Posts tagged with: tax strategist
Listen to David McLaren on Exit This Way™
David McLaren, CPA, CGMA, CRFAC, the founder and owner of McLaren Associates CPA in Shrewsbury, MA joined host Kerri Salls on Exit This Way™ to discuss:
Accountancy Beyond The Spreadsheet
David McLaren is the founder and owner of McLaren Associates CPA. David began his career in 1985 as an accountant for Colony Farms. He advanced to head accountant for Randolph Press and later moved to Meola’s Dairy where he served in the capacity as internal auditor.
In the nineties, David served as an accountant at United Parcel Service while teaching at Bentley College. He then worked as staff accountant for Greenberg, Rosenblatt, Kull and Bitsoli, CPAs in Worcester. He spent nearly a decade as a supervisor at Shepherd & Goldstein, CPAs where his accomplishments included organizing and growing their Cape Cod office.
David worked as director of finance at Qinetiq Trusted Information Management, Inc., a computer forensics firm with offices in the United States and Europe; working with the FBI, Ministry of Defense in the UK, and the Department of Defense in the USA. He served as controller at Atlantic Construction Services, Inc. and as accountant at Goulet, Salvidio & Associates, CPAs in Worcester.
David holds a degree in accountancy cum laude from Bentley College and is a member of the American Institute of Certified Public Accountants and the Massachusetts Society of Certified Public Accountants. In addition, David has been recognized by the Worcester Business Journal as a “40 Under Forty” winner.
David started the conversation by putting the role of an accountant who does your taxes in perspective. He reminded us that there’s more to being an accountant than just putting historical numbers on a form. As a tax strategist, a pro-active accountant is doing you a favor by knowing the tax laws to save you a great deal of money. Beyond that, he highlighted that there’s significant value showing clients where their money is going.
David clarified what a tax strategist can do, referencing industry specific deductions and credits in the tax law back to 1945, to save money, steps to take, or get 9% of profits back.
David described the challenge owners face of the double-edged sword. They want to take aggressive deductions to reduce taxes. But this will hurt your business value down the road, spending a lot and not making any money. David explained the advantages of using credits instead because credits are add-backs, so they don’t hurt your valuation, and actually add value.
Match Deductions with Cash Flows
Understanding your client, what keeps them up at night so we can help make the business work the best possible. As that strategist, David looks at the whole business, the risk profile before they may want to sell. He shows owners three of the top concerns to get them in the best position possible.
David sees his job is to focus clients on what their goal is for cash flow, exit strategy, taxes, loans and banking and making the entire’ thing’ work. He says accountants tend not to do this and just historically records numbers on tax forms rather than proactively work with clients on their goals.
David sees his job is to assist clients with process improvement or process creation. The more the business relies on the client/owner, the less value it has, as another buyer cannot walk in their shoes. He identifies issues, problems or risk. Many times this may take a great deal of convincing.
David made the distinction that most accountants are reactive and wait for the phone to ring, leaving it up to the client to address the issues, figure things out and come up with questions on their own. When you take accountancy beyond the spreadsheet, a tax strategist is going to be looking at your business proactively to identify the three things an owner should do that will give them the highest return, best bang for their buck.
Red flags on tax returns can be big issues triggering a government audit. Even if you are doing everything perfectly, David says audits cause an unnecessary distraction from your business and cause damage, even when you are not doing anything wrong. The government will treat you like you are doing something wrong.
Most accountants may not even know what the latest things are that cause audits and red flags. That’s why David recommends using an accountant who knows all the current laws, who represents clients in front of the IRS regularly, and is current on how the IRS looks at your returns.
The distraction from your business can be costly. If you will be audited he recommends simply paying someone to represent you. ‘You’ll never get a benefit from being audited’.
David recommends using one accountant to do your taxes, review operations for any red flags and to design your tax strategy because you don’t want one accountant disagreeing with how another accountant looked at your numbers.
David things accountants should be asking owners what keeps them up at night. But how many accountants actually ask their clients what is keeping them up and try to help? Most do not act as a partner, but should. Great accountants do get to know their clients, are proactive tax strategists and know what keeps their clients up at night to help fix the issues.
Listen to David’s full interview here.