Tag Houston Accounting Firm

Time to Hire a CFO? Evaluating Your Need

0 comments By TRMoore Filed in Business Advisory, General Tagged with , , , , , March 13th, 2012 @ 4:28 pm

by Jennifer Mailhes, CPA, Consulting Partner, TR Moore & Company

As your business grows, you may struggle with when to add key staff, and the accounting function is especially tricky. Often a small to mid-sized business is served well by one combined CFO-Controller function, but as the business becomes more complex, you may begin to see a need for a higher-level perspective. Even recognizing this need, it can still be difficult to determine if it’s time to add the position to your team, and whether your need is part or full time.

Read below for more on the difference between the two functions when separated, some milestones that may indicate a need to have both a CFO and a Controller, and some ideas for evaluating your needs.

CFO vs. Controller – What’s the Difference?

The CFO position is more forward looking and strategic. CFOs tend to be more analytical than individuals in the Controller position. Job duties often include:

  • Lender negotiations
  • Cash-flow planning
  • Budget preparation and forecasting
  • Cash management
  • “What if?” scenarios

The Controller position, on the other hand, is usually more backward looking (reporting, compliance) as well as in the “here and now” (daily accounting operations). Job duties often include:

  • Monthly/recurring reporting
  • Supervision of accounts receivable and accounts payable
  • Month-end financials
  • Approval of transactions

4 Cases Where You May Need a CFO

  1. You’re implementing a new accounting system
  2. You’re looking to add locations
  3. You’re seeking financing
  4. You have complex financing where you need someone to be looking ahead to monitor covenant requirements, potential cash-flow problems and the need for additional funding

Evaluating the Need

A few signs that can indicate the need for some additional support include:

  • Projects aren’t getting completed/tasks are “on the list” for a long time, which can indicate your CFO-Controller needs
    assistance to get them done, either from a resource or a skill set standpoint
  • Cash-flow problems
  • Your CFO-Controller is leaning on you for financial questions you feel are out of your realm of expertise

In addition to weighing the answers to these questions, consider getting your CFO-Controller some higher-level support from your accounting firm for a period of time. By monitoring the amount of outside assistance required, you can determine where your CFO-Controller needs the most help, how many hours of work are needed and whether it makes sense to bring the work in house.

As the Consulting Partner at Doeren Mayhew firm TR Moore & Company, Jennifer Mailhes helps accounting staff streamline processes and provide more valuable financial information to their management through our CFO and Controller service
modules. For more information, contact us.

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Are You Taking Advantage of These New Hiring Incentives?

0 comments By TRMoore Filed in General, Tax Tagged with , , , January 30th, 2012 @ 5:05 pm

In an effort to get unemployed veterans working, two new credits were included in the American Jobs Act, signed into law by President Obama in November 2011. The Returning War Heroes Act provides businesses with a maximum tax credit of $5,600 per hired veteran, while the Wounded Warriors Tax Credit offers a maximum credit of $9,600 per veteran with service-related disabilities.

Read the CCH tax update below for more information, and contact us for assistance in making these credits part of your tax savings strategy:

The Three Percent Withholding Repeal & Job Creation Act (2011 Heroes Act) expands tax incentives that encourage employers to hire military veterans. The 2011 Heroes Act enhances the Work Opportunity Tax Credit (WOTC) by creating the Returning Heroes Tax Credit and the Wounded Warriors Tax Credit.

In general, the WOTC rewards employers with a tax credit for hiring individuals from targeted groups. The WOTC was extended by the Tax Relief, Unemployment Insurance Reauthorization & Job Creation Act of 2010 (2010 Tax Relief Act) through the end of 2011. The targeted groups eligible for the WOTC as extended by the 2010 Tax Relief Act are:

  • Families receiving Temporary Assistance for Needy Families (TANF)
  • Qualified veterans (certain veterans receiving food stamps and certain veterans with service-connected disabilities)
  • Qualified ex-felons 
  • Designated community residents
  • Vocational rehabilitation referrals
  • Qualified summer youth employees
  • Qualified food stamp recipients
  • Qualified Supplemental Security Income recipients 
  • Long-term family assistance (TANF) recipients

However, the 2011 Heroes Act expands the WOTC to include:

  • Employers that hire veterans who have been looking for employment for more than six months may be eligible for a Returning Heroes Tax Credit of up to $5,600 per employee; employers that hire veterans who have been looking for employment for less than six months may be eligible for a credit of up to $2,400 per employee.
  • Employers that hire veterans with service-connected disabilities who have been looking for employment for more than six months may be eligible for a Wounded Warriors Tax Credit of up to $9,600 per employee.

The Returning Heroes and Wounded Warriors credits apply to individuals who begin work after Nov. 21, 2011, and on or before Dec. 31, 2012. However, the 2011 Heroes Act does not extend the Dec. 31, 2011, sunset date on the WOTC provided by the 2010 Tax Relief Act for any targeted group except for qualified veterans.

Exempt Organizations. The 2011 Heroes Act also makes the Returning Heroes Tax and Wounded Warriors Tax credits, as well as the credit for veterans receiving food stamps and veterans with service-connected disabilities who do not meet the criteria for the Wounded Warrior Credit, available to tax-exempt employees. A tax exempt employer for purposes of this extension is an organization described in Code Sec. 501(c) and exempt from taxation under Code Sec. 501(a).

Contact us for assistance in making these credits part of your tax savings strategy.

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Our Top 11 Headlines of 2011

0 comments By TRMoore Filed in General Tagged with , December 29th, 2011 @ 12:15 pm

Happy New Year! The year has been an eventful one as we saw economic conditions began to improve, mergers and acquisitions activity picking up, and tax cuts extended for the year by the Tax Relief Act of 2010. Our award-winning Blogsight covered such topics via nearly 100 blog posts. Not surprisingly, IRS matters, business best practices and tax minimization strategies rounded out our most highly read posts of the year:  

  1. Our Annual Tax Savings Planning Guide is Here. We recommended that our clients download our complimentary 2011-2012 guide in the fall to get a start on tax savings prior to year-end. If you haven’t already, be sure to check it out now to explore any tax savings opportunities you may be able to take advantage of before April 15. Read more.
  2. 6 Red Flags for an IRS Audit. A St. Patrick’s Day post encouraged readers not to rely on luck when it comes to IRS scrutiny – be aware of these red flags instead. Read more.
  3. Bridging the Price Gap Between Buyer & Seller: How an Earnout Can Help. The valuation gap was a hot topic at this year’s M&A Insight panel discussion, and an earnout is a commonly used way to bridge it. Read more.   
  4. Fraud Awareness Toolkit. During Fraud Awareness Week in November, we compiled facts and free tools to help you on your path to fraud prevention. Read more.
  5. 5 Steps to a Cash-Flow Projection. A post published in late 2010, it held its own against our 2011 topics, proving that cash flow continues to be top of mind for our small and mid-sized business clients. Read more.
  6. $100,000 Employment Tax Liability? Be Aware of This IRS Rule. Regardless of whether your employment tax deposit is on a monthly or semi-weekly schedule, you’ll want to be aware of this IRS rule if you accumulate a tax liability of $100,000 or more on any day during a deposit period. Read more.
  7. 5 Tax Minimization Strategies to Consider. Could you benefit from bonus depreciation, a cost segregation study, the R&D tax credit, the domestic production deduction or an IC-DISC? Read more.
  8. When is the Right Time to Sell Your Business? Managing Partner Tim Moore was featured on the Entrepreneur Organization’s global blog, where he addressed internal and external factors when considering the timing of a business sale. Read more.
  9. Texas Supreme Court Ruling Makes Non-Competes Easier to Enforce. Employee non-compete agreements are part of a sound exit strategy, and a recent ruling makes them easier to enforce – find out how. Read more.
  10. Employees vs. Independent Contractors: IRS Allowing Reclassification. The classification of workers as either employees or independent contractors has been under IRS scrutiny in recent years, and now there’s a new initiative to help business owners comply. Read more.
  11. 5 Key Accounting Questions Business Owners Should Ask. Whether you have a CFO on staff or need outside support from your accounting firm, addressing these questions will result in higher-level information to help you better run the business. Read more.
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5 Key Accounting Questions Business Owners Should Ask

0 comments By TRMoore Filed in Business Advisory, General Tagged with , , , , November 22nd, 2011 @ 3:07 pm

by Jennifer Mailhes, CPA, Consulting Partner, TR Moore & Company

Most companies could benefit greatly from having a CFO on staff, but for some closely held businesses, there isn’t enough work for this function to be full time, and it usually isn’t a cost effective option. Regardless of whether you do or don’t have a CFO, there are five key accounting questions you should be asking yourself: 

  1. Are you getting timely financial information? You should be reviewing sales data, expense information, daily or weekly flash reports or dashboards, and financial statements on a consistent basis. This hindsight view of your financials can give you meaningful data to help you correct problems or capitalize on opportunities. And daily or weekly reports can provide indicators of how your business is doing during the month. If you aren’t reviewing this information on a consistent and timely basis, you could be repeating poor practices over a period of time or continuing to lose out on opportunities.  
  2. Are you getting any forward-looking information? Data that can provide you with valuable foresight includes:
    •  Sales numbers — These can reveal delays in manufacturing or service, management issues that need to be corrected in order to hit your numbers or adjustments that need to be made to ensure profitability.
    • Orders in the pipeline or backlog — This will show if you have enough orders to hit your revenue goals.
    • Cash-flow forecasts — These can help you predict if a cash-crunch is likely and determine how purchases should be financed, whether you will need to draw on a line of credit, etc. 
  3. Are you looking at trends? Monitoring areas such as bank ratios, fixed expenses, margins and collections can help you to identify problems before they become significant issues, benchmark against your history and easily see the impact of seasonality. Additionally, the reporting graphs used for trending are easy to read, making it easier for others in the company to make use of the information.
  4. Who’s answering your high-level questions? Whether addressed by your CFO or an outside resource, the following types of questions can give you insight you may have overlooked and help you plan financially for changes and decisions before you make them: 
    • I’m thinking of adding a new business line; what impact will this have on my business’ numbers?
    • If I bring on a large account at a lower margin than my typical, can I make money on it or not?
    • Is it time to replace my equipment, and should I buy or lease?
    • Am I making profit returns consistent with my industry? 
  5. Do you have effective oversight and backup on key functions? Employees should be cross-trained on tasks such as paying bills, running payroll, handling deposits and billing customers. Additionally, it’s a good idea to have some controller-level backup. Having these areas sufficiently covered will help to ensure you continue to receive timely financial information and meet bank deadlines. In addition, if these tasks fall behind due to turnover, it could take you 30 to 60 days to get a new employee up to speed.  

As the Consulting Partner at Doeren Mayhew firm TR Moore & Company, Jennifer Mailhes  guides Houston business owners and their management teams in areas such as strategic planning, accounting analysis and CFO support, and business advisory services. For more information, contact us.

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Tax Planning Tip: Timing Income & Deductions to Your Advantage

0 comments By TRMoore Filed in General, Tax Tagged with , , , , October 27th, 2011 @ 4:32 pm

by Richard Beutelschies, CPA, Tax Partner, TR Moore & Company, A Doeren Mayhew Firm

Projecting your business’s income for this year and next will allow you to time income and deductions to your advantage. It’s generally better to defer tax. So if you expect to be in the same or a lower tax bracket next year, consider:

  1. Deferring income to next year. If your business uses the cash method of accounting, you can defer billing for your products or services. Or, if you use the accrual method, you can delay shipping products or delivering services.
  2. Accelerating deductions into the current year. If you’re a cash-basis taxpayer, you may want to make an estimated state tax payment before Dec. 31, so you can deduct it this year rather than next. But consider the alternative minimum tax (AMT) consequences first. Both cash- and accrual-basis taxpayers can charge expenses on a credit card and deduct them in the year charged, regardless of when paid.

Warning: Think twice about these strategies if you’re experiencing a low-income year. Their negative impact on your cash flow may not be worth the potential tax benefit (read more about this scenario). And, if it’s likely you’ll be in a higher tax bracket next year, the opposite strategies (accelerating income and deferring deductions) may save you more tax.

Download our 2011-2012 Tax Planning Guide for more savings strategies.

As Tax Partner, Richard Beutelschies leverages more than 30 years experience to lead tax services at the Houston location of top 100 U.S. firm Doeren Mayhew, assisting business owners in areas such as compliance, tax savings planning, estate planning and corporate tax structuring. For more information, contact us.

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