Why Taxes Are Good!

An interview with Rodney Fingleson, C.P.A.  Georgia Ragsdale, C.E.O. Watermark Financial, Inc.  

Q: Explain to me the differences between when you are acting as a CPA and acting as a business advisor?

A: Acting as a CPA is compliance work and tax planning, that means that you get a set of numbers and you plan what kind of taxes are due, compliance as a CPA, financial statements or tax returns, a lot of companies want their financial statements audited or reviewed and they wan their tax returns prepared – individual and corporate, that’s when you act as a CPA. When you act as a business advisor, that’s when you advise a client as to their cash needs, what they need to expand the business, buying other companies, buying a competitor, advise to get the business going forward.  Generally speaking the business advisor should have enough experience to give the client, they should be very familiar with the industry they are advising on. This morning I was meeting with a company in Oxnard and they need a $10M line of credit, I specialize in helping companies to raise funds so I know all the relationships to get the company what it needs. That’s the difference between a CPA and a business advisor, in that a CPA is a what we call standard compliance work, business advisor helps a client grow their business.

Q: What kind of innovations in the field of providing compliance CPA work with people, what are some things the average person may not know about? 

A: Generally it’s an understanding of how their business works and it’s showing the outside world that they are actually doing better than they want. We have seen horrible financial statements, many people don’t realize they can do financial statements in a way that people in the outside world can actually understand them.  And that’s the biggest issue, many people say ‘I can’t get a loan’ or ‘I don’t understand my financial statement’; so many people don’t understand whether they are making a profit or not.

Q: In light of that, what are the most important consideration when you are looking at a company?

A: To have accurate monthly statements.  And that is true for both the CPA role and the advisory role, if you don’t have accurate numbers there is no way anyone can help you.

Q: Everyone is very concerned with paying taxes, where do you see taxation heading; you have been with your firm since 1979, so can you provide us with your long term perspective?

A: Well, my emphasis is not on taxation in that we want businesses to be profitably and then they pay taxes. Given that, the changes I see are the changing capital gains rates for businesses. I am advising certain clients who are looking to sell their businesses that they should try to sell the business this year, because if you look at the capital gains tax rate it is the lowest it will ever be. I don’t see changes in regular tax rates, but the current capital gains rate of 13% could be increased to a much higher amount.

Q: What could there be to love about taxes?

A: Very simple! I always tell people, “I would love you to pay $1,000,000 in taxes.” And they all freak out, they say, “why is that?!?!” And I say, “well, if you are paying $1,000,000 in taxes it means you made $2,000,000 or $3,000,000, what’s wrong with that!” It’s great to pay taxes, people shy away from taxes, and that’s the wrong approach. You want to pay as much taxes as possible knowing that all the best planning has been done and you still owe it, then you would have done well.

Q: Very well said. What are, without breaking any confidentialities, what are your greatest client success stories – something you provided to a client that they would not have had without your assistance?

A: The greatest success is a pharmaceutical company that we have, when we first started representing them 10 years ago owed the bank a very small amount of money and were just breaking even.  Now does an aggregate of $150,000,000 and puts a lot of that to the bottom line, as a result of me being absolutely instrumental in getting loans and planning and all that.  Ironically, here is a story that is related – there is this particular gentleman who calls me over to see his brand new warehouse and he has a brand new Bentley out front, and I said to “nice car,” and he said “you like that? I tell you what, instead of me going to show you this warehouse, I am going to get you a Bentley because without you I would never have made it this far. And don’t worry about it, the company will pay for it on a monthly basis.” I said to him, “that you so much, but as an accountant I can’t take that from you.” And my wife was so upset! She said “how could you say no to that!” So I lost out on a free Bentley.

Q: We shouldn’t leave people hanging, what do you drive now?

A: I slum it down in an SL50 Mercedes Sports. 

Q: Good to know.

A: But, I paid for that!

Q: Great, one last question. Having been born in Johannesburg, what do you see about American business that may not be noticed as much by native born Americans? 

A: Basically, to pay attention to the actual people who provide jobs.  Not worry about your own territory, but helping other people. What I find is that many people don’t bring in the best financial people because it may make them feel bad, so let’s assume that I don’t want to introduce you to my clients because they may like you more than you like me – people have a tendency not to bring in other workers with different expertise to help grow their business.  The biggest problem that I see today is that instead of bringing in the best of the best, it’s that “I am the best, and that’s all you need.”

Q: Well thank you Rodney, I know you are very busy, I appreciate your speaking with me today. 

A: No problem.

Rodney Fingleson joined Gumbiner Savett Inc.(Los Angeles) in 1979 and became a CPA in 1986.  Rodney was elected to be Chairman of the Board in January 2006.  He can be reached via e-mail: rfingleson@gscpa.com .  Gumbiner Savett Inc. Certified Public Accountants & Business Advisors.