Using Quality Financial Professionals
February 13th, 2008
By The XBanker
With all due respect to the many excellent accounting professionals out there, I am constantly amazed at the number of CPAs who willfully ignore the litigation explosion and the need for asset protection. These CPAs provide useless legal advice to their clients by suggesting that they are too small to incorporate.
Their advice is to operate as a sole proprietor, or worse, as a general partnership with others because it is easy and does not involve annual filing fees to the state. The problem, of course, is that you are never too small to get sued. And when you operate as a sole proprietor or general partnership the liability exposure is against all of your personal assets for many years to come. So the question isn’t are you too small to incorporate.
The accurate question is do you and your family have any sort of financial future to protect?
And given that that answer will always be yes, then the need to incorporate and utilize asset protection strategies is a given. You need to start protecting yourself as soon as you start your first business and buy that first rental property. You need to implement asset protection strategies at the start and then throughout your wealth building career. Remember, it is too late to protect your assets after a problem comes up. You need to act at the beginning so that there is no gap in your protection, no chink in your armor, as you move forward.
Another problem I have against lesser accounting professionals is that they argue that an extra corporate or LLC tax return is too cumbersome and/or expensive for their client. To this my first reaction is: Have you ever filed a corporate or LLC tax return? They are not difficult and should not be expensive. In my mind this particular ‘tax pro’ is giving the bad legal advice not to incorporate to cover up the fact that they do not know how to file anything other than a personal return. If you are dealing with such a person it may be that you have outgrown their services.
You need to work with professionals who understand the importance of asset protection, and will work with you to accomplish your important financial and protection objectives. It is important to know that the right team can make all the difference towards your future success.
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That’s a great post Garret , while all those above reasons are extremely important , 8 years ago , I had no idea about any of those. For a fact , I had nothing to protect , I mowed people lawns for living and I knew , I don’t want to do it forever. So , I had incorporated , just to create a legitt foundation for anything I’ll do in the future. In those years , I had based different ventures on my Inc. foudation , and 2 years ago , when I was apllying for used car dealer license and needed to be in car business for at least 2 years to get the Bond without co-signer , I told them : “My incorporation is in active business for 5 years”, I told them the truth , right ?
I got the bond and own dealership , just don’t ask me , what I ‘ll do next month or next year… I don’t know myself , and that’s one of the reasons , why I am incorporated.
As an accounting professional, I take absolutely no offense :) I couldn’t agree with you more.
There is a real disconnect, in some cases, between the accounting and legal worlds. A true professional should offer what’s best for their client, not what’s easiest to deliver.
Great post Garrett. I look forward to more.
I totally agree with you. Most CPAs do not know how to show their clients how to structure the optimal entity, because our industry is more of a transaction than true consulting. The problem, is most small business owners do not want to pay for the advice and spend more time and money dealing with the problems. That is why so many small businesses fail, they do not have a solid game plan, sufficient financing and a real CPA advisor that can help them with everything, not just book keeping and tax compliance. Small business owners need holistic wealth management where they focus on ensuring that they can replace income.
I look forward to reading more of your postings.
Michael J. Fitzgerald, CPA/PFS, CFP, MST
http://www.fitzfp-llc.com