Customer Study No. 4: Business Owner
Note: This story is based on an actual scenario involving one of our customers, but some details have been changed to protect the customer's privacy.
Chris owns a high-end custom kitchen design company and typically works from 7 a.m. to 7 p.m. Monday to Saturday. In his work, he is constantly managing projects and collaborating with architects, general contractors, plumbers, electricians and homeowners. He also manages 15 employees and personally sells every project. In addition to growing his business, he is building his own home. All of these factors leave him little time for taking care of his business books, let alone his personal books. And he hadn’t made any payroll tax deposits ever-“no one ever told me how”, he said.
Chris originally financed much of the business with personal credit cards. As a result, the distinction between his business and personal accounts was blurred. Funds often got integrated and expenses confused. Eventually, it became imperative for him to take action. This was a classic case of the overwhelmed business owner being spread too thin, trying to do too many things and not able to focus on growing his business.
At the recommendation of Chris' accountant, Commonwealth Cash Management entered the picture. He was assigned a dedicated CCM Client Assistant who was able to separate his business accounting from his personal accounting. The Client Assistant quickly identified missed bill payments to vendors and subcontractors, a missed payment to the IRS, as well as commingled funds (personal and business), bounced checks and drafts to the accounts that were unnecessary and unauthorized. And we quickly took over the payroll processing, getting him in compliance –and his employees-and the taxing agencies paid.
Once the missed payments and commingled funds were put in order, CCM rolled Chris' business into his personal net worth. Since that consolidation, he has gotten accurate, regular statements about his overall financial situation. He has also been able to pay his bills regularly and on time, which has improved his relationship with his vendors.
Best of all, Chris can now separate business assets and liabilities from personal assets and liabilities. This information is put in succinct and easy-to-use form for his CPA to work on the taxes and related business and personal returns. By ensuring his books are in order, CCM has made both Chris and his CPA more efficient.
In hindsight, Chris realizes he had been "wearing too many hats" by working with new clients, managing employees and vendors, and trying to keep his books straight. He now understands that it makes the most sense to focus on what he is good at while delegating less sensitive tasks to his staff and outsourcing the rest to professionals like CCM.