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.
“Usually, by the time the end of the year rolls around, there’s very little ability to interact proactively before things occur,” says Walter McGrail, senior manager of Cendrowski Corporate Advisors. “Year-end planning is basically summarizing what you did. There may be some limited opportunities to postpone or accelerate some things. Whereas meeting throughout the year is clearly a more well-intentioned way to get to the bottom line of maximizing tax savings.”
It’s almost always best to give your accountant an opportunity to weigh in ahead of time on most nonroutine types of transactions.
“After a major transaction has occurred, the only thing you can do is post-mortem type tax planning,” McGrail says. “When it’s already cast in stone, all you can do is take a look at the documentation and advise what the tax ramifications will be. But if you had been put in touch with somebody earlier, perhaps through some proper tax planning you could have changed the character of income recognition or postponed the taxability for a year.”
CEOs who consult with their accountants regularly and ahead of time on major transactions are much more likely to get good value for the services their accountant provides.
“These are the types of things that help make me an investment rather than an expense,” McGrail says. “The two things that your tax adviser should be able to help you with are making sure you take into account the most advantageous tax rates and, whenever possible, delaying paying taxes to the following year. Delaying a tax payment by a year saves the present value of that money. Character and timing are always the biggest issues in the tax planning arena.”
Walter McGrail, senior manager of Cendrowski Corporate Advisors, provides tax and business consultation to public, private, and family-owned businesses, as well as accounting malpractice defense and forensic accounting services.
HOW TO REACH: Cendrowski Corporate Advisors, www.cca-advisors.com, (866) 717-1607