Preface: Attorneys are an invaluable resource to business. Retain an attorney for legal business matters when necessary.
Why Your CPA Advises You to Work with an Attorney When Necessary
You are well advised to retain an attorney in certain instances. Why?Namely, sometimes you don’t know what you don’t know. Your CPA appreciates this fact. After all, if you knew every tax and accounting angle, you wouldn’t need your CPA. When financial matters involve a peripheral individual or business additional risks arise, an attorney is worth the investment.
If you need accurate financial statements, tax advice, resolution of an IRS matters, or numerical analysis, your CPA is the right resource. If you need to amend a partnership agreement, write a buy-sell agreement, incorporate a new business, or draft a letter of intent, you need an attorney. Remember this; if your CPA or attorney disagrees with this advice, you probably need a new CPA or attorney.
Often your CPA and attorney will work together to provide your business with a financial fortress. The fortress works like this. You wouldn’t pay a carpenter to install a new phone system in your business, nor would you pay marketing experts to install carpet in your new office. You understand the importance and value in working with a business or individual specializing in the task at hand. You would, perhaps, pay a human resource specialist to hire the right talent for a managerial role in your business. These are understandable examples of specialization. In too many instances entrepreneurs have the wrong impression of what trusted advisors can do for their business, e.g. their CPA.
Suppose you are selling an interest in an LLC to your partner. You tell your accountant your plans, and they write an agreement of sale document and rewrite the Operating Agreement. Your accountant makes the appropriate adjustments with the tax filing, and you receive payment. Here’s an example of where things can go wrong without proper oversight. Three years later you decide to contact the bank for a loan on investment real estate. Your banker says your credit score is to too low, but when you checked five years ago it was stellar. The problem, your partner who bought your business interest has a major delinquent credit card balance. Who forgot to take your name off the credit card, and maybe the at the limit line of credit with your personal guarantee? You now maybe aware of a risk you may not have been aware of before. Don’t sweat a business attorneys fees if you want savvy advice. It’s should be obvious why your CPA advises you to retain an attorney. They don’t want to pay the line of credit or credit cards from a malpractice lawsuit. The professional oversight of attorney provides additional financial protection to not only you, but your CPA also.
Think of your attorney as saving you and your business from making major mistakes, and not just getting you and your business out of major mistakes. Listening to your CPA when they advise you to retain an attorney is in your best interest.
Summary: Attorneys can save your business from legal hassles. Your CPA when advising your business to use an attorney will often have a referral to a trusted attorney. Sometimes a CPA firm will have an attorney on staff. Appreciate why attorneys are an asset to your business decisions and not a liability.