CPAs should know the client needs and risks when working as CFOs
Nowadays, a big number of clients have online businesses. Due to the technology that they have at their expense, business growth can be ramped up in months rather than in years. At the same time, a big number of these business owners do not have the skills necessary for managing their rapid growth of business. As a result of this, they ask their CPA or Accountant in Sarasota Fl for help.
Qualified individuals in Sarasota FL services often provide CFO services to businesses and clients. It might be a nice way to increase the profits/revenue and to develop new client relationships. However, CPAs who are publicly practicing must know about the risks related to it.
Nowadays, a big number of clients have online businesses. Due to the technology that they have at their expense, business growth can be ramped up in months rather than in years. At the same time, a big number of these business owners to not have the skills necessary for managing their rapid growth of business.
In case you are a public practitioner and have a client who wants you to take the role of a CFO, consult with your insurance broker and your lawyer both. Before making a decision on how to proceed, ask them about the insurance coverage problems and potential legal issues that you can run into. Often at times, it is suitable to let your lawyer form an agreement for independent contractors for you. As a result of this, your legal liabilities will reduce to a good extent. As a result of this, however, your income will become taxable. Nevertheless, it may be a great way for you to protect your CPA firm and yourself from liabilities under unwanted circumstances.
Also, it is important to remember that management decisions are not your responsibility. All that you need to do is to provide consulting. However, leave the management decisions to the clients. Moreover, it is better to communicate by email as it serves as an evidence later in disputes. On the other hand, communicating via the phone often leaves room for error.
At the same time, avoid signing any contracts on behalf of your client. Rather, such things should be left to the owner of the business.
Another important precaution is to stay within your service scope. After your scope of work/service is defined, stay within that limit and do not perform services that are not covered by you and the professional standards that are present in the engagement letter.
Often at times, CPAs believe that since they have formed a friendship with their clients, they will not get sued.
“Since my client is my friend, chances are that he will not sue me”
The above mentioned statement is extremely wrong, and puts a CPA in great risk. Even in case you have had years long friendship or a great work-relationship with the client, the client can still sue you in case they are in a dire financial strait. In this case, turning you into a scapegoat would seem fair, as the client may already be looking for someone who can be blamed.
So CPAs and individuals should always keep all of these precautions in their mind when they are working with clients, or offering them services as a CFO.
Sarasota Accountant Fajardo And Associates can help