Discussion:Proposition to be CFO for a client
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Discussion Forum Index --> Tax Questions --> Proposition to be CFO for a client
| 31 January 2008 | |
| Here we go yet again...client that owes me about 7K in fees from last year; tax returns for prior years to be filed in 08 and ongoing help with his business...will be publicly traded corporation.
He dropped off 2K cold hard cash today and wants me to be CFO of his corporation so that the SEC will allow him to trade...he needs officers....salary would be great but as of now, no salary only letterhead designation.... What to do to protect myself? Sure if he can pay me the 250K per year salary to do the work, I will take it, but he needs me to sign as an officer for a corporation that is right now in the toilet.... I am NOT an attorney, so I don't know if this will bite me in my patootie!! | |
TheTinCook (talk|edits) said: | 31 January 2008 |
| He owes you 5 grand from a year ago, and you think he'll pay you salary?
I'd pass. | |
| 31 January 2008 | |
| Sandy,
As a former CFO (albeit for some really small crappy companies), do your best Nancy Reagan impersonation and just say "No", especially if it is in the toilet. Remember if your are an officer, you can be responsible as well. If he can't pay you the $7K, what makes you think he has D&O, liability and all the insurance that goes with running the company responsibly? Good luck. Tom Taocpa 14:10, 31 January 2008 (CST) | |
| 31 January 2008 | |
| Thank you....I just know that if this goes public as he "assumes" and he has all the financials to support the income, it could be beneficial. But the B/S showed large losses on the stock holdings as I reported them at market value.
The 2K btw is a retainer for the tax returns; he will still owe me the 7K as well as about another 800.00....3 years corporate, 6 years individual as well as all the financials to support his pink sheets trading... | |
TheTinCook (talk|edits) said: | 31 January 2008 |
| Was this the guy with the pink sheets from way back when?
That was quite the situation you posted, if I recall correctly. | |
| January 31, 2008 | |
| Hi Sandy >> It seems like you should be able to get an enforcable employment contract at a stated salary. And/or stock and/or stock options. Make sure the D&O insurance liabilities are paid up and sufficient to cover your risks. Don't let him hold your $7k hostage to you accepting officer's job. Before accepting any position, be sure you're in the position to enjoy a huge payout if the company is successful. | |
Death&Taxes (talk|edits) said: | 31 January 2008 |
| I have this bridge.......
Sandy, read Discussion: Poor Guy Was Duped - Now What? | |
| 31 January 2008 | |
| No trick question....absolutely a client who owes me 7K for financials to be able to trade on pink sheets. Yes, this is the same client. He now needs 1120's and 1040's for several years in order to refinance his mortgage. He is dangling 250K per year salary in my face...he has paid this amount in p/r in the past, so I am thinking he is "good" for the payroll.
He came to me today as I said with 2K cash to give a retainer for federal tax returns....I am a trusting soul perhaps...but the carrot looks so good. Asked me if I would sign as "CFO" of the corporation that will be publicly trading...no salary as of yet but to sign so corporation is indeed a corporation for pink sheets. He has President, VP, Secretary, and needs a CFO to make it fly. Sorry to be so dense but it is my nature to care and to also question motives....he is outsourcing to India the call center and the work but if this will fly needs to have a "substantive nature of business" in the State of FL.... Guy has $$, no doubt but the $$ are tied up in pink sheets stock and spouse's income. He now needs to refinance mtg to get some cash flow.... Irsfixer? Never a trick question from me :) | |
| 31 January 2008 | |
| Sandy:
As an ex CFO of a public company, I wouldn't do it for 250K. I wouldn't do it for 500K. Public company risks are too great out there today, primarily for the CFO. If he is late and pays you in cash it doesn't sound like he has a good financial foundation to go public. Plus I assume the prior three years finanaicals will be audited and if I understand the discussion they will be auditing your work for which you will sign the registration statement as CFO. Not a severe problem but again, based upon what you have told us about his personal performance if it walks like a duck and talks like a duck it is a duck. Another thing to consider. Does he listen to his advisors? Does he listen to his lawyers. There are a lot of hot shot successes out there that go public and think they know more than the pros and end up with it in a sling. If he doesn't listen to advisors then he won't change his ways when the co goes public. Then you will much bigger issues to attend to. Really though, if he is flaky the company won't make it through due dilligence with the brokerage house (at least I hope things haven't gotten that bad in the last 10 years). Granted this thing could take off and you could be very well off. It could also tank and you could have some investors looking at you for relief. If you do decide to go forward, get an employment contract and some type of liability insurance and make sure you can share in the stock apprecation in some manner. Good luck as well. | |
| February 1, 2008 | |
| I think you also need to consider whether you would actually like to work for someone else again. You've been on your own. You do what you want, when you want. You have your own blog, etc. All of that pretty much goes by the wayside when you work for someone else. | |
| 1 February 2008 | |
| Here are my thoughts:
= "This sounds exciting, and i really want to do this!" However... = Pay the balance owed so we can move forward. = What kind of weasel walks in and pays 2k CASH? = Finally, you need to charge more for your work, "i have a steady gig with a client, we give the QB file to 'Large Firm CPA' for taxes, they charge 2.5 k for Corporate and Franchise, I'm like what do they do? The work was already done. Geesh = I like James's response better than mine | |
| 1 February 2008 | |
| He may as well offer you $1,000,000.00 a year because if he can't pay your fees - he will not pay your salary. Furthermore, you will be signing 941's and being setup for the Trust Fund Recovery Penalty.
It would be insane to take this "job". It may not even be a real job. It may be a ruse to get a lot of unpaid work out of you with promises of great rewards in the future. It is a conflict of interest waiting to happen. Did i mention insanity? | |
Bottom Line (talk|edits) said: | 1 February 2008 |
NO WAY!! This guy's supposedly been rich before but owes you money he can't pay and NEEDS to refinance his house. He's delinquent on filing taxes and comes to you with SOME money (but nowhere near what he owes you) when he's desperate. Even though I don't have any credentials (CPA, EA), I still wouldn't take it. You've worked very hard for your CPA and have a lot more to lose than I do. (Never mind all those kids to feed  ) Don't let the potential of money cloud your judgement.
IF he does get anywhere near taking this public, as an officer (especially the financial officer and a CPA), you'll be hung out to dry if/when this goes south. | |
| 1 February 2008 | |
| Thank you all...very good information and I certainly am more knowledgeable for asking. I just thought "cool"...now not so cool...but I will do the back tax returns and will not deliver them without a check for what he owes me for the financials already done and the additional for the tax returns....thank you again all :) | |
| 1 February 2008 | |
| I dunno, officer of a NEW publicly traded company? And CFO at that? Resposbile for SEC filings, I assume. What liability attaches to that job.... Isn't the CFO usually the fall guy (or gal)? | |
