Tammy Clontz, B2B CFO®
Providing CFO services in Mount Vernon, KY and surrounding areas

The dreaded notice appears in your mailbox.  Your tax return is being audited.

Chances of this happening are slim but increasing.  Less than 1% of business returns are audited and less than 1.5% of personal tax returns are audited.

If you have received a notice, don’t panic and don’t take it personally.  Audited returns are selected by a computer generated process where there an item or items falls outside of the norm based on the statistics gathered from millions of returns filed.

It is possible you can avoid an audit if you attach an explanation for an item that may be flagged as out of the norm.  Complex investment or business expenses, or higher than normal itemized deductions, may cause your return to be flagged for audit.  The return is pulled and reviewed by an examiner.  If you take the initiative of attaching the explanation on the original return an audit may be avoided.

If your return is selected the best defense is a good offense.  This means good, honest clear records. Also make sure you leave the attitude at home.  Auditors are just doing their job, they are not “out to get” anyone.

Make sure you have the information requested.  That means double check the Tax Year in question.  Take the backup documentation to support the item or items in question.  Give them what they ask for.

If you have a tax professional who has prepared your return, they will be the best resource in dealing with an audit.  Take the notice to them for their professional advice and make sure you give them adequate time to assess the situation.  They will best know how to handle the situation.

If you don’t have a tax accountant and feel like you need help in dealing with the situation, don’t hesitate to engage the services of a professional.

If you do receive a notice of audit from the IRS, don’t ignore it and hope it will go away.  Be prepared to present the records supporting the item in question and make sure it is for the correct year.  Don’t volunteer information that hasn’t been requested.  Be professional and courteous.  Engage the help of a tax professional, preferably the CPA who prepared the return.

And last but not least, if you cannot provide the supporting documentation necessary to prove or support the item in question, be prepared to pay.  The importance of good, honest and clear record keeping is a definite advantage in the audit game.

If you need help with your financial reporting and record keeping, please consider contacting a Partner with B2B CFO®, providing as-needed, affordable services utilizing Part Time CFOs.

In calculating the true cost of an employee, a business owner should first determine the value of the service of the position.  What is it really worth to the business owner to have the expertise needed to fill the position in a way that is most beneficial to the business?

Some questions that you may ask in establishing the need for a CFO in your business may include:

• Do your bankers trust your internal financial statements?
• Are your financial statements accurate and timely?
• Do you have accurate monthly reporting to project the amount you will owe the IRS on April 15?
• Do you have accurate internal cash flow projections?
• Are your company assets protected by adequate controls?

According to Indeed.com the average CFO in Kentucky receives an annual salary of $104,000 per year.  Add additional basic employer costs including taxes and benefits of 45% based on the Department of Labor and the actual annual cost is over $150,000 annually.  This does not include recruiting, training and bonus costs that are normally associated with this position.

The truth of the matter is that many companies need a CFO but think they can’t afford a W-2 employee.  The good news is that you have an alternative to hiring a full-time CFO.  CFO Careers now include Part Time CFOs, Virtual CFOs and Interim CFOs.  B2B CFO® provides a great alternative with experienced financial professionals and an extensive support system at affordable rates and on an as-needed basis.

These professionals not only provide the owner with a better understanding of the financial side of business but with strategic decision making tools, protection and oversight of company assets, assistance with lending relationships, quality and timeliness of financial information, tax strategies, pricing negotiations and development of procedures and policies, just to name a few.

So how do you, as a business owner, decide when to hire a CFO? Do you outsource or go with a full time CFO?  What is the true cost of hiring a CFO?

As a business owner or CEO, you probably already know the answer to these questions.  The question should be what is the cost of not hiring a CFO?  The true cost of not seeking professional CFO services is the time lost of a business owner to focus on customers, new services and other core business issues necessary to business survival.  It may be the cost of mistakes that could have been avoided with the knowledge of an experienced CFO.  It may be the sacrifice of personal and family time.  It may be the cost of a good night’s sleep or health issues from stress.

It may cost you the business.

The accounting function continues to be simplified across the board for small companies through the use of software solutions such as Intuit.  You may be more familiar with the term Quickbooks which is a valuable piece of the Intuit/ Sage Software family.

A relatively new product to the Quickbooks family is Quickbooks Online.  As a new Quickbooks Proadvisor, I had to learn about all the Quickbooks versions in order to help my clients choose the best solution for their business.  I believe that the new Quickbooks Online version is a great accounting solution for the start-up of a small business.

Not only is Quickbooks Online affordable, there are various versions to choose from, which offer accounting solutions tailored to the needs of your business. Quickbooks securely creates and manages invoices, utilizes Payment solutions and tracks financial performance in an easy to understand format.  The best part is that it is accessible, anywhere, anytime on-line.

If you need to beef up your system, there are also versions available that include inventory tracking and payroll.  For help in selecting the Online version that is right for you, check out this website.

Compare Quickbooks Online Solutions

If you think you had rather go with the traditional desktop software for your accounting needs, you can check out this link to compare the different Intuit versions offered.

Compare Quickbooks Desktop and Online Solutions

It is important to select the software that will be the most beneficial to your business.  Accurate and timely financial reporting is vital to the successful growth and survival of any business, especially if you have to seek business funding.

Quickbooks is a great tool to use to measure the financial and reporting aspects of your business.  Even with the great support and training you receive when subscribing to a Quickbooks solution, many business owners should seek the expertise of a professional such as a Part Time CFO to help with the software set-up and training of the employees who are Quickbooks users.

When it comes to the bottom line, don’t hesitate to call on a professional for help.   B2B CFO® offers affordable CFO services on a Part Time, As-Needed basis which gives small businesses an alternative to hiring a costly W-2 employee.  Quickbooks also offers the advantages of utilizing the services of a Virtual CFO to solve problems or provide support.

It is well documented that the savings in your time and the value of accurate and timely reporting more than payback the cost of seeking the help of a professional.  Many business owners believe they cannot afford to hire a professional for financial advice; the reality is that they can’t afford not to.

Strategic Planning is defined in the dictionary as “the planning of all the activities of a business to ensure competitive advantage and profitability” and is a great tool to utilize when charting the success of your business.

1)      Define your competitive edge and translate that into your mission or vision statement.  What does your company do better than anyone else?  Focus on your unique abilities, products or services when defining the overall big picture for the company and how they will best meet the needs of your customers.  Complete a mission or vision statement that answers the question “What is my business and what can I do best for my customers?”

2)      Define your future direction.  Ask yourself “What will my business look like 5 years from now?”  Visualize the products, customer needs, market opportunities, etc. to determine the direction you want your company to go.

3)      Prepare a SWOT (Strengths, Weaknesses, Opportunities and Threats) Analysis.  This is a useful tool to match your Strengths with your Opportunities to maximize success.  By identifying your Weaknesses and Threats you are better able to implement planning that will minimize failure.  Don’t forget to consider markets, sales trends, competitors, suppliers and what is happening in the world when you are performing your analysis.

4)      Utilize your SWOT analysis to write goals and objectives that will take you from your current status to your future direction.  First determine up to 5 realistic objectives that will get take you on the path to your future direction, then develop goals to support each objective.  Use the SMART acronym to succeed in setting achievable goals:

(a)    Specific-Be specific and clear

(b)   Measurable-Make them measurable and quantifiable

(c)    Achievable-They need to be achievable

(d)   Realistic-They must be realistic

(e)   Time-There must be an adequate time frame for achieving

5)      Define the processes needed to achieve your goals and then prioritize them.  Assess your resources and determine how to best utilize for achieving the objectives and goals you have established.  Communicate with your employees, set deadlines and track results.

6)      Set up a dashboard for KPI’s (Key Performance Indicators) that measure the objectives and goals and continually communicate the progress to management.  Setting deadlines and tracking results are essential to guiding the company to achieve the goals that will deliver the defined mission statement.  The Intuit Sage Solution has customizable features for your unique business needs.  You can’t achieve what you can’t measure.  An experienced CFO is invaluable to making this happen.

7)      Refine the strategic plan.  Continually assess the future direction to make sure you are on track.  As the company changes and grows, your plan must also be changed to adapt to new technology, product discovery, economic drivers, business funding needs, customer needs, etc.

While following these guidelines will help you in developing, measuring and defining your strategic plan, the most important piece of a successful business puzzle is the leadership.  An effective leader devoted to successful implementation of a strategic plan will communicate the plan and the progress in achieving the plan to everyone in the organization and will take actions needed to adapt to changes.

An experienced CFO (Chief Financial Officer) will take the strategic plan and develop the needed KPI’s to measure success.  If you haven’t got the business resources to have a full time CFO, consider engaging the services of a Part Time CFO or Entrepreneurial CFO.  You may even consider a Virtual CFO to suit your business needs.  No matter if they are locating business funding sources, determining future cash flows, or interpreting financial results, a CFO contributes greatly to the success of a business enterprise.