Professionalizing your Business

Professionalizing Your Business
With skill, hard work, and a sprinkle of good luck, a start-up can surpass that entrepreneurial stage when the business owner builds on-the-fly the seeds of a great business, but there comes a point in the maturation of the business when the informal management style that worked so well in the beginning no longer gets the job done, and the ad-hoc activity can no longer sustain the requirements of customers, employees, and management. A rapidly expanding company can outgrow its infrastructure and the owner may need to tap into new talent who can steward the company into the future. Like any entrepreneur, the owner seeks better management capabilities and ways to improve upon the business operations. What does it mean to professionalize a business? It can represent simple methods that, when implemented, can help daily decision making become more effective. It can include processes and reliable tools that help maximize your management team’s ability to continually improve and prepare for where the business needs to strategically grow in the future. It can include reaching out to a trusted business adviser who can offer an unbiased diagnosis of your entire business and bring forward the right talent and propositions to help transition the business to its next phase of success.

Taxes

Around the world and here in Canada, the focus on tax risk management is growing more intense. Business owners and finance executives are being compelled to take greater interest in how tax is managed within their companies, and tax directors are working to find ways to reduce their organization’s effective tax rate responsibly while managing their tax risk.

Today’s businesses face increasingly rigorous regulation and growing pressure from a variety of parties within and outside of the company to demonstrate that they’re well-run, responsible organizations. Tax management is now one of the criteria by which corporate governance is judged by investors and other third parties such as the media and especially the tax authorities.

Tax Authorities Set Their Sights on Tax Risk and Governance
The emphasis on tax risk and governance is expected to get stronger. Unified by the Organisation for Economic Co-operation and Development’s (OECD’s) Forum of Tax Administrators, the Canada Revenue Agency (CRA), the Internal Revenue Service (IRS), and their counterparts are linking a company’s approach to tax and its relations with tax collectors with the quality of its corporate governance. The tax authorities are also influencing governments to enact stricter laws against companies that are seen as shirking their civic duty through inappropriate tax plans.

For example:

•In the United Kingdom, senior accounting officers of large companies must annually certify that their tax systems and controls are adequate
•The United States requires companies to report “uncertain tax positions”—which are not certain to be upheld on audit—on their balance sheets and, in the future, on their tax returns
•Australia recently laid out a detailed tax risk management framework that socially responsible companies should adopt.
In Canada, Quebec has set up a new regime requiring companies to disclose “aggressive tax planning” transactions and the federal government is developing rules to establish a similar regime nationally.