AI is everywhere right now. And if you're a business owner, the question isn't really whether to use it. It's whether you're using it in a way that actually helps you, without putting your business at risk.
We've been watching this space closely. And what we keep seeing is business owners fall into one of two camps: they avoid AI entirely because it feels risky, or they use consumer-grade tools without thinking through what they're handing over. Both have a cost.
Our thoughts on this lean into the business owners who want to use AI thoughtfully. The ones who want to know what it's actually good for, where the real risks are, and how to protect their data while still getting value from the tools that are genuinely worth using.
Using AI with Your Financial Statements
What it's actually good for
AI can read and summarize financial statements faster than any human. For a business owner who dreads opening the P&L, or who doesn't have a finance background, AI can translate the numbers into plain language and flag what deserves attention.
Here's where we see it add real value:
- Summarizing a month-end P&L in plain language
- Identifying line items that have shifted significantly from prior periods
- Comparing your actuals to budget and describing the gap
- Answering specific questions like: Which expense categories grew faster than revenue this quarter?
What it is not good for
AI is not an accountant. It does not understand the context behind your numbers. It doesn't know that your payroll spiked in March because you onboarded three people in preparation for a big client, not because something went wrong. That context lives with you and your team.
This is important. AI will give you an answer that sounds confident. That does not mean the answer is right for your situation. Every output needs a human being with business context to review it before any decision gets made.
Best practices
- Always review AI-generated financial summaries before sharing them with anyone
- Use AI to ask questions, not to draw conclusions
- Never upload raw financial statements to a consumer AI tool
- Keep a human in the loop on anything that informs a business decision
Privacy, Legal Implications, and What to Actually Use
The legal and privacy landscape around AI is moving fast. And for business owners using AI with financial data, the risks are real and specific.
The shadow AI problem
A law firm called Brownstein recently published a report that should get every business owner's attention. They described what they call shadow AI: employees using consumer AI tools, often on personal devices, without any formal approval or oversight. Inputting confidential client information, proprietary data, and sensitive financials into tools that may retain that data, use it to improve their models, or expose it in ways the business never authorized.
This isn't hypothetical. It's happening in businesses of every size, right now. And leadership often doesn't know because they never set up any guidelines.
The legal implications you need to know
In the United States, the FTC has made clear that mishandling consumer and business data through third-party tools carries regulatory exposure. If you operate in industries with specific data requirements, such as healthcare, financial services, or legal, your obligations are even higher.
In Europe, the picture is more defined. The EU AI Act classifies credit scoring, financial risk modelling, and related applications as high-risk AI systems with mandatory compliance requirements taking effect in August 2026. GDPR has required data processing agreements with every AI vendor since 2018. If you have any European clients or employees, these frameworks apply to you.
Even if you are a small business in North Dakota or Minnesota with no European clients, the core principle applies everywhere: when you input client financial data into a third-party AI platform, that platform becomes a data processor. You remain the data controller. The liability stays with you.
Rules to follow
Never paste raw financial statements, client data, tax records, or any personally identifiable financial information into a consumer AI tool. This includes free tiers of ChatGPT, free versions of Claude, and any AI product that does not explicitly state that your data will not be used for training or retained on their servers.
This is not us being alarmist. This is us saying: read the terms of service. Or better yet, only use tools that have made an explicit, documented commitment to data privacy.
- Never upload full financial statements with client names or Social Security numbers
- Use aggregate or anonymized data when possible for analysis tasks
- Have a written internal policy about which AI tools are approved for use and what data can be shared with them
- If you have employees, make sure they know the rules before they start using AI on your behalf
Source: Brownstein, The New Legal Risk Is Not AI Adoption. It Is AI Without Governance (May 2026)
Source: EU AI Act financial services compliance overview, financialregulations.eu (March 2026)
Source: AI compliance for accountants: EU AI Act, DORA, and GDPR, Ops Intel (April 2026)
