Paul Leedham wants CEOs to be free to do CEO things.
Go out and grow the business. Build the team around you. Establish the corporate culture.
As for the rest of the heavy lifting, that’s where Leedham and his colleagues at Manning Elliott LLP Vancouver enter the fray.
A partner at Manning Elliott, Leedham gets a lot of facetime with chief executive officers (CEO) and chief financial officers (CFO). Despite holding down those high-ranking positions, sometimes even the best make mistakes.
To that end, Leedham and co. are like the Tylenol to the CEO or CFO’s number-crunching headache.
“They’ve got better things to do in their day to day than worrying about their financial reporting, accounting and taxes - they want to make sure that it’s all in good order,” Leedham says. “We look to gain their trust so they can do what they need to do to report to their shareholders and grow the business.”
Manning Elliott’s client base works in a myriad of technological fields: software solutions, online currency exchange, mobile solutions, digital simulation, security systems, 3D printing, digital media and animation, video games and engineering software.
It’s within three broad areas that Manning Elliott offers the bulk of their expertise: accounting and financial reporting, tax compliance and business advisory.
The accounting and financial reporting aspects typically require a few pivotal checks and balances. For example, if a privately-held company has a lot of debt or bank loans, third parties and other stakeholders will often want their financial statements audited or looked at in some fashion. Junior tech companies, might only need a review of their financial statements to satisfy third-party funding requirements.
“The benefit there is helping our clients identify what level of assurance we can provide to assist them with satisfying their stakeholder needs,” Leedham says. “Different investors and lenders want different kinds of information.”
Having an in-house team that specializes in U.S. tax laws is a feather in the Manning Elliott cap when it comes to the group’s second area of know-how: tax compliance laws. Companies with significant sales on both sides of the border, along with other firms who employ foreign workers, need to familiarize themselves with both taxes owing and tax incentives.
“Many times, especially with companies that operate in the tech industry, it might not be readily apparent that there could be some U.S. income tax reporting requirements that they are required to satisfy simply by virtue of making a lot of sales into the U.S.,” Leedham explains. “It can depend on what state they’re dealing with; different states have different triggering points.”
Manning Elliott’s business advisory side also specializes in big-picture questions that have different outcomes on either side of the 49th parallel.
If a business has companies in both the U.S. and Canada, it will need to know how to structure the transfer of payments between both entities across the border so as to meet the tax rules and to do so in a tax-efficient manner.
Questions can arise on how profit shares – and taxes – are divided between those two cross-border companies.
“We’re advising our clients on a strategic way to go about minimizing tax but also ensuring that if the taxman comes asking questions that they’ve got a supportable position to defend,” Leedham says. “Taking a proactive approach at ensuring all is in good order in the early stages can avoid a lot of stress and anxiety later on.”
Manning Elliott’s business advisory team includes a valuation group that often sees growing tech firms attempting to acquire other companies. During that process, involving Manning Elliott’s team early on before an acquisition is made is critical as they can weigh in on how a proposed purchase price is arrived at, and help identify often overlooked intangible assets not already reflected in a target’s historical financial statements. “Providing our insights to the management team during the due diligence process and before arrangements get finalized can help our clients avoid the headaches that come with trying to straighten things out after-the-fact, and better yet can even save them from overpaying on acquisitions,” Leedham says.It’s a crucial step that a board of directors needs fleshed out to know a purchase price is both reasonable and supportable under accounting rules. Determining an appropriate fair value for assets picked up in the acquisition is also important, especially for intangibles.
“In the accounting world, those items are very, very common for tech companies but they also need to be validated in each reporting period the company has, to make sure that the value is still attached to it and it hasn’t been impaired,” Leedham adds.
In a tech world that changes seemingly by the week, Manning Elliott’s team strives to stay ahead of the curve.
“You need to be immersed in it,” Leedham says. “You can’t be a fly-by-night player in that space. If you’re frequently dealing with this space day in and day out, you need to keep on top of new developments and ever-changing precedent that you see out there.”
To learn more about the services at Manning Elliott LLP, visit www.manningelliott.com.
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