CFO Services from Performance Advisors LLC
Greetings!
As a business owner, you probably spend most of your time thinking about everyday operations and future growth. However, when it comes to strategic decisions, growth objectives and overall success, your company's financial position must also be considered. That's where Performance Advisors can help. Our CFO services allow smaller to mid-market companies that cannot afford the salary of a full-time CFO to purchase a more sophisticated, yet practical level of financial expertise on a part-time basis.
or call us at 602-579-5725 or toll free at 888-629-0605
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Beat The IRS - Basic Tax Planning
The purpose of tax planning is to arrange your financial affairs in order to minimize your taxes. There are four basic ways to reduce your taxes. Of these four there may be several variations but for the most part, what you are able to do will depend on your financial situation. The following are the basics to planning your taxes, they are:
Reduce your income
Increase your deductions
Tax credits
Owning a business
If you are reading this newsletter, you have already started taking advantage of the best tax planning tool available, namely owning your own business. This is what the wealthy do to be able to keep more of what they earn. Since this is such a vast subject... it would be a good idea to sit down with your accountant, tax planner or CFO Service provider and discuss the various options available to you to move income or expenses from one year to another to gain the best tax advantage for you. The bottom line on business income is, you only pay taxes after your expenses unlike the income from a paycheck.
Tax credits are plentiful for a business. On our website, visit Tax Credits You Don't Want To Miss for a listing of over 25 tax credits that are available to businesses, along with the corresponding link to the tax form required to claim the credit
The CFO and Business Forecasting
As I see it business forecasting is finding the right number of "what if" scenarios in order to identify enough possibilities of what is going to happen. A lot of business owners think that forecasting is like being a soothsayer in that business forecasting identifies exactly what is going to happen. No one can predict the future and there are too many different things that could happen to a business that will throw off the most sophisticated of forecasts. The role of the Chief Financial Officer in forecasting is to identify the top 7 or so likely scenarios and do a "what if" analysis on those 7 scenarios. One of the 7 scenarios should be a best case and a worse case. The proper forecasting tool to use is one that has a Profit and Loss, a Balance Sheet, Cash Flow, Inventory Plan and Sales Forecast all in one. These schedules can be broken down by quarter, month or even by week. Of course it needs to be adaptable to retail, manufacturing, distribution or service depending on the type of business the CFO is forecasting. The model also needs to identify where the risks and opportunities are and incorporate the key metrics. The great thing about this model is that as one number changes anywhere in the model all the numbers adjust. Performance Advisors has such a tool in its arsenal, called the TPA Business Counselor© and is available as part of our CFO Services. It shows the business owner all of the risks and opportunities associated with any scenario and it allows for more thorough decision making and a reduction of risk for the business owner.
Performance Advisors can act as your part-time CFO and can help you with tax planning, business forecasting, manage your business more efficiently and profitably, while also helping to identify and reduce risk. To learn more, contact Performance Advisors at 602-579-5725 or email Performance Advisors today.
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The Risk of Under-Capitalization
Lets face it, if a company is not properly capitalized it will have cash flow problems and it is destined to fail and poses great risk. Most entrepreneurs under estimate their cash needs. This is due to so many unexpected events that occur in the beginning stages of operating a business. I have never seen an entrepreneur's initial cash flow plan ever come close to actual. The prepared entrepreneur is constantly looking for more sources of capital even if he or she feels the cash needs are met. It is the responsibility of the CFO to look for these sources of capital. Staying on top of cash needs is a vital component of CFO Services and CFO duties.
What I see a lot of is entrepreneurs trying to survive with small cash resources and then when that runs out put in more cash. Most likely the new cash put in is a minimal amount and that runs out quick. It is a vicious circle and it is throwing good money after bad.
Entrepreneurs must be honest with themselves in projecting cash flow and then must be aggressive in obtaining the cash resources needed. Cash flow problems are the number one frustration for entrepreneurs.
Signs of Cash flow problems include inventory over buys or over production, rising accounts receivable with level sales, large capitalized costs and rising payables.
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The CEO of a start-up business informed his chief advisors that the company seemed to be in sort of difficulty and he wanted to know why.
"Well, its not cash," said the newly-appointed controller.
"How do you know?" was the CEO's next question.
"Because we don't have any," replied the controller.
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Performance Advisors, like most other accountants, will still handle your traditional accounting services such as tax filing and financial statements, plus we also act as business advisors on a broad range of issues. This can take place in the form of creating budgets and preparing cash flow projections, answering those "What If" forecasting questions, preparing or reviewing business plans, even helping your business secure financing and make sound investments. We can also provide a Business Valuation with tips on increasing the value of your business. Our analytical reports use ratio analysys and trend analysys, as well as industry comparisons, to analyze your company's financial health.
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