J. William Seabrooke CPA P.C.

The exclusive purpose for the information which is provided from this website is to disseminate  information, and not to provide tax advice.

If you are a business owner or if you are in a key position within a business you will always be expected to continuously and consistently achieve some very specific performance standards.  You also have a special duty of trust (fiduciary) responsibility to your employees, your shareholders and creditors, the Secretary of State, and all of the taxing authorities.  You  can not raise the defense or put forth the argument that you did not realize that a task , or tax return report filing was expected or required.  Summarily, “Ignorance of the laws is not a defense!”  If you do not have the knowledge or skills that are required, contact someone who does, hire a person, or engage a professional such as a CPA, attorney, etc. 

Additionally, even though you may be a very small business with only one or two people, the standards and performance expectations to which you will be held are on par with that of businesses which are many times larger than your own.  Over the past three decades I have worked with many small business owners.  During this time one of my biggest challenges has been to continuously remind the owners to refrain from using the business assets for their own personal use, i.e, Cash, Automobiles, Inventory, Equipment, etc.  This disregard of the business entity could subject you to legal action, court judgments, charges of fraud, and revocation of your business charter or licenses.

A related article on this subject was posted on September 16, 2009  http://www.billseabrookecpa.com/blog/?p=95  Both new and existing business owners have asked me what guidelines are available for them which set forth the standards for business owners.  There is some excellent information on this subject which is available from the IRS website:  http://www.irs.gov/businesses/small/article/0,,id=98575,00.html 

Another frequent question which I have received is “Why should I incur these expenses which I can not afford, and perhaps do not even need?”  Although the responses below are not “all inclusive”, they do address the major considerations:

1. To continuously provide information to the business owners regarding the past financial performance, the direction that the business operations are going, and the required changes or corrective action that should be taken;
2. To record all of the financial transactions and provide accurate financial information for the business records;
3. To support all of the business transactions and provide an audit trail from the transaction to the financial statements, or from the financial statements back to the original transaction;
4. To respond to inquiries from employees, customers, creditors, stockholders, investors, or taxing authorities
5. To fulfill the requirement that your business records are always subject to an audit or review by any taxing authority
6. To support the information and amounts reported on all tax returns and external reports 

The most cost effective method to accomplish the above goals is through the utilization of a personal computer and the appropriate software applications.  Among the options that are available to a business owner are:

• Maintenance of the records by the business owner using either a manual (pencil and paper) system or Microsoft Excel.  This method is not recommended.
• Utilization of a local (on site) personal computer system, using an accounting or bookkeeping software application, i.e. Quick Books, Peachtree Accounting, etc -This is a better solution, but only if regularly and continuously maintained by either a bookkeeper, accountant, CPA,  etc who knows the proper accounting procedures.
• Utilization of an on-line application (‘Cloud”) version of the above software applications – the accounting system will be maintained and updated by a knowledgeable person (a bookkeeper, accountant, etc who knows the correct accounting procedures)  locally or anywhere throughout the world.  Both the business owners and the accountant will have access to the financial data and reports via the Internet.
• Engaging a bookkeeper, accountant, or CPA to provide all of these services for you.  However, your agreement should include a requirement to have the responsible person meet with you no less frequently than monthly to discuss your financial performance and issues that require your immediate attention/resolution.

The overall goals for all of the above recommendations is to permit you to achieve regulatory compliance, to provide a cost-effective solution for your business operations,  and to provide regular financial reporting to assist you in managing your business (and not vice versa).