Let me tell you a story about a client that got themselves into a rather large headache. The family had invested in commercial real estate for many years. They had accumulated a pretty significant amount of money. Their financial matters were handled primarily by a bookkeeper. Although the bookkeeper was pretty diligent, it was beyond her ability to handle all these financial matters: portfolio investments, commercial mortgages, insurance policies, trusts. 

 

An issue came up with a participation in a real estate joint venture. Documentation was poorly organzied. It had not been recorded properly in the books from the day the first checks were written. Figuring out the tax basis was a nightware as the books did not properly reflect what had occured over the year. Cash had been recorded, but the JV's cost had not been kept up to date. The JV had been in existence for decades. A nightmare. 

 

If your record keeping is not set up properly from the beginning, fixing it up becomes overwhelming

 

The Dangers of Having Poor Bookkeeping Records

 

Poor bookkeeping/financial reporting for high net worth individuals can become a pretty significant problem. Normally the issue arises when dealing witgh a taxation authority. Poor documentation. Errors that can't be traced that can conceivably cost millions under the right set of circumstances. Missing assets. Missing or hard to find documentation. Incorrectly recorded assets. On and on.