EP26 - Understanding Your Financials What to Look For & What to Ask Your Bookkeeper

Understanding Your Financials: What to Look For and What to Ask Your BookkeeperYour financials are telling a story. The question is whether it’s the right one. Understanding your financials is one of the most important skills a business owner can develop, yet it’s also one of the most overlooked. Many entrepreneurs assume their profit and loss statement and balance sheet are just paperwork for tax season, but in reality, these reports are the foundation of smart tax strategy, cash flow clarity, and long-term growth.In this episode of Let’s Get Fiscal, Anastasia Aiello and Myiesha Fisher break down how to read your financial statements with confidence and spot red flags before they turn into expensive mistakes. If you traveled, hired contractors, launched a product, or ran a major promotion, your numbers should reflect that activity. When they don’t, it can signal missing data, misclassification, or gaps that could raise IRS questions later.You’ll learn how to review your profit and loss and balance sheet like a pro, what negative numbers actually mean, and how to connect your real-life business activity to what’s showing up in your reports. Most importantly, this episode empowers you to ask better questions of your bookkeeper so your financials accurately reflect your business story, not just generic accounting rules.HostsAnastasia Aiello, CPA – Tax strategist specializing in tax optimization for small business owners and creative professionals. With over a decade of experience, Anastasia helps entrepreneurs translate financial data into clear, compliant tax strategies that support sustainable growth.Myiesha Fisher – Bookkeeping and tax compliance expert focused on helping freelancers, independent contractors, and creators build audit-ready financial systems. Myiesha specializes in making financial reports understandable, actionable, and aligned with real business activity.What You’ll LearnWhat does it really mean when your financials are “telling a story” about your business?How do profit and loss statements and balance sheets work together?What negative numbers in your financial reports actually signal?How can you quickly spot missing expenses or misclassified transactions?Why do mismatches between profit, cash, and lifestyle raise red flags?What questions should you ask your bookkeeper to fully understand your numbers?Timestamps00:00 – Why understanding your financials matters for business owners01:01 – Financials as the story of your business year04:02 – Profit and loss vs. balance sheet explained07:28 – How to scan reports quickly for errors and red flags10:02 – Account categories: what should (and shouldn’t) be included12:17 – Spotting inconsistencies, fraud, and missing activity16:25 – Comparing year-over-year and monthly financial patterns21:00 – Profit vs. cash balance: identifying disconnectsKey TakeawaysReview negative numbers immediately. Negative balances often signal missing expenses, incorrect classifications, or syncing issues that need attention.Understand account definitions. Each category should have a clear purpose; mixed or vague accounts make your financial story unclear.Match numbers to real life. Travel, marketing campaigns, or lifestyle changes should show up in your financials.Compare profit to cash. High profit with low cash usually means money is leaving the business somewhere.Ask questions early and often. There’s no such thing as a dumb financial question when it’s your business.Your understanding matters. Financials don’t work if only your bookkeeper understands them.FAQ – Common QuestionsQ: What financial reports should business owners review regularly?A: At a minimum, you should review your profit and loss statement and your balance sheet. The profit and loss shows activity for a specific period, while the balance sheet shows what your business owns and owes from the beginning of time. Reviewing both together helps you understand performance and financial position.Q: What do negative numbers on a profit and loss mean?A: Negative numbers often indicate errors, refunds, or missing transactions. While some negatives make sense, like refunds, others signal that expenses or income may not be recorded correctly and should be investigated.Q: Why doesn’t my profit match my bank balance?A: Profit and cash are different. If your profit is high but your bank balance is low, money may have been withdrawn, misclassified, or not fully recorded. This mismatch is one of the biggest red flags to review.Q: How detailed should my bookkeeping categories be?A: Categories should be specific enough to clearly define what belongs there. For example, business meals should only include qualifying meals. Clear definitions help your financials align with IRS expectations.Q: Is it okay to ask my bookkeeper lots of questions?A: Yes. Understanding your financials is your responsibility as a business owner. Asking questions ensures your reports accurately reflect how your business actually operates.Resources & Links🎧 Listen Everywhere:Apple Podcasts: https://podcasts.apple.com/us/podcast/lets-get-fiscal/id1831050448Spotify: https://open.spotify.com/show/08AjRNfqQJBdG1vPazii4Q?si=fb0379d3bef94f11YouTube: https://www.youtube.com/@letsgetfiscalpodcast📊 Coterie Tax Resources:Questions about understanding your financials? Submit here: https://www.coterietax.com/qaListen to more episodes: https://www.coterietax.com/podcastReady to optimize your taxes? Work with Coterie: https://www.coterietax.comUnderstanding your financials gives you control, clarity, and confidence as a business owner. If this episode raised questions about your own numbers, submit them here: https://www.coterietax.com/qa. Anastasia and Myiesha may answer them in a future episode.