In preparing your budgets or cost anlysis for providing services, is as an essential to calculate the cost of warranty service. This can come in the form of warranty service due to internal causes (not completing work projected, not performing the job properly, etc) or external causes (a problem with newly installed equipment). These costs exist and need to be calculated as part of your overall overhead. For example, say you sell and install a brand new piece of equipment that you sold to your client. So your capturing both your margin on the hardware, plus the labor of installation – perhaps even advanced consulting/sales services. Now, what happens when the product you receive from the distributor comes in and is broken, or isn’t really the correct item (not compatible with application) — should your client be expected to pay the labor and costs associated with the inital install and then again the reinstallation? Likely not.
Did you find a CPA for your team yet? You probably have a bookkeeper, but you want an independent CPA firm at your beck-and-call. The better off you think your company is during this economic situation, the more you might want to panic. So far I have seen two companies fall this year because their books were being cooked. Money was disappearing right from under the owners nose!
So what do you need to do – have your books audited by an external, independent CPA. A few reasons:
1) To ensure that things appear on the up-and-up with everyone who is involved with the finances at the company, from on-paper to actually having check authorization. Make sure all of the money is properly accounted for. Be prepared to dig-deeper as necessary;
2) To ensure that you’re doing everything properly. You simply don’t know about the things you don’t know. A CPA is paid to know these things.
3) A good honest look into your company. The CPA has seen it all before and can give you a good sounding board, or perhaps devil’s advocate with you. They can be a reality check on where your company “really is” – how bad things are effecting your company.
So, what are you waiting for, make that call now…
This is not intended to be specific legal advise, but general information and a guide to help you work with your professional team including lawyers to provide the correct amount of protection for your company. This is part of a 4 week series which came out of a luncheon discussion with several close business associates of mine.
I was discussing with a friend over lunch about the concept of micro-loans and peer-to-peer lending. They have had an amazing rate of success recently, and I believe those programs will only increase in 2009, especially as banks continue to tighten down on who they’re lending to.
This brought about an idea: would you contribute $100 towards the success of another entrepreneur? A network of individuals who understand the power of collaborative efforts, investing in the future, and the benefits of new start-ups. Say, we were to pull together 5 sponsors per business and then distribute those funds to pre-qualified businesses. What our primary checkpoints would revolve around business concept solvency and a non-negative business/criminal record. Personal credit score may not apply.
Take a moment and let us know what you think about this!
As a growing business you must learn from your CPA early on about how to interpret your Profit & Loss and Balance Sheets. These indicate the lifeblood of your company. Depending on your business you need to look at these at least monthly, if not weekly or daily! Additionally, as part of your corporations annual shareholder meeting, go ahead an prepare a financial review and prospectus, even if it is only for you. Look at other corporation’s filings – both large and small. This exercise will give you the opportunity to do some looking back, as well as forward looking based on past performance. It also gets a lot of your homework cleared out of the way when you’re ready to look for outside funding. Infact, even before you start looking for F&F financing (friends & family), you really should have something prepared to hand to them as well.
The following is quoted from Michael Gray’s CPA Tax & Business Insight Newsletter for September 2008:
Paul McCauley, who I am embarrassed to say is a CPA, and union leader Brad Rooker are promoting an initiative to impose a one-time 25% “wealth tax” (read success tax) on the assets of Californians exceeding $20 million for single persons and $40 million for married couples. The wealthiest 1 percent of California taxpayers paid 47.9% of the state’s personal income taxes for 2006, but that doesn’t satisfy McCauley and Rooker.
Of course, there is nothing to prevent these individuals from moving out of California to a more friendly state, and bringing their corporate headquarters with them. Say Steve Jobs (Apple Computer, Pixar), John Chambers (Cisco Systems), Larry Ellison (Oracle), George Lucas (Lucasfilm) and Larry Page and Sergy Brin (Google).
In addition, the wealthy don’t keep their assets as cash in a mattress. In order to pay the tax, any of them who decide to stay will have to liquidate their stock, bonds, and real estate. What do you think dumping these assets will do to the market? What do you think it will do to CalPERS, the state’s retirement system and one of its biggest investors?
These are also the people who fund our universities and charities, and bail out the state of California by purchasing municipal bonds to fund deficits.
If the state gets this money, do you really believe it will solve its money woes, or do you agree with me that it will be dissipated in nothing flat?
We should tar and feather McCauley and Rooker and they should be fired as unfit for their occupations.
More importantly, we need to speak out and not passively let their proposal be promoted as a “reasonable alternative.” This is not “just politics.” This relates to freedom, property rights and understanding that the real source of wealth is men’s minds. (See Atlas Shrugged by Ayn Rand.)
For more information, please see http://www.taxtrimmers.com