How a CPA Can Help Keep Your Exit Plan on Track

Every business owner needs an exit plan in place many years before his or her intended exit date. Once your exit strategy and plan have been developed, an essential next step in the process is assembling a team of preferred advisors.

Your exit planning expert will likely be at the hub of that team, interfacing with its members to help orchestrate your plan. Your advisory team should include a financial planner, estate attorney, banker, business broker, business attorney, and certified public accountant (CPA). No one professional has all the answers but the expertise of each team member will be required at particular points along the path of your exit plan. Once your team is in place you’ll want to introduce your plan and assign each advisor their tasks and activities. Their diverse skills and talents will help optimize the time and money you invest in the journey.

There is one member of this team, however, whose ongoing participation can be of tremendous value – your CPA. Many companies hire a CPA at tax time but rely only on a bookkeeper or accountant the rest of the year. Business owners often assume that handling their accounting and finances in this way will save the business money, when in fact, it could be costing.

What differentiates a CPA?

A CPA, or Certified Public Accountant, has in-depth education, typically a college degree in a financial field, and has passed rigorous examinations to attain the designation of CPA. They must be licensed with the state(s) in which they practice and comply with continuing education requirements to maintain licensure. Accountants and bookkeepers are not subject to specific education or licensing requirements. A CPA can potentially save your company more than you pay for their services – a great investment, not only for purposes of improving the efficiency and effectiveness of your accounting practices, but can be a tremendous asset in keeping your exit plan on track.

How can a CPA help you achieve your exit plan?

Minimizing taxes is foundational to meeting your exit objectives. CPAs must be current on federal tax laws and those for the states within which they are licensed. They are therefore in a position to help find every deduction and to provide high-level, tax-related advice. Considered “enrolled agents,” a CPA can even represent your business before the IRS, should it be audited. An accountant is not eligible to do so.

Also elemental to a successful exit plan is determining the current value of your business, projecting what its value must be at the time of your exit in order to accomplish your financial objectives, developing a plan, and staying on track to achieve and retain that value. You’ll likely work with valuation and exit planning experts to obtain the data and develop a solid profitability and growth strategy and plan. But once you have that in place, a CPA can provide the highly-detailed analyses necessary to monitor your progress and help you stick with your plan. If you’re falling behind, a CPA will be able to sort out why and make suggestions about how to get back on track – sooner than later.

As an exit planning accountability partner, a CPA will help optimize your day-to-day financial procedures. If you find yourself in any of the following circumstances, you are likely falling short of that optimization, which is costing your company – not only today, but it’s impacting the end goal of your exit plan.

  • Your books never seem to be up to date.
  • The accounting/bookkeeping system or software you use doesn’t work well for your business – or you have none.
  • Accounts payable or accounts receivable activity is behind.
  • Business debt could be better managed but you’re not sure how to make changes.
  • Costs could be reduced but you don’t know where to start cutting expenses.
  • A new business venture or stream of revenue is possible but you need a plan for when and how to fund it.
  • Financial forecasting is not done regularly.
  • Cash flow is not optimized.
  • Key Performance Indicators (KPIs) have not been identified and/or they are not monitored regularly.
  • You need a better understanding of how to interpret financials in order to make well-informed business decisions, large or small.
  • Financial policies and practices are not aligned with your business strategy.
  • Financial processes are not in place, or if so, are not thoroughly documented.
  • Your current financial practices may be costing you money.
  • Overseeing your bookkeeping and accounting activities yourself is interfering with what you need to be focused on – running and building your business.

Whether a staff member or an outside firm or individual, a CPA can assist you in a variety of roles, from working with your existing bookkeeper or accountant to taking full charge of your financial practices. A CPA can help you navigate and understand your financial statements so that you make more informed business decisions, and help keep a pulse on the financial health of your company – which affects every aspect of your business. As a CPA with four decades of experience in public accounting, and exit planning expertise, I recommend a CPA that is proactive, with a focus on your business objectives and how to achieve them.

Having a CPA on your team can save you thousands of dollars, even in the short term. And it will free you up to focus your time and energy on growing your business and working your exit plan to make that vision a reality. I’d welcome the opportunity to help you with a business valuation and the development of an exit strategy and plan. Contact me for a complimentary review of your current status.

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