Part-time CFO | Or Dividends The Most Efficient Tax Strategy

There are so many variables that part-time CFO needs take into consideration when making this decision, that business owners should understand itís a complex issue that they will be able to answer quickly themselves. One of the variables that business owners need to help their professional understand, is if the business owner is also taking in any other income that is unrelated to their business, and if they are how they are getting paid, is it salary or dividends? Does the business owner have a significant other, if they do are they income splitting with them? Does their spouse have other income as well, and how are they getting paid is it salary or dividends?

Other variables that need to be considered by their part time CFO is if the business owner or their spouse claim any child care expenses, or if they are moving their business and will be claiming moving expenses. In order to clean childcare or moving expenses, the person claiming them must be during a salary, because those expenses are only deductible off of earned income. Whether a business owner themselves are claiming those expenses, or if is their spouse, whoever claims them must be taking at least part in salary to claim those expenses.

Part time CFO will also be asking business owners if they are going through us divorce or separation, because this can also factor into how a business owner or their spouse gets paid. There professionals going to be asking them not only qualitative but quantitative questions in order to assess the right decision here. Since dividends strategies might be much more difficult to explain in a divorce or separation, is owners may find it easier to claim salary while going through this process, but itís not just that easy.

By working with a part-time CFO who has lots of years of experience, business owners will be able to be assured that they are working with a professional who can deeply understand the situation, in order to help business owners come up with the right decision, and right income makes for them and their business.

Half of all entrepreneurs close the doors to their business within five years, and 29% of those failed entrepreneurs say that the reason why their business failed was because they ran out of money says part-time CFO. The reason why this is so significant, is because business owners can greatly affect the amount of money they have in their business by utilizing an effective tax strategy when they are deciding how to take money out of their business. Itís not unusual or uncommon for businesses to have several thousand dollars in lost taxes that they paid by having an ineffective tax strategy in their business.

Entrepreneurs may end up with an inefficient tax strategy for a number of reasons, often they are trying to save themselves money in accounting fees, and a part time CFO who charges significantly less in the competition, may be doing that because they have less experience, or are not as knowledgeable. This ends up with a tax professional who doesnít completely understand the situation, and creates an inefficient text strategy for the entrepreneurs.

There are some warning signs that business owners can look for that can perhaps indicate to them that they are not utilizing the most efficient tax strategy for them or their business. The first warning sign is if there part-time CFO answered the question how they should pay themselves very quickly. Thatís using indicate if that they donít understand the subject enough to answer. In fact, accountants must do an extremely deep search of not only the business owner and their circumstances, but the circumstances of the business in order to come up with the right mix of salary in dividends that business owners should pay themselves.

Another warning sign that entrepreneurs should look for, is if they have been to see a financial statement, or look at their tax return and show that they are either getting paid in 100% dividends or hundred percent salary. This might indicate that not enough thought has gone into the payment. While some part-time CFO may come to the conclusion that this is actually the best strategy for this business owner at this time, and effective tax strategy usually is a combination of dividends and salary. The business owner wants to find out why this strategy was created for them, they can ask their accountant, to find out if the answer satisfies them. If not, it may be time for a second opinion.

The business professionals at Spurrell and Associates have come up with several processes that they use in determining the answer to this question. The processes help them take as much information from the client about themselves in their business as possible, and then they have created processes that are devoted to analysing those answers so that they can get efficient tax strategies for the clients consistently.