in the literal sense, keeping two sets of books is illegal according to the IRS. But the truth to that, and the reality of that are not the same thing.
Your tax reporting forms are set up for the IRS to have the ability to accurately and efficiently calculate how much you owe them.
When you’re looking at your financial information and trying to read the story, trying to read into it what it tells you about your business and what kind of changes you might make, or where you should best focus your attention, you will quickly discover the need to drill down and re-order the categorizations.
Two sets of books to the IRS means you’re lying about the real numbers, but two sets of books to the entrepreneur means something entirely different. It means you’re being proactive, it means you’re being a detective, it means you are doing what you need to do to fine-tune the engine of your business. that is not illegal, it’s smart.