Friends Trust – Businessmen Protect
Sometimes business and friendship does not mix. Hugs and handshakes notwithstanding people change grow apart and partners can redirect their goals. This happens more often than people are willing to recognize. “Oh, we’ll be friends for life, no need to worry!”
Two close friends created a business on a handshake never structuring paperwork to protect their individual interests. They penetrated a niche market and achieved some notable success. However, greed raised its ugly head and one partner, not satisfied with half-a-pie, decided to establish a competing business.
Of course this created a complete falling out. A life-long friendship was in shambles and a thriving business was in jeopardy. Because there was no policy or procedure in place the partnership could not be disentangled properly and no amount of discussion between the now enemies could resolve the issue. The only remaining solution was a sale of the business to a third party. The sale, due to the distressed nature of the arrangement and the need for speed, did not realize its maximum potential.
The moral of the story: Friends Trust – Business Men Protect. Don’t let this happen to you. Consult with Sumner CPA to shield both your friendship and your shared business. No arrangement is too complex for Sumner CPA’s staff of professionals to model to your specific needs.
Show Me The Money!
Diligence is essential to a successful business. Suspicion is deadly. Hatred is terminal. Two successful businessmen suspected the other of thievery: stealing money from the business. The acrimony became so great they could no longer converse with each other let alone run their business properly. Something had to be done. By the time Sumner CPA was called in to trouble shoot things were critical.
Discovery showed a lean office staff consisting of a bookkeeper and accounts payable and accounts receivable clerk. A forensic review of the books showed certain red flag badges of fraud and unexplained activity. A diligent investigation revealed that the office staff had been committing fraud: writing checks to themselves and forging the shareholders’ signatures.
The moral of the story: thorough accounting procedures with adequate cross check and due diligence is essential to prevent actions such as this. Before this happens to you call Sumner CPA for a review of your books. We may just find something you need to know.
Ideas Are Great But ...
Two friends have a shared eureka moment, come up with a great concept for a business but are cash poor. They begin their business without proper planning and establish a business structure inadequate to their actual needs.
They need capital and a third friend, with deep pockets, loves the idea sees the potential and invests. Problem solved? Well not exactly.
The two founders, experts at what they do, have a tax preparer who is not qualified to be a financial consultant and one they used before becoming successful businessmen. They wondered why they were not making as much money as they thought they should be. Enter Sumner CPA.
A complete analysis of their business structure showed glaring issues with how their capital accounts were accounted for. The business was miscategorized resulting in substantial tax liability issues and the loss of substantial tax credits. Repairs were made; issues resolved.
The moral of the story: experts are there for a reason. Make use of them from the outset to spare your business from unnecessary expense and yourself for unnecessary aggravation.