Category: Financial Advisors

  • Misclassify Owner Draws and Your Books Will Break

    Misclassify Owner Draws and Your Books Will Break

    If you’re running a small service-based business, chances are you’ve pulled money out of the business. Maybe it’s monthly, maybe it’s whenever cash builds up. But if you’re recording those owner draws the wrong way, you’re setting yourself up for headaches, both in your financials and with the IRS.

    Here’s what most firm owners get wrong, what it does to your books, and how to fix it.

    As a FreshBooks certified Collaborative Advisor, I see this happen far to often.

    1. What Is an Owner Draw—And What It’s Not

    An owner draw is a distribution of equity. It’s not a business expense. It’s not payroll (unless you’re an S-Corp and paying yourself through W-2 wages). And it’s definitely not something that should show up on your profit and loss (P&L) statement.

    But too often, that’s exactly what happens.

    When owner draws are misclassified, say, coded to “Owner Salary,” “Contractor Pay,” or even just dumped into a generic expense bucket, they artificially lower your net income. That messes up your profitability metrics, confuses your tax picture, and throws off any benchmarking you do for valuation or growth planning.

    Bottom line: If your draws are hitting the P&L, you’re doing it wrong.

    2. The Right Way to Record Owner Draws

    The correct bookkeeping treatment depends on your entity structure.

    Sole Proprietor or Single-Member LLC (Schedule C)

    • You don’t pay yourself a salary.
    • You take owner draws, which come out of equity.
    • In QuickBooks or Xero, use an equity account like “Owner’s Draw” or “Owner Distributions.”
    • These transactions should never hit the expense accounts or P&L.

    S-Corp

    • You’re required to pay yourself a reasonable salary as a W-2 wage.
    • Additional distributions can be taken as owner draws, assuming the business has profits.
    • W-2 wages go through payroll and are tax-deductible.
    • Owner draws are not expenses and should be coded to an equity account, same as above.

    Rule of thumb: Only payroll wages go to your P&L. Everything else belongs in equity.

    3. Why It Matters: Real Consequences of Bad Coding

    Let’s say you draw $10K/month and mistakenly classify that as an expense. Here’s what you’ve just done:

    • Inflated your overhead. You’ve artificially reduced your net income by $120K annually.
    • Messed up your margin analysis. Your firm looks less profitable than it really is.
    • Created tax confusion. Your books don’t match your tax return. That’s a flag.
    • Thrown off your compensation benchmark. You’ll be comparing apples to oranges against industry data.
    • Distorted EBITDA. If you’re ever planning to sell, you’ve just skewed your valuation metrics.

    That’s a lot of pain for a simple misclassification.

    4. Cash Flow Still Matters, But Track It Separately

    Just because draws don’t hit the P&L doesn’t mean they’re invisible. They show up on the statement of cash flows and your balance sheet.

    In fact, tracking draws accurately can tell you a lot:

    • Are you over-drawing relative to profit?
    • Are you eating into retained earnings?
    • Is your compensation mix (W-2 vs draw) tax-efficient?

    These are key questions for financial advisors who want clean books, better decision-making, and an easier time at tax season.

    5. How to Clean Up the Mess

    If your books are a mess right now, here’s a simple action plan:

    1. Run a report of all transactions coded to anything like “owner pay,” “personal,” or “draw” in your P&L.
    2. Reclassify them to an equity account on your balance sheet.
    3. Create clear rules for how draws are tracked going forward.
    4. Automate transfers from business to personal if you’re a sole prop, label and track every one.
    5. Work with a bookkeeper who understands advisory firms. The nuances matter.

    Final Thought

    You work hard to help clients make smarter decisions with their money. Don’t let a sloppy owner draw process undermine your own financials. When your books reflect reality, clean, accurate, and tax-compliant, you can actually use them to run a better business.

    Owner draws aren’t complicated. But they are easy to get wrong. Do it right and your books will stay clean, your CPA will stay happy, and your firm will stay on track.

    Need help untangling your owner draw mess? At Becker & Ledger, we help advisors. Reach out and let’s get your books working for you, not against you.

  • Not All Bookkeepers Understand Advisory Firms

    Not All Bookkeepers Understand Advisory Firms

    Most bookkeepers are generalists. They understand restaurants, plumbers, retail shops, but RIA firms? That’s a different animal.

    If your bookkeeper doesn’t understand the realities of a registered investment advisory (RIA) firm or wealth management practice, you could end up with bad data, missed deductions, or even compliance headaches that ripple into audits or regulatory scrutiny.

    Here are five advisor-specific rules every bookkeeper handling an advisory firm must know and apply.

    1. Revenue Must Match Your Custodian Reports Exactly

    For an advisory firm, revenue isn’t just a pile of deposits from various sources. It’s tightly tied to quarterly fee calculations from custodians like Schwab, Fidelity, or Pershing.

    A bookkeeper not used to RIA businesses might miscode this revenue or treat advisor fee income like generic service income. Big mistake.

    Why this matters: Your firm’s revenue records should precisely match your custodial payout reports, not estimates, not “close enough” numbers. Any difference can flag problems during audits, surprise the SEC, or create confusion when calculating KPIs like revenue per client.

    Action:

    • Reconcile revenue quarterly with custodial fee statements.
    • Book revenue using the exact timing and amounts from custodian payouts, not just bank deposits.

    2. Direct vs. Pass-Through Expenses Must Be Split Clearly

    Advisory firms often have expenses that serve both the firm and individual owners, such as insurance, tech subscriptions, or even travel costs.

    A generalist bookkeeper might lump these together, missing the crucial distinction between firm-operating expenses and pass-through (personal or owner benefit) expenses that should hit distributions or shareholder loans, not P&L.

    Why this matters:

    • Misclassification here distorts the firm’s profitability and operating margins.
    • This can directly impact firm valuation (if selling) or tax deductions (if audited).

    Action:

    • Require detailed coding of expenses, including owner draws or personal benefits passed through the firm.
    • Separate legitimate firm-level expenses from those benefiting owners personally.

    3. Compensation Must Reflect Industry Structure (Not Payroll 101)

    Advisory firms handle pay differently than standard small businesses. There’s typically a mix of W-2 wages for owners, guaranteed payments (for partnerships), and distributions, not just plain salary.

    A generalist bookkeeper may not grasp how these fit together, or why the mix matters for tax planning and benchmarking.

    Why this matters:

    • Advisory firms live and die by clean owner compensation data—especially for valuation, growth benchmarking, and tax prep.
    • Wrong categorization can mess up retirement plan contributions or cause IRS scrutiny on “reasonable compensation” rules for S-Corps.

    Action:

    • Maintain clean, separate records for W-2 wages, guaranteed payments, and equity distributions.
    • Benchmark advisor pay against industry norms (FP Transitions, Schwab benchmarking reports) to ensure reasonableness.

    4. Marketing, Sponsorship, and Client Event Costs Need Special Handling (With Examples)

    RIAs spend on relationship-building in ways that don’t fit the generic “marketing” category your average bookkeeper knows. These costs are often partially deductible (only 50%) depending on IRS rules, not fully deductible like digital ads or print marketing.

    Common Examples Bookkeepers Must Handle Properly:

    Google Ads, LinkedIn Ads, Website Development – Advertising Expense (fully deductible) 100%

    Client Appreciation Dinner at a Local Steakhouse – Meals & Entertainment Expense 50% deductible

    Golf Outing or Sporting Event Tickets for Clients – Entertainment (non-deductible or 50% in rare cases) Often 0%

    Sponsoring a local charity event with firm branding – Advertising or Marketing – (fully deductible) 100%

    Hosting a Retirement Planning Seminar (with food) – Split: Food under Meals (50%), room rental under Advertising/Marketing (100%)

    Employee-Only Holiday Party – Employee Benefit Expense (fully deductible) 100%

    5. Custodial Fee Reimbursements and Client Credits Require Tracking

    Sometimes RIAs cover trading costs, wire fees, or credit back certain charges to clients. These adjustments flow through custodial statements but rarely through the general ledger unless the bookkeeper knows to look for them.

    Generalists miss these. Advisor-focused bookkeepers track them, so they match actual client reimbursements against firm expenses.

    Why this matters:

    • Missing these can distort margins or create a regulatory mismatch if client disclosures don’t square with books.
    • SEC audits sometimes review these reimbursements for accuracy.

    Action:

    • Track and reconcile custodial fee reimbursements separately from standard expense lines.
    • Ensure these adjustments match disclosures and client agreements.

    The Bottom Line

    Most bookkeepers are not trained for the nuances of advisory firms. But you can’t afford sloppy financial records or tax errors in this business.

    Ask your bookkeeper:

    • “Do you reconcile to custodian reports?”
    • “Do you separate owner expenses from firm expenses?”
    • “Do you code advisor-specific costs the right way?”

    If they blink, hesitate, or deflect—it’s time to get someone who understands your world.

    Because in wealth management, clean books aren’t just good practice, they protect your firm’s value, your regulatory standing, and your peace of mind.

  • The IRS Doesn’t Care About Your Opinion on Cash vs. Accrual, Know the Rules

    The IRS Doesn’t Care About Your Opinion on Cash vs. Accrual, Know the Rules

    For most small businesses, choosing between cash and accrual accounting is a matter of preference, tax strategy, and simplicity.

    But if you run an RIA, it is not a choice. It is a requirement.

    The SEC requires that all Registered Investment Advisers maintain their financial books and records by Generally Accepted Accounting Principles (GAAP). Under GAAP, accrual accounting is a full stop.

    Many advisors get this wrong, thinking they can run their books on the cash basis because they don’t have inventory or because their tax CPA files their returns on a cash basis. However, for regulatory purposes, the SEC expects your internal books, the ones subject to audit or exam, to follow accrual accounting standards.

    Why Accrual?

    Accrual accounting matches income and expenses to the period when they are earned or incurred, not when cash moves in or out.

    Here is why this matters to the SEC:

    ✅ It gives a true, timely view of your firm’s financial health.

    ✅ It prevents the manipulation of income or expenses based on the timing of cash flows.

    ✅ It aligns with GAAP, which is the baseline for trustworthy, verifiable financial records during an SEC audit or exam.

    For example, if you invoice a client for Q2 services in July and they pay in August, under accrual accounting, you record that income in Q2, not when the money hits your account in August.

    Same with expenses. If you receive a vendor bill in December but don’t pay it until January, accrual accounting books that expense in December, when the liability occurred.

    But My CPA Does My Taxes on a Cash Basis, Is That Okay?

    Yes, for tax purposes only.

    Many RIAs with gross receipts under $27 million (the IRS threshold) can file their tax returns using the cash basis of accounting. But that has nothing to do with your internal books and records required by the SEC.

    For the IRS, cash basis may be fine. For the SEC, accrual is mandatory.

    This distinction trips up a lot of advisors who let their tax CPA handle their bookkeeping. Your tax filings and your internal financials are not the same thing. The books the SEC cares about, those required by the Books and Records Rule (Rule 204-2 under the Advisers Act), must be accrual.

    What the SEC Requires

    Under the Advisers Act, you are required to maintain:

    • General ledgers showing assets, liabilities, capital, income, and expenses, prepared by GAAP (accrual basis).
    • Journal entries for each transaction.
    • Supporting documentation for all disbursements and receipts of funds.
    • Trial balances and financial statements that fairly present your firm’s financial condition.

    These must be updated in a timely fashion and be ready for inspection during an SEC exam.

    Practical Steps for Advisors

    Here is what this means for your firm in the real world:

    1. Use the accrual basis for internal books. Your bookkeeping system, whether QuickBooks, Xero, or another platform, must be set to accrual accounting.
    2. Maintain separate tax accounting if needed. Your CPA can file taxes on a cash basis if you qualify, but that does not change your obligation to keep accrual-based books for SEC purposes.
    3. Work with a bookkeeper or controller who understands RIA-specific compliance. Many generalist bookkeepers miss this critical distinction. Make sure yours does not.
    4. Document everything. Have clear, GAAP-compliant records of all financial transactions. During an SEC exam, sloppy or incomplete records are a red flag.

    Bottom Line

    You don’t get to pick cash vs. accrual based on preference. The IRS allows a cash basis for tax returns in some cases. But the SEC requires accrual accounting for your firm’s books and records, without exception.

    Confusing the two can lead to sloppy records, audit headaches, and compliance risks that simply aren’t worth it.

    If you want your firm’s financials to stand up to regulatory scrutiny and make sharper, more strategic decisions, you need your books on an accrual basis, clean, timely, and accurate.

    No shortcuts. No debate.

    Need help getting your books SEC-compliant, without the hassle?

    Let’s make sure your firm’s financial foundation is rock-solid, audit-ready, and decision-focused.

  • Misclassify one transaction and it could derail your entire P&L

    Misclassify one transaction and it could derail your entire P&L

    Your profit and loss (P&L) statement isn’t just a compliance document, it’s your financial scorecard. But if you misclassify even one transaction, that scorecard becomes unreliable. The result is that your P&L is off, so are your decisions.

    Here’s the truth: small bookkeeping mistakes don’t stay small. They ripple through your business, showing up as skewed margins, flawed cash flow analysis, and inaccurate tax estimates. Below are essential, field-tested strategies to keep your books clean, accurate, and decision-ready.

    1. Start With a Chart of Accounts That Reflects Your Business Model

    Service-based businesses don’t need inventory categories or retail sales tracking. What they do need is a tailored chart of accounts that clearly separates:

    • Fee revenue (services, consulting, hourly, etc.)
    • Owner draws/distributions
    • Marketing and business development
    • Technology stack (CRM, social platforms, email integrations)
    • Professional services (compliance, legal, accounting)
    • Continuing education and licensing

    The mistake most advisors make? Using the default chart of accounts in FreshBooks or QuickBooks. Customize it. A generic structure leads to generic insights and misclassification.

    2. Treat Owner Expenses Like the IRS Will See Them

    It’s easy to blur the lines between business and personal when you’re solo or small. But sloppiness here creates two problems:

    • It invites audit risk.
    • It distorts your operating margin.

    If you pay for something personally that should be reimbursed (e.g., a business meal on your personal Amex), log it correctly as an owner contribution + business expense, not as income or a loan.

    On the flip side, if you expense something borderline (e.g., a golf outing that wasn’t client-related), and your bookkeeper logs it under “Marketing,” you’ve artificially inflated your spend.

    Build a policy and stick to it. Consistency beats creativity when it comes to classification.

    3. Know the Difference Between Cost of Goods Sold and Operating Expenses

    This one trips up a lot of service-based businesses. You typically don’t have a Cost of Goods Sold (COGS) section because they don’t sell products. But some tools, like creative platforms or client portal software, can blur the line.

    Here’s the rule of thumb:
    If the expense scales directly with client count or revenue, consider treating it as COGS.
     Otherwise, it goes in operating expenses.

    Example:
    A performance reporting tool that charges per household might reasonably belong in COGS, while a flat-fee compliance consultant does not.

    Getting this wrong affects your gross margin, which influences how you benchmark yourself against peers or set pricing.

    4. Reconcile Monthly. Review Quarterly. Never Skip Either.

    Reconciliation isn’t optional. Every account, bank, credit card, and payment processor should be reconciled monthly. Otherwise, small errors (double entries, uncategorized deposits) accumulate fast.

    Then, do a full P&L review quarterly. Look for:

    • Weird spikes or drops in categories.
    • Expenses logged to “Ask My Accountant” or “Miscellaneous.”
    • Negative numbers where they shouldn’t exist.

    And don’t just glance, ask why. Fixing one miscategorized transaction now can prevent hours of correction later. More importantly, it can stop you from making a bad decision based on flawed data.

    5. Avoid Over-Automation Without Oversight

    Bank feeds and rule-based categorization save time, but only when managed.

    If your system auto-categorizes Stripe deposits as “Sales,” but part of that money is client reimbursements or pass-through fees, your revenue is overstated. The fix? Audit your rules every month and disable any that no longer apply.

    Automation without review is just an automated error.

    The Bottom Line

    Bookkeeping isn’t just about staying compliant—it’s about staying sharp. Many businesses live and die by data-driven decisions. A clean P&L helps you price services right, control costs, and grow profitably.

    So don’t treat bookkeeping as a back-office chore. Treat it like the foundation of your strategy. Because the moment you misclassify a transaction, you stop managing your firm based on reality and start managing based on fiction.

    When you’re ready to spend less time keeping the books, reach out.

  • If you’re not reconciling every month, your books are lying to you

    If you’re not reconciling every month, your books are lying to you

    Sarah thought she was on top of her game. Her financial advisory practice was thriving, client assets under management were climbing, and she’d finally hired that associate she’d been putting off for months. But when her CPA called in March with a bombshell about her year-end financials, her confidence crumbled faster than a house of cards.

    “Your books show $47,000 more in revenue than what hit your accounts,” he said, his voice carrying that particular blend of concern and frustration that accountants reserve for moments like these. “We need to figure out where this discrepancy came from.”

    Sarah’s stomach dropped. She’d been diligent about entering transactions, tracking client fees, and monitoring expenses. How could her books be so far off?

    The answer was deceptively simple: she hadn’t reconciled her accounts in eight months.

    The Silent Killer of Financial Accuracy

    Here’s the uncomfortable truth most financial advisors don’t want to face – your bookkeeping software doesn’t talk to your bank. Those automated feeds? They’re helpful, but they’re not foolproof. Duplicate transactions slip through. Bank fees get miscategorized. That $2,500 client payment you recorded? It might have bounced, but your books don’t know that yet.

    Without monthly reconciliation, these small discrepancies compound like interest, creating a financial picture that’s increasingly divorced from reality. You’re making business decisions based on phantom numbers, and that’s a recipe for disaster in our industry where precision isn’t just preferred – it’s required by regulators.

    First—What Does “Reconciling” Actually Mean?

    Reconciling is the process of comparing your accounting records against your actual bank and credit card statements. You’re verifying that what’s in your books matches what’s in reality.

    It’s not just about spotting duplicate transactions or catching a typo. It’s about making sure the cash in your accounting system is the same cash your bank says you have. That means you’ve accounted for every deposit, expense, refund, fee, and transfer—accurately and completely.

    When done right, it’s the financial version of checking your mirrors before changing lanes.

    What Happens When You Don’t Reconcile?

    Let’s be blunt: bad data leads to bad decisions. And unreconciled books are filled with bad data.

    Here’s what happens when you skip monthly reconciliation:

    • Cash flow looks stronger than it is. Uncleared checks, duplicate deposits, or missed fees distort your balance.
    • Expenses are understated. Especially if you rely on credit cards or auto-drafted payments. Those don’t always get captured correctly.
    • You overpay (or underpay) taxes. That opens the door to penalties or audits.
    • Your reports lie. P&Ls, balance sheets, budgets—everything you base decisions on becomes suspect.
    • You lose credibility. Lenders, partners, and even your CPA will start to question the numbers.

    I’ve seen owners run profitable businesses on paper while bleeding cash in real life—all because they weren’t reconciling.

    The Real-World Fix: Build a Monthly Close Process

    Reconciling doesn’t have to be a heavy lift. But it does need to be part of your monthly close routine. Here’s what a clean, real-world process looks like:

    1. Download your statements. Don’t rely solely on the bank feed. Pull your official bank and credit card statements.
    2. Categorize and match transactions. Use your accounting software’s reconciliation tool (e.g., FreshBooks “Reconcile” function) to compare and match line by line.
    3. Investigate discrepancies. Any unmatched transaction needs attention. Is it a timing issue? A duplicate? A missing entry?
    4. Clear uncleared transactions. Old outstanding checks or deposits that never hit? Deal with them. Don’t let them linger for months.
    5. Reconcile petty cash, PayPal, and merchant processors. If it touches money, it needs reconciliation.

    Bonus: Always reconcile before running reports or doing your monthly financial review. Otherwise, the data’s garbage.

    Tools That Actually Help

    Don’t overcomplicate this. You don’t need expensive apps or flashy dashboards. What you need is consistency and clarity.

    • FreshBooks has a solid built-in reconciliation feature. Use it.
    • Bank Rules save time but need to be reviewed regularly.
    • Reconciliation Reports—save a PDF copy each month as part of your documentation trail. If you’re ever audited, this becomes gold.
    • Checklist in Notion, Google Sheets, or your task manager. Build a simple workflow you follow every month.

    This isn’t sexy work—but it’s foundational. Skip it and everything else cracks eventually.

    Final Thought

    You wouldn’t sign a contract without reading it. Don’t trust your books without reconciling them.

    If you’re behind, start fresh this month. Reconcile one account. Then the next. Get back to baseline and make it part of your monthly rhythm. It’s not optional. It’s not “nice to have.” It’s non-negotiable.

    Too busy to dig through your books every month? If you’re ready to hand off your bookkeeping to someone who actually understands business, get in touch. You run your business—I’ll keep the numbers honest.

  • Maximize Your Firm’s Profits with Expense Audits

    Most business owners don’t lose clients—they bleed profit slowly through poor expense tracking. 🩸

    →What I wish more firms knew:

    It’s not the big-ticket items killing your margins—it’s the dozens of small, recurring charges you stopped questioning. Software you no longer use. Subscriptions you forgot to cancel. Vendor creep.

    You wouldn’t tolerate this elsewhere in life. So why 🤷‍♀️ allow it in your own P&L?

    ✅ Run a monthly expense audit.
    ✅ Categorize every line item.
    ✅ Set thresholds for review (e.g., any increase over 10%).
    ✅ Use real-time reporting to catch trends before they balloon.

    Firms that track expenses proactively don’t just save money—they create room to reinvest in growth.

    Profit leaks are silent, but they’re not invisible if you know where to look.

  • Income-Related Bookkeeping Mistakes Advisors Can’t Afford to Make

    Income-Related Bookkeeping Mistakes Advisors Can’t Afford to Make

    If you’re like most advisors, your clients come first, which often means your back office comes last.😞

    But bookkeeping, especially how you record income, is one of those areas where “later” can turn into a compliance problem, billing error, or credibility issue fast.

    Here are four common income-booking mistakes often seen in advisory firms—and how to avoid them:

    1. Misclassifying Advisory Fees vs. Commissions

    Advisory fees and commissions should be tracked and disclosed differently. Yet many advisors lump them together in one income line—or worse, mislabel them entirely. That might seem harmless until you’re asked to produce accurate breakdowns during an audit or valuation.

    Fix: Create clear income categories (advisory, commissions, planning fees, etc.) and code transactions accordingly. Automate wherever possible.

    2. Failing to Track Fee Splits Properly

    If you share revenue with another advisor, entity, or platform, how you record revenue matters. Many firms record gross income but forget to document splits clearly, creating confusion in P&Ls and inconsistencies with CRM or custodial records.

    Fix: Book gross income and track splits as separate line items or classes, so you can report both revenue and actual take-home income cleanly.

    3. Skipping Revenue Recognition for Accrual-Based Firms

    If you’re accrual-based but still recording income when the cash hits the bank, you’re not only misrepresenting performance, you’re also making year-end financials harder to reconcile. It can also distort key ratios used for practice valuation.

    Fix: Recognize income when earned, not received. Use invoicing tools or journal entries to align with proper timing.

    4. Inconsistent Entries Across Platforms

    Revenue data often lives in multiple places—custodians, CRMs, spreadsheets, and your bookkeeping software. If those don’t match, you’re asking for problems during compliance reviews or due diligence.

    Fix: Reconcile regularly and ensure your income records align with source documents. Don’t rely solely on downloaded CSVs—verify and standardize.

    Why It Matters

    FINRA’s 2022 exam findings noted that nearly 30% of firms had recordkeeping deficiencies, many tied to income reporting. The SEC expects accurate financial records, especially when calculating AUM fees or disclosing compensation.

    Sloppy bookkeeping might not seem urgent… until a regulator, buyer, or CPA starts asking questions.

    A Final Thought

    Your books should be an asset, not a liability. Clean income records build trust, reduce stress, and let you scale with confidence.

    If your books are messy or your income categories feel more guesswork than system, let’s talk. I help service-based businesses (including advisory firms) clean up and streamline their back-office systems so they can grow without surprises.

  • Streamline Your Finances: Best Tools

    Streamline Your Finances: Best Tools


    As the owner of a service-based business, your expertise is your bread and butter, not necessarily in managing your back-office operations. Yet precise bookkeeping is the backbone of any successful business. I’ve spent years watching owners struggle with outdated spreadsheets and manual processes when there are incredible tools that could save them hours every week.

    Let’s cut through the noise. Here’s my field-tested toolkit for those that want to spend less time reconciling accounts and more time with clients.

    Cloud-Based Accounting Software: Your Foundation

    If you’re still using desktop accounting software (or worse, spreadsheets), you’re leaving efficiency on the table. Cloud-based platforms have revolutionized bookkeeping for advisors:

    FreshBooks has become increasingly popular among service-based advisors. Its time tracking integration automatically captures billable hours, and its client portal capabilities are intuitive enough for most practices. The key advantage? The user interface is so clean that clients actually engage with their invoices and payments, improving cash flow.

    QuickBooks Online remains the industry standard for many. Its bank feed integration automatically pulls in transactions, and its reporting capabilities are robust enough for most businesses. The key advantage? Nearly every accountant knows how to use it, smoothing tax season transitions.

    Pro tip: Whichever platform you choose, set up a chart of accounts specifically designed for financial advisory firms. Generic templates won’t capture the industry’s unique revenue streams and expenses.

    Expense Management & Receipt Tracking

    The days of hoarding physical receipts should be long behind us:

    Expensify or Dext (formerly Receipt Bank) have mobile apps that let you snap a photo of receipts on the go. The OCR technology extracts vendor, date, and amount information automatically and syncs with your accounting software. I’ve seen advisors recover 2-3 hours weekly just by implementing this simple technology.

    Payroll and HR Management

    For multi-advisor practices:

    Gusto has become the gold standard for payroll. Beyond the basics, it handles the complexity of split compensation models (salary + revenue share) that many growing firms implement. Its self-onboarding features for new employees drastically reduce administrative overhead.

    Time Tracking for Billing Transparency

    For billing hourly or tracking time against retainers:

    Time tracking in FreshBooks transforms how service-based businesses capture revenue. Its one-click timer automatically logs billable hours as you work, and its project-based organization ensures nothing falls through the cracks. The key advantage? You can track time directly from any device, then convert those hours into invoices with a single click, eliminating the revenue leakage that kills profitability.

    Toggl or Harvest provides simple interfaces for tracking time spent on different clients and projects. The reporting helps identify which clients are profitable and which might be consuming more resources than their revenue justifies.

    The Integration Factor

    Here’s what separates average firms from exceptional ones: integration. Each tool above is powerful, but when they talk to each other, the efficiency multiplies.
    For example, when FreshBooks connects with Gusto for payroll you create an ecosystem where data flows without manual intervention.

    Getting Started: Your Next Steps

    • Audit your current processes – Where are the bottlenecks? Which tasks consume disproportionate time?
    • Start with one core system – Usually your accounting software
    • Add integrations progressively – Don’t overhaul everything at once
    • Document your new procedures – Critical for staff training and consistency
    • Schedule quarterly reviews – Technology evolves rapidly; your toolkit should too

    The right bookkeeping toolkit isn’t just about efficiency—it’s about creating capacity for what truly matters: serving your clients and growing your business. The hours recovered from streamlined bookkeeping translate directly into more client meetings, deeper financial planning work, or maybe just a better work-life balance.

    What bookkeeping tools have transformed your practice? I’d love to hear your experiences in the comments.

    Need help cleaning up your books or setting up systems that make compliance easier? That’s what I do at Becker & Ledger. Let’s talk.

  • 7 Common Bookkeeping Mistakes Financial Advisors Make With Their Books

    7 Common Bookkeeping Mistakes Financial Advisors Make With Their Books

    Financial advisors spend their days helping clients navigate complex financial landscapes, yet when it comes to their own bookkeeping, many fall victim to surprisingly common pitfalls. Here are the seven most frequent bookkeeping mistakes financial advisors make when managing their own business finances.

    1. Mixing Personal and Business Finances

    Despite advising clients against this very practice, many advisors fail to maintain clear boundaries between personal and business expenses. Using the same account for both creates a messy audit trail and makes tax preparation unnecessarily complicated. Establish separate accounts and credit cards exclusively for your practice.

    2. Procrastinating on Record-Keeping

    We’ve all been there—letting receipts pile up and bank reconciliations slide until tax season looms. This creates a stressful crunch time and increases the likelihood of errors. Set aside weekly time to update your books while transactions are still fresh.

    3. Misclassifying Expenses

    The financial services industry has specific expense categories that can trip up even seasoned professionals. Incorrectly categorizing compliance costs, continuing education, or client appreciation expenses can lead to missed deduction opportunities or regulatory issues. Create a chart of accounts tailored to your practice.

    4. Neglecting to Track Billable Hours Properly

    Many advisors use fee structures that include hourly components, yet fail to implement robust time-tracking systems. This results in revenue leakage that can significantly impact profitability. Invest in user-friendly time-tracking tools that integrate with your billing system.

    5. DIY Syndrome When You Should Outsource

    Financial advisors often have a “I should know this” mentality that prevents them from delegating bookkeeping tasks. Your expertise lies in financial planning, not necessarily in the nuances of small business accounting. Consider hiring a bookkeeper who specializes in financial advisory practices.

    6. Overlooking Technology Solutions

    Too many advisors rely on outdated accounting methods when modern solutions could save time and improve accuracy. Cloud-based accounting software with financial industry integrations can automate bank feeds, categorize transactions, and generate meaningful reports that help you make better business decisions.

    7. Insufficient Planning for Tax Obligations

    Financial advisors understand tax planning for clients but sometimes neglect it in their own business. Failure to set aside enough for quarterly estimated taxes or overlooking state-specific requirements can lead to cash flow crunches and penalties. Create a dedicated tax savings account and make regular deposits based on projected liability.

    Remember, as a financial advisor, your own books aren’t just about compliance—they’re a vital management tool that provides insights into your practice’s health. Clean, accurate, and timely financial records enable better business decisions and demonstrate to clients that you practice what you preach.

    Taking the time to address these common bookkeeping mistakes won’t just reduce stress and potential compliance issues—it will likely improve your profitability and business performance. After all, the financial habits you recommend to clients should start with your own practice.

    Final Thought

    You don’t have to do your bookkeeping — but you do need to make sure it’s getting done right. Outsourcing to someone who understands advisory firms means you can get accurate, timely books without the headache.

    This newsletter will help you get there.

    And, if you’re looking for a bookkeeping partner who speaks your language, check out Becker & Ledger — we make clean books simple, so you can focus on your clients.