Archive for the 'Operations' Category
Self-test for CPA Accumen, Part 1
When out beating the bushes I hear it all the time. “S-corporation? Structure? Taxes? Oh, I have a good accountant. I have been with him for years. He does just fine. We’ve never been audited.” While I appreciate their loyalty, I cannot help but wonder, “Do they really know?”
Even without meeting the accountant de jure, it can be assumed “things” are slipping through the cracks. That once a year event that brings company and accountant together for the Ides of March is not adequate opportunity for any professional to understand and counsel a corporation, let alone structure it. That corporate tax filing deadline is not the time to do anything except perfect the tax paperwork and file it. Besides if you are filing 2009 tax reports on March 15, 2010, any discussion about tax planning (which a good accountant will not have the time to do during this busy period) should be about your 2011 tax year that will be filed in calendar 2012. If that isn’t your planning frame work, then your tax planning is misguided.
I have developed some questions. Don’t worry you don’t have to put your accountant on the spot by asking him/her the tough ones. You can read and answer the questions yourself. Some of the gaffs are most obvious, others may not be. In any event, they are missed, hence the “gaff” label.
Recall any previous year, when you met with the accountant, did the accountant ask for the preliminaries to establishing a relationship?
- a copy of your EIN
- a copy of your articles of incorporation and
- your accounting resolution?
Accounting is little different than banking–it’s about money. Most accountants have seen enough boiler plate corporate forms to know a company needs to have a banking resolution to open a corporate account. (No, openning a personal that you designate as the “company account” is not sufficient.) That is necessary because of the fiduciary relationship that exists between the corporation (a separate legal entity) and the corporate actors/owners. The power and authority to have bank accounts and operate them must be delegated by the directors.
If one must be empowered to use the company check book, so must one be empowered to hire and retain the corporate accountant. Any accountant who understands corporate business isn’t going move pencil one until he/she sees the basic paperwork. Any accountant who proceeds without demanding this paperwork is either ethically challenged or not well enough rehearsed in corporate accounting to do the job. In either event, this is not the accountant for your business no matter how long you have been using him or her. If one fails in the prelims, what about other details?
These are not small issues to be brushed aside. This is exactly kind of blind acting that opens corporations to having their veil pierced. There are no options to these beginning steps. Remember, in the end, the owners of the corporation are responsible for all malfeasance.
- Did your accountant as for a file copy of your EIN number?
- Did the accountant request a copy of the board resolution authorizing him/her to be retained on behalf of the corporation?
- Was a copy of your articles of incorporation requested for his file?
A “no” answer to any of the above suggests that you do not have the right accountant for your corporation. Thank him/her for their time and move on.
This part one of an ongoing series that will be continued and revisited from time to time.
Free Conferencing with Clients
Good idea!
James-Allen Corporate Services, Inc. has added a new service making annual meetings, special meetings, committee meetings and live consultations available from anywhere you are. No more expensive time-consuming trips to company business meetings. Attend from the comfort of familiar surroundings while meeting with all the important actors in your corporation. When James-Allen Corporate Services is involved with your meeting, the conferencing is free of charge.
Our new conferencing service is simple and easy to use. The no-cost service is available 24-7-365. When using JACS as your corporate secretary or corporation coach, as many as 90 participants can meet for up to six hours without any additional charge for the conferencing feature.
The service has been evaluated, tested and used multiple times. It gets JACS’s approval. All you need is a telephone and long distance access. It works with any phone. A land line or VoIP is suggested.
An exciting feature for busy professionals is you will never have to run or fear running late again! The meeting is where you are. Let James-Allen Corporate Services Inc. make your next meeting as easy as phoning home.
Confusion Over the Annual Report
Most chartered entities are required to file a report disclosing the company’s key operatives (owners, partners, managers, directors). Nothing can filed without an associated fee. The mandatory statutory fee may be called a “filing fee”, but it is more akin to a tax. It is paid to corporations division of secretary of state’s office. This filing is scheduled on, or about, the anniversary date of the original chartering. (Note: each state has it own form and it is own fee schedule. A plethora of business entity types are covered. The report requirements and fee do vary. Check with the corporations office in your state.)
The list of corporate operatives is frequently referred to as the “Annual Report.” Universally state statutes require that S-corporations prepare, publish and distribute to the company shareholders annual reports on the companies business, the owners, the operators, financial data, P&L statements and other relevant business information. This compilation is also generally referred to as the “Annual Report”.
Therein lies the confusion. The secretary of state’s report of owners/operatives and the legislature’s requirement of corporate transparency report are named the same, or similar names. The production and completion of one is not the fulfillment of the other. Both are required.
Governments and corporations run on their paperwork. Keeping the documents and the associated filing/publishing requirements straight is a challenge. It is not easy, but it is not impossible either. Even the most successful corporations rely on seasoned corporate secretaries to keep the deadlines and channel the paper flow. S-corporation usually do not have the financial luxury of staffing a professional corporate secretary. Hence this site.
The annual paperwork that accompanies the payment of the re-chartering fee, as it really should be called, is a statement of pivotal operatives and owners. It should be be called what it is, not an “annual report”. The internal corporate documentation that sets forth pertinent company information, missions statements, business reviews, business plans, financial statements including obligations, debt, assets and P&L (profit and loss) and changes in owners and/or management is the statutory annual report. Perhaps that should be clarified by being referred to the “Annual Corporate Transparency Business Report”.
The former is a public record of who owns and operatives each business. The later is designed to keep owners informed about the company they own and how it is being run. Neither report is optional, both are mandatory. They are not interchangeable–one cannot suffice for the other. Failing to meet he requirements of either or both compromises the sparkling advantages of have an s-corporation: separation of business and it liabilities from the owners and their assets.
If you struggle with these, or other issues, JACS can help. Whether you desire to outsource the work or want to be trained to DIY, you can get the help you need from JACS. Call 715-254-0872.
