Profit Matters

If you like many businesses are going through a workout, turnaround or reorganization, either out-of-court or pursuant to a Chapter 11 petition be sure to consider the impact of cancellation of debt income in your workout plan. Loan forgiveness or modifications can give rise to cancellation of debt income which can result in negative income tax consequences for your business or in the case of a pass-through entity at the shareholder level.

If you work with or are an organizations that enter into leasing transactions as lessors you may find the following method of recording leases in Quickbooks helpful. This is appropriate for leasing companies with 50 or fewer tenants who have not already invested in ledger software specific to that industry. Consider this for organizations that own small office buildings, office parks, retail outlets or shopping centers. 

Designing internal control procedures is often met with much reluctance. It can be hard to see the long term payoff of implementing a procedure when faced with the upfront time investment. This is especial true when comparing the costs of implementation to the individual transactions themselves which may each be highly immaterial. However, the payback has to be viewed in the aggregate to appreciate what the long run gains in efficiency that designing and implementing controls provide.  

 Internal controls are one of those things in accounting and finance that are almost guaranteed to cause an immediate loss of attention when presented to small business owners. Bare with me though, as I have a good reason why you should pay attention to them other than the commonly cited prevention of fraud.

A frequent complaint I here when working with small business owners and not-for-profits is that GAAP accounting is too academic and doesn't provide any practical value to their organization. This typically comes up in conversation concerning stock option expensing, straight-lining rents or discount pledges receivables. Granted many of the more esoteric aspects of GAAP do come across as academic even to accounting professionals.