Accountant Questions His Corporate Documents and Fears Incorporation Mistakes

I had a meeting with a CPA last week. He had formed about 30 corporations for his accounting clients. Then he ran across the articles I had written, watched a few of my videos, and he started to worry. He was not absolutely certain he had completed all of the corporate formalities correctly. And he did not want to find out that he had done it wrong either mid-audit or mid-lawsuit.

He told me that he realized it was going to cost him a small fortune to fix all of the problems that had been created, but he realized how that was going to be better than the alternative. He was prepared to do whatever was necessary to make certain that his clients were fully taken care of and satisfied. He now knew that poor incorporation services risk huge consequences for his clients

Potential Pressures on CPAs

Now it’s not uncommon that when I meet people starting businesses that they want to try and cut every corner to save on every expense that they can while first getting their business off the ground. With this attitude, they often put pressure on their trusted advisers, like their CPAs or their tax accountants, to help them save on the cost of legal fees.

On occasion, CPAs and tax accountants will fall into the trap of actually doing legal work, thinking, “It’s just a few forms, and I can fill it out.” Or, “I’ll have my secretary use an incorporation service like Legal Zoom or something like that.” They create these entities thinking, “Well it hasn’t run into a problem yet, and so this one will probably be okay too.” Of course, it’s okay until a problem comes along, and then you have a tsunami on your hands and not some small problem that you can easily fix.

Incomplete and Incorrect Corporate Documents

Now when we receive these corporate record books to look at, they’re very often incomplete. They filled out forms that they didn’t need. Maybe they incorrectly filled out the forms they do need. Or sometimes they haven’t filled out forms that should have been filled out, and the documents aren’t assembled in the proper order. They don’t have the complete set of corporate records which one would expect.

What happens when they get themselves involved in an audit or a lawsuit? They go into complete panic mode. And a lot of times, the CPAs will say, “Well just quick, type up some minutes or type up some paperwork, and hopefully, that will get us over the curb.” This is not only bad advice, but now they have compounded the problem.

Incorporation Mistakes Prevention

The worried CPA asked me, “So what do I do now?”

What I explained to him is that it’s not uncommon for people to try and do the incorporation process themselves, because they’ve read on the internet that it’s very simple. Or, there are a lot of these do-it-yourself incorporation services that have spent a lot of marketing money online. Then when you look for incorporation services, page after page of the Google research findings show you that you can do it for fifty or one-hundred bucks, and they fall into the trap. And they don’t know what to do once they’ve screwed it all up.

Corporate Record Review Program

We’ve created a program in our office. We call it our Corporate Record Review. It will allow us to help CPAs go through their corporate records, look and see what’s there, look to see what’s missing, look to see what needs to be corrected, and then we can guide them through that process to make sure all of the things that should have been done, have been done.

I indicated to him that the easiest thing for him to do would be to allow us to look at each one of the corporate record books that he had created. We would run it through our 27-point checklist to make sure that all of the things that should have been done for the client can be completed to prevent any future problems.

So he said, “Just figuring out the problem is going to cost me a fortune. What do I do about that?”

A Simple Solution

I assured him this is very simple. I said I will help him go through all of his record books. I will do the review. I will tell him whether or not they are complete and perfect, in which case there is no more work to be done. Or that we can identify the specific problems. I will give them a budget to fix it. Then, we could explain to the client that some extra work needs to be done on their corporation to make sure they have that corporate veil liability protection in place.

After that, we can step in and help him to help his clients make sure that their corporate records are absolutely perfect. I explained to him that I will do this at no charge to him and at no charge to his client. It is just a function of knowing better and how this will allow him to do better for his clients, which helps his clients do better for themselves.

Help is Available!

So here’s my offer to you. If you’re an accountant. If you have done the legal work of forming a corporation for your client. If you have doubts about whether or not you did it correctly. Or, possibly your secretary or assistant did it for you and you’re concerned whether or not they did it correctly. Or, maybe you’re concerned whether or not the records that should have been done on a year-to-year basis have been done correctly. Regardless of your worries, I will help you lay any and all incorporation concerns to rest.

I look at this as though we are partners. I’m a professional in the legal world. You’re a professional in the tax world. Both of us need to get together and help one another so we can really help out our clients.

This is complete without risk to you. And, once we are done meeting and going over your files, you will know whether or not you’re in a good position. If you’re not in a good position, we can help you correct that.