You may be forgetting a key team member…
An old adage states that great leaders surround themselves with great advisors. Complementarily, Andrew Carnegie once said, “No man will make a great leader who wants to do it all himself, or to get all the credit for doing it.”
In keeping with this issue’s theme of sports and recreation, I recall an interview I once watched of Dan Bylsma, then-head coach of the NHL’s Pittsburgh Penguins. In describing the role of the head coach in the NHL, he said that baseball had it right by titling its head-coach equivalent as a “manager.” In addition to managing the team’s players, Bylsma was in charge of his own coaching staff: his advisors. As many successful head coaches do, he gave much of the credit for his own success to the team’s assistant coaches.
Utilizing a Valuable Resource
Every successful sports team has great management and coaching, and it doesn’t stop with the general manager or head coach—these leadership roles rely on assistants and advisors to help in many ways. The same can be said for every successful business and its management. However, one key advisor whom management may not always think of is its CPA (certified public accountant).
For some businesses, the relationship with their CPA is rather simple: once a year, they drop off their financial records, and the CPA prepares the company’s tax return. If that’s the case, you may be underutilizing a valuable resource. Sure, a CPA can help you with compliance (e.g., an annual tax return or an audit required by the bank), but he or she can also do much more. In today’s ever-changing, technology-driven world, CPAs are spending less time “crunching numbers” and more time advising, consulting and solving problems. So why not take advantage of that?
Some of the traditional services a CPA or CPA firm can provide include: bookkeeping and financial statement preparation, payroll administration, tax return preparation and attest work (audits, reviews and compilations). Classifying these services as “traditional” is not to take away from their importance or to say these services don’t have value; quite the opposite is true. For example, while an audit can satisfy an external requirement, a well-performed audit can also provide valuable information to management and shareholders to help them make important financial decisions and improve performance.
Beyond Traditional Services
Beyond traditional services, a CPA or CPA firm can perform many other functions you may not think about often, if at all, which are more consulting and advisory in nature. Some of these “non-traditional” services a CPA can provide for your business include:
- Business startup assistance. A CPA can help advise you from the beginning, starting with entity-type selection (e.g., incorporating vs. forming an LLC). While an attorney is important in this process to provide input on the legal side of things, a CPA can help you choose the best entity type from a tax standpoint. You may also be putting together a business plan, in which case a CPA can help you develop a realistic plan to operate a profitable business and advise you on creating short- and long-term goals for your company.
- Fraud prevention and detection/internal control evaluation. The best way to fight fraud is to prevent it. (A great article on fraud and internal controls, entitled “Foiling Fraud in the Workplace” by Allie Fisher, can be found in the May 2016 issue of iBi.) An internal control evaluation performed by a CPA can help your business mitigate the risk of fraud occurring in the first place. Or, if fraud has already occurred, a qualified CPA can perform a forensic investigation to determine the financial impact of the fraudulent act(s).
- Due diligence and feasibility studies. Rather than just jumping into a new project, you should understand the possible outcomes, both negative and positive, before investing a significant amount of your time and money; a CPA can advise you on whether or not it makes sense to undertake that new project. Perhaps you are looking to acquire a company to expand your own business’ operations. A CPA can perform due diligence on the potential acquisition and advise you on whether or not the circumstances are favorable to purchase the company, and if so, how the deal should be structured and how much should be paid for the acquisition.
- Succession planning. It is common for one generation to pass on ownership to the next generation through gifting. Or maybe you are looking to retire and have younger management that wants to buy you out, but you don’t know what you should sell for. A CPA can assist in developing a succession plan that is tailored to your unique situation and achieves your goals. A qualified CPA can also help with valuation-related issues so all parties involved are satisfied.
- Estate planning and gifting. A common estate planning strategy is gifting, and a CPA can work with your attorneys to achieve your goals, as well as help you navigate the complex world of estate and gift taxation. If you are gifting your business, a qualified CPA can also provide a business valuation that will pass IRS muster.
- Expert witness and litigation support. There are numerous reasons you may need a CPA to serve as an expert witness in court or as an expert consultant to your team of lawyers. Cases involving damages, lost profits and shareholder oppression are just a few examples of situations in which a CPA can be of service.
The purpose of this article is not to sell you on the services the CPA profession provides, but to enlighten you of the many matters on which your CPA can advise you. Understandably, there are numerous other examples of services CPAs can perform that are not covered here, including services to individuals. However, in summary, a good CPA will look to provide as much value as possible with each service he or she provides. So if you are ever making a business decision, financially-related or not, and wonder if your CPA would have any thoughts, there is a good chance he or she does… and working with your CPA from the beginning could save you a lot of time and money in the end. iBi
Joe Tibbs, CPA is a senior accountant in the Consulting Department at Heinold Banwart, Ltd. He may be reached at (309) 694-4251 or [email protected]