Accounting and Consulting
Get on it
How creating a simple folder can save you a big headache at the end of the tax year
By Mark Scott
Smart Business Cleveland | December 2007
It takes just a little effort to make a big difference in preparing
your company to close its financial books for the year, says Scott
Gregory.
The certified CPA suggests simply keeping a folder that is labeled
for end-of-year financial paperwork on the desk of a financial staff
member.
“As different issues and things come up during the year, drop a
copy of that in that folder,” Gregory says. “That way, they don’t
have to go back and stop and try to think of things that might have
impacted the year-end. They’ll have them right there.”
Gregory, president of Bottom Line Accounting Solutions LLC,
works to help businesses become more efficient in their
accounting practices. One of the most common problems he
sees is companies that wait until the last minute to begin endof-year tasks.
“The year-end should be a year-round process,” Gregory says. “It
should not wait until the last minute.”
The best first step for CEOs who are on the clock is to go over
with a CPA major financial issues that need to be dealt with.
Involve the leadership of the company in the discussions and
cover all critical issues.
“The owner of the business may be considering increasing his
borrowing capacity at the bank, and the bank is going to require a
different level of financial statement, maybe going from a review
to an audit,” Gregory says. “That may have some impact on what
the finance staff does at the end of the year, as well. By talking to
the owners or the stakeholders, they can at least be identified and
worked in to try to get that information.”
Gregory says getting outside help to make year-end financial
decisions is not just for companies that have procrastinated; it
can be of great help to any company with limited financial
expertise or a small staff.
Gregory says many companies expend a lot of time with their
payroll, from finalizing the last paycheck of the year to the final
payroll tax return.
“Payroll, in my mind, has always been a nonvalue-added activity,” Gregory says. “There is so much internal time trying to take
care of all that that it really blocks out some of the other more
important things that could be done to help the business close
faster. A smart business would at least consider outsourcing that
nonvalue-added activity in payroll.”
Many CEOs respond to the idea of outsourcing their financial
duties by saying that they are already paying people to do that
task.
“If they took that staff person’s time, even though they have got
him on staff and they are on the payroll, and converted him to
doing other customer-centric and value-added activities, it
would pay for itself in no time,” Gregory says. “There’s a lot of
implicit costs the business owner doesn’t usually see that he can
be educated on to help make the decision a little easier.”
The matter of liability also provides a strong incentive to
bring an expert on board.
“If they fail to do something properly in regard to payroll, the
owners of the business are liable for any taxes and penalties that
are due,” Gregory says. “That’s a huge problem, especially for a
smaller business. If it’s not something you’re good at, why do it?
Do the things you’re good at in your business and let the others
who are good at other things take care of those things on your
behalf.”
HOW TO REACH: Bottom Line Accounting Solutions LLC, (440) 527-5696 or www.betterbottom-line.com
Finding ways to save
The decisions you make to close out the books for one year can
have a significant impact on the way things shake out the next
year.
“Because of the way the tax code is written, it may make sense
in some years to accelerate income and defer expenses because
that’s the way it needs to be,” says Scott Gregory, president of
Bottom Line Accounting Solutions LLC. “And in some years, it’s
the complete opposite of that. That’s one of the primary areas
where a business can really save some money or, if nothing else,
defer and minimize their taxes, which is the same as keeping
money in their pocket.”
Planning is the key to successfully making these decisions,
Gregory says.
“What I typically see is the business just hands off a package of
information to the accountant in January,” Gregory says. “They
don’t hear anything back until March or April, and they have
already lost another quarter’s worth of time to do some heads-up
planning for the following year.”
Gregory says tracking documents and spreadsheets is an effective way to keep information current throughout the year and put
a company in a better position to make informed financial decisions.
“More pressing tasks typically get the nod and the attention, and
the year-end stuff just keeps getting shoved aside and aside and
aside,” Gregory says. “It shouldn’t wait any longer than the beginning of the fourth quarter to start some of the question-and-answer
and information gathering as far as what might be going into the
year-end.”
HOW TO REACH: Bottom Line Accounting Solutions LLC, (440) 527-5696 or
www.betterbottomline.com
