 Financial management & reporting system  Three aspects: Accounting, Reporting & Management

 Money in - Money out  Accounts Receivable, Payroll and Accounts Payable  Assets, Liabilities, & Equity  Income, Expense, Profits

 Balance Sheet, Income Statement, Cash Flow Statement  External vs Internal reporting  Management reporting (costs, profitability, budgets, forecasts, etc)

 Allocation of capital  Who gets paid & when?  Cost management

1. Lay a good foundation 2. Keep it simple 3. Avoid the landmines

 Cash flow forecast  Accounting software system  Internal controls  Procedures

Week 1Week 2Week 3 Starting Cash 100,000 85,000 60,000 + Receipts 10,000 5,000 10,000 - Payroll (20,000) - Loans (8,000) - Rent (2,000) - Accts Pay. (15,000) (10,000)(10,000) Ending Cash 85,000 60,000 60,000

 Industry-Specific vs. Generic  Cloud vs. LAN  Plan for near term growth  Consider cost of maintenance  Accounting staff familiarity

 Protection of assets  Reduce risk of errors in reporting  Separation of duties  Bank reconciliations  Check signing authorizations  System security controls

 Keep it simple  Who does what and when  Routine deadlines – weekly, monthly, quarterly and annually  Monthly closeout schedule  Address significant accounting policies

 Payroll taxes › “Responsible Person” › Trust Fund Recovery Penalty › OUTSOURCE!!  Sales taxes › Taxable vs Non-taxable sales › State specific › “Nexus”

Nexus for California: “for sales and use tax purposes include (but are not limited to) the following:  Maintaining, occupying or using any type of office, sales room, warehouse or other place of business in California. This includes use that is temporary, indirect or through an agent or other representative.  Having any kind of representative operating in the state for the purpose of taking orders, making sales or deliveries, installing, or assembling tangible personal property.  Making repairs or providing maintenance or service to property sold, whether by employees, agents or other representatives.  Deriving rentals from a lease of tangible personal property located in California.”

Employee vs Contractor › Employer is responsible for employees’ payroll taxes › Contractor is responsible for self-employment taxes › 20 Factor test – IRS Revenue Ruling “In September 2011, former Secretary of Labor Hilda L. Solis announced a major step forward with the signing of a Memorandum of Understanding (MOU) between the Department and the Internal Revenue Service (IRS). Under this agreement, the agencies will work together and share information to reduce the incidence of misclassification of employees, to help reduce the tax gap, and to improve compliance with federal labor laws.”

 Overtime rules  Owner transactions  Tax filing requirements (“nexus”)  “Creative” accounting

Todd Giustiniano, CPA E.K. Lozano & Company CPA’s & Consultants 220 Dalwill Drive Mandeville, La