Case Study

Start-Up Operations

A family began a residential property renovation company. They searched for and purchased a home that was in need of major improvements. They had been operating for nearly eight months when it became apparent that they were losing track of the numerous contributions and payments that had been made to date.

The firm performed the following services for the client:

• Advised the client on the tax consequences of the various legal entities that are available to new businesses.
• Arranged for the client to meet with a lawyer to be advised of the legal aspects of each of the entity types and to create the legal entity.
• Registered the newly created Limited Liability Corporation for an Employer’s Identification Number.
• Advised client about the tax reporting options of a Limited Liability Corporation and implemented the Partnership method of reporting.
• Created a chart of accounts and financial statement formats that provide a clear picture of the financial results of the company.
• Processed eight months of backlog, that involved three checking accounts, two home equity accounts, and three credit card accounts, all mixed between personal and business.
• Provided an easy to use reporting system that streamlined the processing of each subsequent month, isolated business transactions, and assured proper record keeping for tax purposes.
• Prepared Federal and State Partnership and Individual tax returns.

e-Commerce

A music licensing agency was experiencing a rising level of complaints from its clients regarding the time it was taking to issue approved licenses. A review of the licensing process revealed that a large percentage of the licensing agents’ time was spent issuing licenses to individuals, schools, associations, and religious and charitable organizations. The average amount collected per license was less then $35, due to the low volume of copies being made. The licensing agent was spending more time with these customers than with a record company that might generate millions in royalties for the agency’s clients.

The recommendation to utilize the web was accepted by the agency. In managing the project the necessary resources were brought in to create a website that would do the following:

• Educate the public on the legal requirements to license a song before recording it.
• Provide an easy to use search engine that allowed the customer to find the song they wanted utilizing a variety of search options (Title, Artist, Songwriter, A portion of the lyrics, Album title, etc).
• Provide a user friendly licensing processes that allowed the user to apply for a limited quantity license.
• Provide payment by credit card.
• Electronically issue the appropriate license.

All the steps needed to license a song without ever involving a licensing agent!

The positive results from this successful web licensing/billing system were:

• Licensing volume doubled due to ease of use.
• The default rate on limited licenses was reduced from 50% to 0% due to online credit card verification and billing.
• The equivalent of a 25% increase in licensing personnel was achieved by eliminating the need for an agent to issue a limited license.

Inventory Control

A record and tape distributor, in operation less then four years, was experiencing such rapid growth that it had already opened its eighth regional center. The New Jersey facility was experiencing inventory losses that were ten times the level of all the other facilities combined.

A detailed review of all receiving, shipping and order fulfillment processes was undertaken. The review resulted in a series of recommendations for changes to the physical plant's layout, designed to increase security. A new set of receiving and shipping procedures were implemented that provided proper internal controls.

A new manual accounting system was created that assured accurate recording of product receipts and payments. A new order system was developed that assured all orders were billed upon shipping.

In less than three months the New Jersey facility had reduced inventory shrinkage to nearly zero. The results were verified during three consecutive physical inventories.

The results were so positive that the company computerized the accounting system and implemented it throughout the network of branches. It also standardized the shipping and receiving processes, and the requirements for physical security based on the procedures developed for the New Jersey facility.

IRS Audit Preparation

A painting contractor who had always prepared his own tax returns was being audited by the IRS. He wanted to represent himself during the examination, but requested a review of his returns.

A detailed examination of the years under audit was completed and the appropriate documentation was organized to aid the client during the audit. The examination of the returns revealed several areas where the client had not taken full advantage of allowable deductions.

The client then completed the audit process with the IRS, was able to present the appropriate documentation and was ultimately issued an additional refund based on the items found during our examination of the returns.