An accountant can serve many types of roles for CEOs, from hands-off keeper of books to proactive, fully engaged adviser. It’s up to executives to decide how heavily they want to rely on their accountants. But in general, the more interaction they have, the fewer financial surprises they’ll run into.
“The more contact we have, the better,” says Leif Erickson, associate director in the tax department of SS&G. “It’s really crucial, especially right now, with everything that’s going on. There’s so much uncertainty out there with regard to the tax law and the new things that are coming on the horizon.”
A key area that Erickson says he’s been helping clients with is business combinations, in which a companies seek to buy a portion of another company and they need to decide whether to structure the transaction as a stock acquisition or an asset acquisition.
“Getting us involved on the front end can help to at least lay out the tax consequences of structuring the transaction this way or that way,” Erickson says. “And a lot of times, the tax ramifications are not necessarily at the forefront; the tax side isn’t really going to be the driving force behind the decision. But it’s at least something that the CEO and CFO can think about — these are the things that are out there, these are the benefits, these are the things that maybe we want to negotiate as part of the deal.”
Another important area is inventory management, especially when inventory quantities rise quickly over a short period.
“A client recently came to us, and they’d had a tremendous spike in their inventory and were experiencing tremendous price increases,” Erickson says. “So we looked at it, and we said, ‘Have you looked into LIFO [last-in, first-out inventory accounting]? They hadn’t given it much thought. By switching them over to LIFO, it produced huge savings. The first year, I think we got a $700,000 reserve for that client, so that was an added deduction of $700,000. We were able to turn it into a big positive with regard to the tax side of things.”
Leif Erickson, associate director in the tax department of SS&G, specializes in corporate and individual tax planning, FAS 109 calculation, LIFO studies and cost segregation studies.
HOW TO REACH: SS&G, www.ssandg.com, (330) 668-9696