We Could Do With More Cooperation Between Legal And Accounting Firms Representing Mutual Clients.

Too many

Too many

legal agreements are being written with nominal tax planning. Conversely, it is common to prepare financial documents without concern for legal situations like contingency requirements, breaching of loan agreements, up-to-date minute book documentation, and

numerous compliance issues including corporate statutes and industry third

party regulations.

This Frequent Mistake Could Bite

Corporate minute books are among the first documents tax auditors request to

verify the validity of certain tax deductions

like bonuses. Considering that minute books are usually at the lawyers office, one hopes there are no omitted

documents or other glaring omissions.

Items That Necessitate

Consistent Cooperation

I have never experienced it anything but worthwhile for the

attorneys and accountants to share some of each other's understanding of the

business.There are numerous reasons why. It is the responsibility of the

company owners to create the collaborative culture. One example that should be looked

at is that legal opinion may be important to verify if

certain accrued liabilities are really

mandatory to be paid. This would disclose some surprising

information. This exercise alone is invaluable if a shareholder wants to secure their shareholder

loan to the company without being at the bottom of the totem pole.

Small and Large Businesses Need Their Legal and Accounting Representatives to

Work Together.

The issue of

standard General Security Agreements is something that needs a lawyer and accountant to

work together. Legal and financial responsibilities these forms convey can be

stressfull to say the least. Realizing that there is no such thing as boilerplate agreements that can be

changed is great news. Considering options such as letters of understanding or side

agreements to mitigate some of the potential damage that can be caused by powerful

GSA's is only likely to happen when the lawyers and accountants are

working together as they do in bigger businesses. The lawyers understand the legal problems but they sometimes don't run the numbers to determine how easy it

is to be in technical infringement of contract with the lender.

And the accountants don't know the consequences generously provided by legal issues.

It is always a challenge to customize a loan

agreement with a financial institution but knowing both your accountant and attorney are helping

you "gang up" on them will give you every chance of receiving what you want.

Oh yes, the tax angle. The fact that client privilege is only enjoyed by the legal community

means that accountants tax planning memos and correspondence could fall into the

hands of CRA, but since they usually do not exist, it is

probably not a problem. However, if they were to exist, it would be best for your

accountants and lawyer to discuss ways of communicating that would provide legal privilege

for these phantom documents, an extreme but extremely valuable

manoeuvre.

by: danwsw5nro

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