In the past I have addressed this subject on many occasions, so I am still amazed at what I continually observe from business owners. Many owners still do not place the appropriate emphasis on having good financial records, especially if they are preparing to sell their business or company.
Too many owners are lackadaisical or leave all financial responsibility to bookkeepers, clerical positions or their accountants. If you are a business owner you must know the accounting basics and review your records daily! An answer of “I don’t know, check with my accountant or bookkeeper” does not cut it. Typically everyone is amazed when a person put in a financially responsible position gets caught embezzling or misappropriating funds. I am not surprised at all! Often the owners do not monitor the situation properly and do not impose the proper financial controls. Financial duties should be segregated with proper oversight, checks and balances and continued review. CPA’s and financial advisors should also assist the owners in all these areas to prevent wrong doing.
Another area which owners are lax is tax filing and compliance. Once again if you are trying to sell your business or company all tax filings must be current. Federal and state payroll taxes, sales tax, income tax, etc. must be timely filed and paid. Business or corporate tax returns that are not filed or on extension are situations which are unacceptable if you are selling. A sales transaction will not close if returns are not filed. You will not be able to secure a Certificate of Good Standing from the Department of Revenue and will be unable to secure a Waiver of Tax Lien Certificate necessary documents needed to close.
So, financial recordkeeping and reporting must be top priority for all business owners. Educate yourself, get personally involved and be on top of all financial areas within your business or company. It will provide you with key financial information for decision making and add value to your company, especially if you are planning to sell.
PUBLISHED IN THE SOUTHCOAST BUSINESS BULLETIN – AUGUST 2014