on their tax filings, if they are a cruel basis or cash basis and sometimes it looks like I I'm looking at the tax return with them and and we we're we're looking at it together and sometimes they're they're realizing certain sections of their tax return that have been filed for years and they never realized even what what that meant, what it meant to do something in an acral

[8:50] basis versus a a cash basis uh accounting format. And yeah, some and and then

[8:58] >> the other can interrupt for just a minute. um for for pe you and I are familiar with you know cashbased versus acrruel based count but if you would take take a minute or two and and for people who are not familiar with those terms I explain them so so that they understand the difference because it it's it's it's really an important difference. It's such an important difference and it and it sometimes people are like, "Oh, yeah, just book book this because this is what the 1099 says." And I'm like, "Okay, but that 1099 you got it." It's not correct,

[9:35] right? We we accounted for cash basis, which is whatever hits your bank account in in the period in the year in the calendar year. So that's the January through December 31st. And sometimes it doesn't match what someone might receive in a 1099. And you have to go back to those uh vendors or those contracts, whoever sends it to you or vice versa, because there's the ones that you send from your business and then there's the ones that you receive sometimes

[10:07] >> uh depending on your legal entity. And

[10:10] >> you have to make sure that those numbers are right because that gets reported to the IRS. And so cash basis whatever hits your bank account. Acral basis is whatever is realized and recognized because the transaction because the agreement happened versus when the cash transferred. Right? If you have a contract even if the contract pays out in seven months you're you're recognizing whatever portions of that revenue is already delivered to that client. It's not based on when they paid you and and yeah essentially.

[10:47] >> So to to put an example on let's say somebody had an agreement to deliver you know 10,000 we'll use the classic economist term widgets right and they've delivered 5,000 but they haven't been paid yet. On a cash basis there's been no there's been no income as a result of the delivery of the 5,000. But on an acrruel basis, if the contract called for a dollar a widget and they've delivered 5,000, then they have to report $5,000 worth of income once they delivered the 5,000 even though they

[11:23] actually haven't received that cash yet. Right.

[11:25] >> And so that has a big difference on the income that one has to report to the IRS and potentially on one's tax liability. Right.

[11:34] >> Exactly.

[11:35] >> Yeah. Okay. Great. Thank Yeah. think I think again I think it's important for people to understand that and and it it kind of blows my mind that people don't realize which system they're on.

[11:47] >> No, they don't even know where it is. They don't know where to look. They don't know where to find it. And and this is when I realize they don't know what kind of legal entity they have sometimes. and and this could lead to issues if you're switching from from tax accountants and and the previous tax accountant might have passed away and and you don't have a relationship with them anymore. And so now the next tax accountant has to really go back in and and pull all your your tax background and detail and make sure that

[12:22] the filings that went to the IRS are are specific and and it explicitly states if you're a corporation, if you're an S corp, if you're LC taxes corp, if you're sole proprietor, and then all all of these things have different implications if you're partnership. My goodness, the time and and in these documents and I I'll get into that a a little bit later because I I know that you we were we're talking about preparing for a sale,

[12:53] >> preparing for and and that all looks like having proper documentation for everything because I've heard horror stories that I haven't been part of but in accounting you you just get to hear certain things

[13:07] >> from the other accountants horror stories.

[13:12] >> It's really interesting and and there's ways to prevent it. Uh, and and that just looks like being very intentional and and for the people that love DIY situations, definitely have some sort of relationship with with an accountant that's willing to review your work

[13:33] >> because there's only so much that chat GPT is going to do for you and automate for you. Yeah, I'm all for AI, but at the end of the day, it's not always going to be exactly right. It'll get you in in a good place, but you want you want that confirmation from someone that's actually going to have to represent the financials in any given situation and can speak to the numbers and the documentation that went into preparing those numbers. And um to go back to the the original

[14:10] question and how often the two primary documents being um the um income and expense report and the balance sheet. So how often should people um be preparing them or having their you know bookkeeper accountant prepare those documents?

[14:28] >> Those documents at minimum quarterly at minimum uh quarterly. and and this means having reconciliations done on on all the the debt uh and also all of the credit cards, all of the bank accounts, if there's investment accounts, at least true them up, right? If there's u many dividends, record them. All all of these things happen at le you want to do that at least quarterly, if not monthly. monthly

[15:03] is the the most perfect way to do them. Real time even better, but you can't you do the reconciliation at month end and that's a proper close and that's enough. Mhm.

[15:15] >> However, if you're if you're not sure if um certain transactions that happen in your in the business are are categorized as an equity transaction or as a distribution, you want to get that clear because if you don't, you'd be reporting distributions under a profit and loss statement and that's not correct. Mhm. [clears throat]

[15:38] >> So, there's transactions that happen in the business that have to do with the owners and sometimes you they they're not business transactions. You have to take them out and that's how you take them out. So,

[15:53] >> yeah. So you do the reconciliations, up update your records, but also make sure that um whatever adjustments need to be made for whatever period for for the month or for the quarter, make sure all of those are made and make sure everything is is is is balanced out.

[16:11] >> Yes. And a lot of times I think one of the more common another common misconception that I see often um I see the the DIYers the people that do it themselves they love to uh place payments for um the loans that they have straight to their profit and loss statement. And guess what? only the interest goes to the profit and loss, right? The rest hits the the balance sheet on the liability side, right? And

[16:47] you need to split that entry, that journal entry out. And if you don't know how to do that, please call me. [laughter]

[16:55] >> Yeah. You know, it is interesting because um I mean, I just I do my books every month both for my business and for me personally. Um and you know, I just use I use Quicken. it's perfectly adequate, you know, and um and then at the you know, after the year is over, I um I go through and sometimes I still have to make a few adjustments before I send it to my accountant to do my taxes. But uh you know, I feel like well, you know, you got to kind of keep up and also then I know what's going on with my business. You know, again, this is kind of what blows my mind is that that so

[17:30] many people don't do this. How do they know if their business is, you know, actually making money, right, without looking at the bottom line each month? How do they know if it's, you know, growing in equity or if, you know, if if it it's getting, you know, swamped by um, you know, debt or something? I mean I I I assume you've seen these situations and and sometimes have to be the uh shall we say the bearer of bad news [laughter] when you know once you get the books into shape maybe maybe share some experiences you've had in that regard so that again people can understand you

[18:06] know the results [laughter]

[18:09] >> bear of bad news. Oh my goodness. Uh I I one off the top of my head we're dealing with a client. We we've categorize all the transactions and and everything and turns out they their previous tax accountant did not file their escorp status. So there's a risk that we might have to restate that the equity a little bit or rework it uh

[18:45] so that it reflects uh escort status properly and and all of the um distributions and and uh payroll taxes and all of that and and the other there I've seen I've seen so many different things. Um, I almost want to ask you to ask me something more specific [laughter] because I'm like I'm pulling from from all these I my files go back quite a lot.

[19:14] >> So, you know, the one you brought up is interesting, right? Because if if an S corp election was failed to be made, so then presumably it's being treated like a CC Corp. And a CC Corp on the one that's a taxable entity whereas an S corp is a pass through entity. So, you know, what what happens when, you know, the, you know, the the owners are thinking, "Oh, well, you know, I've I've, you know, passed this through or whatever, but in the meantime, the corporation, uh, you know, should have paid taxes on income, and I mean, it just sounds it

[19:50] sounds like, you know, and all of a sudden now it's maybe dividends instead of

[19:56] >> Yes. Yes. Yes. Cool." And Oh my goodness. Exactly. And so with with that [laughter] there's there's tax penalties and and those acrew from the the day of of uh it's like the April 15 deadline for the relevant year that that needed filing. And if we're talking about four and five years of of this going um unnoticed

[20:25] >> and and unrecognized and uncorrected, it it's a significant it could be a significant tax liability. And at that point, you probably need to get a lawyer. You probably want to Yeah. It it's because now you're you're dealing with the issue of like this isn't really your mistake that you did on your own. You you hired someone to do x amount of work and they they didn't follow through at the time with the filings that needed and that's that's your protection, right? That

[21:00] you're documenting in the process these communications versus going just in person and there's no email records. Like how do you prove that you were supposed to be escortp as of a certain date and the person that you hired to to file that didn't do so?

[21:19] >> Yeah.

[21:19] >> Right. And Right. And so now not only do you have like the tax liability issue or and the then the future filings, right? How do you file those? You can hire a bookkeeper. You can hire a fractional CFO and the accounting might be done done in quotation marks because things are categorized. But you don't know what the like you haven't paid the estimate taxes estimated taxes or the the annual taxes or to the state to the city and all of these implications start to just

[21:56] come together and it just turns into a big issue,

[21:59] >> right? So, you just want someone to to fight for you and and also defend you against that situation that you know, maybe you were working honestly and and trusting but not verifying that things were filed, right? And and then there's ownership to take on when it comes to double-checking that things were filed or asking for documents that prove the status of your entity and and all of that. So I'm very big on on asking for you know formation documents. Okay. So

[22:35] who's on the formation that oh my wife my your wife where is she on this paperwork sir. You know it's like where where are we seeing the people that we say are partnered to us? I I had another situation where the client had multiple businesses and then uh it was like a a practice style office and and so they medical in the medical space and so they had this this business partner that was referred to as a business partner at all times but good luck finding him anywhere

[23:11] on the documents. He wasn't part of the formation documents. There were no shares allotted to him. There was no percentage of anything outside of him being able to spend whatever he wanted on the company credit card, even paid his rent. So, but but it's okay because it's part of his compensation. And I'm like, okay. So, okay. So now where's the documentation that allows uh employees because now he's not a business partner in my in my eyes,

[23:45] >> right?

[23:46] >> There's a documentation that that proves that this is an employee benefit for for this firm, right? you have proper accounting policies that where where maybe executive level um employees are allowed a stipend, right? And and that's okay. But but you know, it's documented and it's explicit versus a a happen stance. I found a $5,000 rent payment like whose rent payment is this? We already recorded the rent for the month. Where's his second rent? Did you open another office? Like I start asking

[24:22] all these questions and sometimes our my clients don't like that. I dig a little too much. But I just need these numbers to be what they supposed to be, not what you think they're supposed to be,

[24:36] >> you know?

[24:37] >> And and and with a situation like that where an employee is spending money on a credit card or maybe paying his own rent, so where is the documentation of what is actually compensation to him, right? because he would presumably owe income taxes on that, right? So, that becomes another complication. Let's take a quick break and we'll come back and talk some more.

[24:58] >> Yes.

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[25:40] or visit magnumprops.com. So, you know, it it what what you said just before the break is interesting because um you know, you're you're going through a company's books, you're finding things that are problematic and you know, the owner maybe is getting kind of you know, annoyed, right? Um, but I could imagine that at the time when the business is going to be sold, if it hasn't passed muster with you, how is it going to pass muster

[26:16] with potential buyers, right? Is there, you know, therein lies, I think, you know, the rub of of of this, you know, issue for for our subject today. And um so um talk if you would about um how you work with a business um despite whatever sort of you know how however annoyed an owner might be. to create um um documents that will

[26:52] actually stand up under scrutiny, you know, by a third party who's, you know, considering acquiring the business, right? Because other otherwise, if I'm buying a business and I I can't rely on the financial statements, what am I buying?

[27:12] >> Right? It looks like It looks like making sure that that there are documents, right? So I I don't prepare the documents myself. When it comes to legal documents, I do expect that the client, you know, either get some prepaid legal services or something like that, maybe legal shield and have their their lawyer prepare the legal documents so that they are valid and and you know,

[27:47] >> I'm sorry I maybe I'm I'm I misled you with the question. I mean, in terms of the accounting documents, right?

[27:53] >> Oh, okay. Okay. Okay.

[27:54] >> Right. So, so let's say I'm considering buying a business and you know presumably what I pay for the business is going to be based on the profitability of the business, the um the net worth of the business. Um so how do you how do you then you know prepare a company um despite what could look like a lot of irregularities in the books, right? because I as a buyer I'm I may want to go in and you know audit the company or audit its books um to

[28:30] understand what it is that I'm buying. So, you know, you know, what is what is I guess the process maybe that you take the company through to make sure that from an accounting perspective, um, potential buyers will look at it and and have confidence that they understand financially what's going on with the business. Well, we we make sure that the the accounting reflects the legal entity that the company is, right? And and whatever accounting policies need to be

[29:06] applied, we apply them. And from there, we also make sure that whatever is being reported is true information. making sure that if it if it happened because we we have it in the bank. It happened because we have the agreement and the the there was a a completion of of that service and and we recorded such revenue and and it's all all the details pertaining to that transaction are are recorded and and properly reflected. at that point, you know, it it's a sign of

[29:41] books you can stand by and and honestly say that yes, these transactions are true. I've seen situations where there's a lot of like end transactions that end in zero and and they're like 5,000 5,000 5,000 5,000 and but if you ask for a receipt, there's no receipt that matches the date of the transaction

[30:07] >> for that amount. So, that's a that's another thing uh another point to to take a look at. And we make sure that there are receipts for the different transactions as well if that's something that the client wants us to do because it's it's very specific work. And also, we're we're not the originators of these receipts. Again, depending on the client to to have the courtesy of simply even just snapping a picture or forwarding a copy of of the transaction so that we

[30:42] can attach it inside of the accounting software. So, there's only so much I can do with with like getting every receipt for every transaction

[30:51] >> unless it's a subscription and and that automatically will hit your inbox. things like that. Those are are simple, but you you if you went to the coffee shop on the corner for your business meeting and you spent $200, okay, um you definitely want to have a receipt for that and and maybe even document who was there and the time it took place and that's going to be visible on the receipt. If there's five people, if there's two people, it it's on the receipt. So, you know, it's then it's true, right, that it happened and

[31:26] and and it happened on the company credit card. And if it didn't happen on the company credit card or debit card, we're we're adding it in as a contribution to the business and then listing it as an expense. So, those are the things that I I'm constantly thinking about and and I'm asking my clients. I'm like, "Okay, so did you did you always spend for the business inside of these accounts?" And they say yes or no, or they're embarrassed to say what the truth is that they were a bit messy with how they they spent for the things in the

[32:03] business. They might they might have spent on on a personal credit card. And and and I then I ask, "Okay, so did you put anything personal on this card?" even though I know it's a personal card, but you only used it for the business. Is that completely true? Can I count on all these transactions to be business transactions? And so at that point, we can we can bring them in. But if they if they're not, if some of them are personal, they really have to go in and highlight every single transaction that was personal. And that is extremely tedious as well. However, it's something

[32:40] that has to be done for the sake of being able to report the activity that's that pertains just to the business. Uh so yeah I mean you so you that that highlights another point and um I think so well which is I mean today so much of what we spend is done by credit card um that you know if someone is going to be using a credit card for a business it really should be just used for business expenses. the the personal and the business should be separated. Even if

[33:15] one is a sole proprietor and there's no separate entity, right? The legal entity is just the person, right? Um but they can still have a separate bank account for the [clears throat] business that's that's just the business and then they can have their personal checking account and they can have a credit card that's just for the business as well. even if it's, you know, in their name and it's based on their personal credit, they can just designate it, uh, you know, for the business, uh, and and in so doing pretty significantly increase the reliability

[33:51] of of their books and records.

[33:54] >> That is correct. That is something that if they haven't done, they they should do. And it's possible to just designate one card to one of the businesses. Like I have another client that has multiple businesses under the same entity. And I'm like, well, from legal standpoint, that that's messy. But and also then from an accounting standpoint, how do we know that this the contractor spend is not for the real estate business versus like the your assistant that's for the

[34:32] Amazon storefront or uh you're you're making jewelry and you paid someone to put the jewelry. So how do we distinguish with all the different business operations who's getting what expense allocated to them,

[34:53] >> right? Because then the the profitability of that business is is a bit questionable unless it's very clear that only one vendor and it's very clear that that vendor doesn't touch any of the other businesses,

[35:09] >> right? then we can confidently say that this is the vendor that is the assistant that pertains to the Amazon storefront. [clears throat]

[35:20] >> It's the real estate business,

[35:23] >> right? And it's interesting that you mentioned that because I my I my business is one entity but I have several parts to it but each part has its own sort of um you know books and records and I have individual credit cards you know for each part. So, um I mean they're all they're all from the same institution, but but I do have separate credit cards for them. And I do it for myself just because it makes it easier for me to keep track of, you know, of what's going on. And then I have a better view of, you know, which segment of my business is actually

[35:59] profitable and and and which which are not. And I have like like my shows, you know, I don't I don't I don't do these to make money off the shows themselves. Um I do them for other reasons to, you know, raise my public profile, to, you know, be able to showcase um the the the professional competence of of people like you, right? So I don't mind that that part of my business in effect loses money. Um, but I I I want to know how much basically. Yes.

[36:35] >> Right. Um, and and how does that affect the overall bottom line, you know, to to my to my corporation, right? So, um, I just find it's easier to have, you know, separate credit cards by I call them divisions, right? So,

[36:51] >> and and the other the other side of that too, Calvin, is that some some companies are not just a service-based company. They they sell products and if you don't know what it costs to make one one set of earrings or one bracelet or one ring what whatever that is or one pair of shoes or one one uh tamalei one empanala you know like there's so many hungry.

[37:22] >> Yeah. [laughter] Like it's like lunch time over here. But there's there's there's all of that that people don't think about and and it's it goes even beyond the the monthly reconciliation process like that. That's just regular accounting hygiene. But but then the other side of it is is pricing your products so that you stay afloat and and knowing what the cost is to to the business and and monitoring that alongside the the price and the revenue. And so how do you sell this business

[37:58] that you've you've underpriced the product? Your expenses are through the roof. And how do you reconcile that? How do you make it work so that it it does look good when by the time you decide to sell? That's something that you want to think about early on and and monitor with a heartbeat like uh monitor it often.

[38:22] >> Right. Right. I I love that term accounting hygiene. [laughter] I'm gonna I'm I'm gonna use that term from now on. I I'll of course I'll you know give your name for attribution but but I I think that that's you know we we you know brush our teeth twice a day because we need to have good oral hygiene right we wash our hands uh so that we you know have good you know just hygiene in general but we need to do the same thing with with the books and records of our business just like you say sort of daytoday making sure that things are are are done in a uh you know

[38:58] a proper fashion um so that we don't in essence contaminate our businesses and then you know down the road we want to we want to sell a company or or in some ways more complicated you know you the owner passes away and now a third party is responsible for administrating that estate. They want to they need to sell the business and they're looking at this jumble and it's, you know, eyes start to glaze over and now the estate may not be able to realize the full value of that business because there's no way to prove

[39:34] that in fact, you know, the business is worth whatever it is, a million dollars or, you know, $500,000 or $10 million. you know those those un that that accounting hygiene is what's going to support in the end that that valuation. So

[39:50] >> yes yes

[39:52] >> very very very problematic le let's take another quick break.

[39:56] >> Yes. Probate and Trust TV, your curated source for the most useful and insightful content on estate planning and trust and probate administration, featuring standout professionals like Bill Gross, Paul Bralet, James Cunningham, and yours truly. Whether you're a lawyer, accountant, real estate professional, or working on your own succession plan, this channel helps you quickly find the clearest, most practical content YouTube has to offer.

[40:32] Subscribe now to Probate and Trust TV. Spend more time learning, less time searching. So, so vonie let let's take a situation where you know for whatever reason uh you know the business owner has not done you know proper accounting hygiene um and and now you know you've been brought in maybe you were brought in by you know an administrator to say hey I need to get this straightened out because I've got to be able to you know sell this business. So um how far back

[41:11] typically will you you know look at at sort of you know performing after the fact accounting hygiene so that you know the the financial the accounting you know results of the business can be properly understood. Well, it depends on the what the client wants to do, right? There's there I and I sometimes I I I've I've stopped beating myself up about how

[41:47] little sometimes clients are like, "No, no, no, no, no. We're we're it's as of today that we are correcting things like or as of one year ago." and and the previous years that that maybe already have tax filings, maybe th those years, you you let them be what they are, right? They've been filed. Uh, and if you wanted to go back to those years and open them up like a can of worms and and refiles taxes for previous years uh and

[42:24] and restate financials, fine. We'll we'll do it right. We'll do it. We'll we'll work through that process and and we'll get that done for you. And so it just depends on really what the client wants to do and how they want to do it. But really if the taxes have been filed for the company already, maybe we work off of the years that were not filed and and correct from there from that point on.

[42:56] >> So let me give you a scenario. Um and and um let's let's say we've got a company the the you know the owner dies kind of midyear the books are in a mess and so you know I call you up and I say hey von Marie um let's start by getting this year's books into shape. Yes.

[43:16] >> And in and in the process of doing that, you see that there's a lot of personal expenses that were run through the business which

[43:25] >> which art sort of artificially lowers the profitability of the business, right? And so at that and and also then would make the business appear to be worth less money. So at that point, um, if I came to you and said, "Well, if he was doing it this year, right, he was probably doing it last year and the year before, right? Um, I'm probably not going to be able to sell the business just on the, you know, partial financial statements that are

[44:00] done correctly for this year. um I'm probably going to have to provide you know at least what I don't know a year, two years, three years background. What what what would you recommend in terms because you know from my perspective as as a fiduciary I have to maximize the uh you know the return to the estate and so maybe I have to you know go back and have all the books redone and refile tax returns and yes that may mean some back taxes have to be paid but if I have

[44:35] to pay you know a couple hundred,000 in back taxes but as a I get a million dollars higher in the price of the business. Well, that sounds like, you know, a good thing to do, right? So, those would be the questions I would be wrestling with. And, you know, I knowing how I handle things, I would turn to you and say, you know, Vonriie, you're you're the expert. You know, what what would you recommend doing, you know, in in that case? Because now it's not a matter of you have a reluctant owner or an owner is

[45:11] saying, "No, no, no, let sleeping dogs lie. I'm I'm actively saying to you, I don't think I can let sleeping dogs lie." Um, you know, what what do I do? Because if I have to explain this to the judge, I need to be able to have a credible, you know, rationale as as, you know, behind whatever decisions I made. Yeah, that that's such a hard situation, Kevin. Hard. So difficult.

[45:40] >> I mean, if it if if it's going to if as a fiduciary, right, you're that's your task.

[45:49] >> Then you have to do what you have to do. Is it going to be cheap? Absolutely not. So that's the other thing. these uh [laughter] Jack in the Box businesses where you just waiting for the surprise to pop up as you're working through the financials,

[46:08] >> right?

[46:09] >> These are not these are not uh you know the the $200 a month accounting firm,

[46:17] >> right? uh service cost and that that you you it's looking like possibly investing in proper um having someone properly look at this and and paying what it costs to do something like that. Can we do it? Yes. Is it going to cost? Yes. Is it going to be done? Yes. Will it be done well? Yes. And so that that's what you want. That's what you get, you know, and so it it Yeah. I mean, and the other thing I I just that comes to my mind is

[46:52] if the pre if this year the the first six months have been half-hazardly uh taken care of,

[47:01] >> and the previous years are looking about the same, could Could you apply a percentage or um a a discrepancy percentage across the different years uh and and and correct it that way and and prove out, you know, the reasoning behind the the way of of dealing with these certain things that are are not very clear, [clears throat]

[47:28] >> you know, I mean,

[47:33] >> and that's interesting idea. I mean, something like that would be much easier to do, right? and um and and some it you know it might be a credible way to to deal with a problem without having to go through a lot of forensic accounting and you know trying to figure out everything that you know was was done in prior years

[47:54] >> because the other thing too Kevin that could be done is if you've recognized the transactions that are personal this year and go back into the previous years literally pick them out

[48:08] >> extract them and and and could restate those previous years with those transactions excluded and and or or you know properly recorded as distributions which is what they could be or dividends whatever it would be you know I'm just using a general term here like owner's laws or something

[48:28] >> um and then restate your your taxes so that they're reflecting now the the proper true business transactions. That's the other thing that could be done

[48:39] >> which would be more correct to do.

[48:42] >> Right. Right. So there there are there may be more efficient ways I guess of of sort of correcting this problem than completely redoing from you know from from scratch if you will the you know the various stigmas. I mean you still would want at minimum all the bank statements, all the credit card statements, all the loan statements

[49:07] >> and that would be your source information and your your truth uh documents [clears throat]

[49:14] >> and from there were there personal transactions okay we we kick those out to the equity section and then we have a clear P&L right the other thing is that we don't know if this person had transactions from outside of the the business accounts that were able to see, right?

[49:34] >> And then there were missing business transactions like expenses. I wouldn't usually the the thing is I I see a lot of expenses happening outside of business accounts, but I don't see revenue happening outside of business accounts often. So, at minimum, you could probably trust that the revenue is is what it's supposed to be [clears throat]

[49:58] >> unless it was manually entered and it doesn't match the bank.

[50:02] >> Right? So that I mean that's an interesting point because I always think of people as overstating their expenses in order to reduce their tax liability, but indeed sometimes people will incur expenses kind of off the books.

[50:17] >> Um and and now the bottom line is actually inflated because it's not reflecting the true expenses.

[50:27] >> Yes.

[50:27] >> Yeah. Interesting. it, you know, it shows the sort of, you know, perspective, you know, we have to be careful about getting too ingrained in one perspective

[50:36] >> when dealing with these things. Yeah. Well, this this is why this is why everybody needs a von Marie, right? [laughter]

[50:45] >> Keep us from, you know, oh my gosh, I mean, it becomes on on some level it starts to become mindboggling to to deal with it. So,

[50:55] >> it does. It does. and and there's definitely a line in the sand at which we we call it in, right? As as much as we want to dig for every expense, every penny and and bring it in and and apply it against the business like stop with the mess. Stop with the mess. I'm just going to say that I'm going to be a little bit harsh and and just say that just stop like separate your accounts out, separate your transactions out. into the proper uh credit cards or or bank statements or

[51:30] checking accounts and and keep things clear and if not hire someone because these are the kinds of masses that become expensive unnecessarily.

[51:40] >> Right.

[51:41] >> Right. So,

[51:43] >> so and I you know I think that's that's a great note on which to kind of wrap things up because you know in the end um I you know correct me if I'm wrong but your message is you know get your books straightened out if if if it's kind of a mess in the past that that can be dealt with if it has to be but but at least starting today

[52:05] >> either get your act together or get a professional in who will take care of it for you uh so that this doesn't become an ever larger problem as as time goes by.

[52:19] >> Yes. Yes. And and for the DIYers, like wouldn't you want to be on a on a beautiful beach, not worrying about whether you spent the the money on on the wrong credit card? And if you did, you you kind of made a note and you sent it to the accountant and said, "Hey, I I made this mistake. this, please apply this to this business and this entity and you you're going to see it on this side. Like that's the way to just be open about communication and and correcting things and keep your receipts, right? because worst case scenario the there's a million uh

[52:57] transactions inside of your personal account and yes you spent you have business transactions in there but at the end of the day if if we didn't have to dig through all of that because you kept the receipt simply and and you snapped a picture of it and you kept it in a folder and that's all you did. That's worth more than having to go back 12 months worth of personal and business co-mingled transactions

[53:24] >> to distinguish what was what. Because you were conscious enough to save this this document and say, "Oh my goodness, I know this is for the business, but I don't I don't have enough credit limit on that credit card inside of the business. So, I didn't have enough cash inside the business, so I bought it without using the business transactions." But we have the receipt

[53:45] >> and it's it's true. It's real. We we can bring it in. We can apply it. You know that that's like at minimum that's what I would say to do.

[53:55] >> Very good. Well, Von Marie, thank you so much for coming and talking with me today. Uh I'm just great information uh for you know for people who have businesses and for um you know for administrators and executives and personal representatives who are dealing with this issue. This this you know gives us you know kind of a map of of how to handle what what could be a a very complex issue. It it is interesting. What I find is often when there's a business in an estate, oftentimes it absorbs

[54:30] a lot more of my time relative to the value of that asset within the estate. And it's because of these kinds of issues. And so, um, you know, one way or another, the the estate ends up ends up paying for it. So, so thank you so much for coming and talk to me. I really appreciate it. I'll have you hang on for just a minute. wrap up the show and then we'll we'll talk offline for a moment. So, so folks, you you can see that that Von Marie has got tremendous knowledge and experience in this area. And if if you have questions for her, um all of her contact information will be in the

[55:05] show notes. I'm sure she'd be happy to to speak with you. And you know, as I said at the beginning show, Von Marie and I have known each other for a number of years now. we've we've uh you know talked about working on various matters together um and and so you know from that perspective uh you know this is I always give the shameless plug as you know um you know you you would not be in better hands than than uh than having Von Marie handle matters for you. So um okay so then let's see slate of shows. So, Mondays at 10:00 a.m., like today,

[55:41] is uh Trust and Estates Weekly. Tuesdays at 10:00 a.m. is my show, Business Lessons for the Military. Wednesdays at 10:00 a.m. is my show, People Making Money. And then every other Thursday at 5:00 p.m. is my show, Jiggers' Place, where we have a cocktail and a schmoo, talk about things not related to finances. So, those are all Pacific time, by the way. So, if you're on the east coast like Von Marie, just add three hours. And um I thank you very much for joining us. Um always always um

[56:16] nice to to um to be able to pass on important information to you our our viewers and and listeners. So, uh again, Von Marie, one more time, thank you so much for coming on. And that just leaves me to sign off as I always do, which is saying, Marie darling, you are my bell.