Will your accounting team pass the final test of the year-end season? Here’s a nine-item problem set.
Accounting
It’s been a big push, but you’ve finally gotten everyone to account for their time. Your people are reporting their hours every week, charging them to their various projects or to overhead, and from their time sheets it looks like they’re all reasonably productive. Now what? How do you determine whether you’re making any money on their work?
If your company operates in an industry in which advance payments are the norm, your need for outside working capital may be reduced. But in business, as in personal life, spending money before you earn it can have unfortunate consequences.
Most owners of closely-held businesses look forward to the day when they deposit the check that compensates them for their many years of blood, sweat, and tears and marks the sale of their company. When this end is near and an offer is on the table, many such owners are suddenly brought up short by the prospect of a substantial tax bill that they might have avoided “if I had only known…” Beyond the basic tax-saving decision to elect Sub-chapter S corporate status (see Alligator Bites, below), it’s usually too late to avoid a big tax bite if you start to scramble after the term sheet hits the negotiating table… except when the goodwill is personal.
"Howe's Bayou"