The 7 Biggest Financial Mistakes Businesses Make Running a business should earn you an honorary degree given all you will learn, writes Brian Hamilton, co-founder and CEO of Sageworks, over at Inc. We live and we learn. In the time it’s taken me to build two companies, I have learned and more importantly, lived, these mistakes. I hope these pieces of advice can help both aspiring and existing entrepreneurs succeed in starting and running their own businesses. Here are the CliffNotes, the mistakes you should hear now and avoid. 1. Hiring in advance of revenue. There is a common expression: “Don’t…
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IT Guru Turns Out to Be Security Hole Roger Kay reports at Forbes: Small businesses have become a choice target for hackers, but by far the most common — and devastating — attacks on small businesses are inside jobs. This is the story of one such assault. The target (we’ll call him Peter) trusted his IT guy (Joe, for our purposes) because Joe worked magic. Peter didn’t understand exactly what Joe was doing, but had to trust him anyway because Peter couldn’t perform those functions himself. Ironically, in his former life, Peter was CFO at a large oil company and…
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CPA Exam Launched at International Test Sites Michael Cohn at Accounting Today reports: The U.S. CPA Exam was successfully administered at four international test sites: Japan, Bahrain, Kuwait, Lebanon and the United Arab Emirates. The American Institute of CPAs, the National Association of State Boards of Accountancy and Prometric said Monday that candidates took exams at the four locations abroad on August 1, the first time in history that the CPA Exam has been administered outside the U.S. and its territories. During the remainder of August, 1,165 candidates are expected to sit for 2,065 examination sections. Future month-long testing windows…
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Wild Market Quiets the Buzz for I.P.O.’s Evelyn M. Russli and Michael J. De La Merced at New York Times’ Dealbook: As stocks swing violently, a chill is beginning to settle on the initial public offering market. A small number of companies have already retreated on their offering plans. WageWorks, an employee benefits provider, pushed its offering, originally scheduled for Friday, to next week and dropped its target price range by as much as 43 percent. Two real estate investment trusts, Orchid Island Capital and Eola Property Trust, have withdrawn their filings. And Old Mutual, a big South African insurance…
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Cut Down on Email, Increase Your Biz Dev So advise Bret Owens and Dan Markovitz at AccountingToday: Too many CPAs begin the day reading through their email inbox. No doubt, reputations depend on near instantaneous client service. But let’s face it—if the only value you’re providing for your client is rapid response, you’ll eventually be replaced by someone in Mumbai, Shenzhen or some other time zone who can respond even faster. Moreover, that level of service comes at a cost: CPAs become reactive rather than proactive. No matter how quickly they respond, they are always fighting fires, always behind the…
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S Corporation Rental Income Not Passive Except When It Is Peter J. Reilly reports at Forbes: Private Letter Ruling 201118011 A C corporation is a taxable entity. Distributions that it makes to its shareholders are also, generally, taxable to them. People who don’t want to pay tax twice on the same income will make an S election. The shareholders are taxed on whatever the earnings are regardless of distributions. Distributions of those earnings will generally not be taxable. It’s pretty easy if the corporation made the election effective day one of its existence. Former C corporations have other problems. If…
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Hey There, Bob Posen! Steven Zelin, aka “The Singing CPA,” and Edith Orenstein, Accounting WEB blogger for Financial Executives International (FEI), have teamed up to create a music video celebrating the third anniversary of the Security and Exchange Commission’s (SEC)Advisory Committee on Improvements to Financial Reporting chaired by Robert C. (Bob) Pozen, senior financial lecturer at Harvard University. AccountingWeb reports: Complexity in financial reporting continues to vex members of the accounting profession as we address issues including convergence from Generally Accepted Accounting Principles (GAAP) to International Financial Reporting Standards (IFRS), implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act,…
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Buying an Established Business The Wall Street Journal’s “Running a Business” blog analyzes the benefits of buying vs. building: If you’re interested in entrepreneurship, but lack ideas or time to create a new business, buying an established company may be a wise alternative. You’ll inherit a working infrastructure complete with resources you’d otherwise have to secure on your own, such as equipment and employees. You’ll also ideally be taking over a known brand built on a positive reputation over many years’ time. Buying a business typically does require more capital upfront than if you were to build one anew. But…
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Shannon Pratt remembers what led him to BV and discusses industry growth in the ’90s Neil Beatonshares his love of numbers, describes how Practice Aids help, and remembers the ‘Wild West’ days of early BV Rod Burkertdescribes difficulties of calculating DLOM and explains why professional specialization is critical Chris Mercer extols LinkedIn and explains how marketability discounts are linked to BV standards Robert Reilly tells how BV credentials provide enormous benefit in the courtroom and why fair value accounting is taking over U.S. GAAP Michael Kaplan explains how a teaching background helped CFFA program development and explains why valuation will…
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Lari Masten discusses the importance of the Harmonic Mean metric when using the Market Approach Curtis Bernstein discusses testing assumptions in healthcare Karen Kaseno shares smart tips for managing your receivables Richard Gray discuss the importance of comparables when valuing partnership entities Jim Harrington discuss the importance of data sets Frank Rosillo discusses the importance of good report writing techniques when conducting business appraisals
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Espen Roback (28:26) tells how he grew up in Norway, describes his work with the ‘Ebay of Illiquid Securities,’ and the way appraisers can provide value through consistency Brent Sloan (18:44) talks about his focus on Fair Value and why Financial Reporting most interested him because of his M&A background. Peter Agrapides (20:50) tells how NACVA offered him his first job, and shares thoughts for today’s undergraduates interested in accounting Tracy Coenan (11:40) explains why she chose a professional focus on tax fraud, money laundering and divorce, how she develops new business, and what she does for fun Lari Masten…
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Alphabet Soup AccountingToday‘s Danielle Lee writes that “A growing roster of professional designations fosters credential-mania,” among CPAs, and devotes an article to surveying some of the most popular credentials today, including those from NACVA: The CVA. The National Association of Certified Valuators and Analysts’ CVA credential does require a CPA license, along with coursework and an exam. Established in 1991, the credential is now held by more than 4,000 designees. The CVA is “extra important because the profession – valuating businesses – is in a constant state of change,” said Mark Morris, chair of NACVA’s valuation credentialing board. “New theories…
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Why Most Investors Don’t Measure Returns Correctly At the NY Times Bucks: Making the Most of Your Money blog, Carl Richards opines: There’s an old saying that you should take a look at your checkbook and your calendar to see what you really value as opposed to what you say you value, because the calendar and the checkbook never lie. Dollars and cents are easy to count in the checkbook. Happiness, on the other hand, isn’t a line item in the ledger. It’s much more difficult to say we’re happier today than yesterday because we coached our children’s sports team…
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Business-For-Sale Market Heats Up So writes Angus Loden at The Wall Street Journal blog In Charge: On the challenges of entrepreneurs managing their businesses. Sales of small businesses rose 8% in the second quarter over the same period last year, hitting the highest level since the closing months of 2008, with a growing number of smaller firms finding buyers, according to business-broker data. Getty Images From April to June, sales of 1,198 small businesses on the market closed, up from 1,106 in the second quarter of 2010, according to BizBuySell.com, an online small-business marketplace based in San Francisco. The median sale…
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House lawmakers passed a bill today to overhaul the U.S. patent system for the first time in nearly 60 years, Nathan Koppel notes on the Wall Street Journal Law Blog: The House passed the America Invents Act on a 407 to 117 vote, WSJ reports. The bill would change how the U.S. grants patents and award them to the party which is “first to file” an invention instead of the “first to invent” it. The change would bring the U.S. in line with other countries, according to WSJ. The Senate passed similar legislation in March on a 95-to-5 vote. (Click here to see…
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David Wanetick, Managing Director at IncreMental Advantage, LLC, a valuation firm with expertise in valuing intangible assets and emerging technologies, based in Princeton, NJ, opines at The Business Insider: Valuing a patent is complex and imperfect. Below we’ll go into some detail surrounding the methods used to determine a patent’s value. Each is applied under different circumstances, and impacted by many factors. Some of these factors can be measured and quantified, while others are intangible and require expert judgment in order to attain a reasonably accurate estimation of value.
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Who Is the Mystery Hamptons Moneybags? asks the New York Times DealBook. The hunt is on for the New York mogul with questionable cash management skills. Speculation bubbled on Wednesday after a receipt left hanging out of a Capital One ATM in East Hampton that displayed its owner’s remaining balance as $99,864,731.94 — yes, that would be $99 million and change — was posted on Dealbreaker. The receipt, which appears to show a $400 cash withdrawal from a savings account plus a $2.75 ATM fee, was rumored to belong to the Appaloosa Management honcho David Tepper, who made billions during the…
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The Accountable Care Fiasco That’s what the Wall Street Journal calls the state of developing real-world guidelines for “the Accountable Care Organizations that are supposed to be the crown jewel of cost-saving reform.” The theory for ACOs, as they’re known, is that hospitals, primary-care doctors and specialists will work more efficiently in teams, like at the Mayo Clinic and other top U.S. hospitals. ACOs are meant to fix health care’s too-many-cooks predicament. The average senior on Medicare sees two physicians and five specialists, 13 on average for those with chronic illnesses. Most likely, those doctors aren’t coordinating patient care. This…
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Lawyers and Accountants Once Put Integrity First So asserts Mark W. Everson, commissioner of the IRS from 2003 to 2007, in an opinion piece for the Sunday NY Times: Three or four decades ago, investors and regulators could rely on these professionals to provide a check on corporate risk-taking. But over time, attorneys and auditors came to see their practices not as independent firms that strengthen the integrity of capitalism, but as businesses measured chiefly by the earnings of their partners. . . . Recent decades have seen a new model take root: a business plan tied to partner earnings. Obviously,…
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No Parties After IFRS Adoption in Canada When measuring the costs of IFRS implementation, there are the not-at-all trivial costs of changing accounting methods. But there are also opportunity costs of spending time becoming IFRS compliant that you could have spent doing something other things. “The greater cost has really been the diversion of intellectual capital during this time period from doing more productive pursuits than the IFRS conversion,” opines a vice president at Canadian Tire. At CFO Journal Emily Chasen reports that IFRS adoption by our neighbors to the north has been anything but easy: If U.S. regulators want to get a…