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Why would you draw any salary without the funds to cover it? There is one simple answer, wait until the 150K payment arrives before drawing any salary.

Ant that, my friends, is how Medlin Software was born in the late 70's early 80's. Jerry had an accounting franchise, and wrote his own programs to save time (handle more clients). He shared his programs with others in the same line of work, and so on and so on...

I have been working with various CPA firms for over 20 years. Audited financials, reviewed financials, 401K audits and tax consulting and preparation for the owners of the companies I worked for (I would never prepare the tax returns for the company that I do the books for - I want that second set of eyes on my work). The owners always care more about the tax strategies than they do about the review or the audits. The only question the owners have about the financials is usually "did we meet our covenant ratios for the bank"? I have seen good and bad and average firms, but it never fails that the owners always prefer the firms that cater to their tax needs. The current firm I am working with has our audit with one partner that I cannot stand, and she works with a junior accountant without any experience. It is awful. I tried to get them fired, but guess what? The owners love the principal of the company who personally does their business and personal tax returns. I am stuck. So I have to live with this crappy auditor and her incompetent side kick for the Financial and 401K audits. That is just the way it goes when you work for the man. You take his money to do his work, and you will like it, and you will say thank you. Tom Modesto, CA

Just ignore that error and bring up another atxinc.com site. I got that error several times but then went to returnquery.atxinc.com and it was fine. I have a lot of different atx sites bookmarked with useful keywords like 'rehang' or 'forms'.

Sarcasm alert: I'd guess they'll do all of the analytics using printouts spewed by a computer, confirmations that will be assigned to the most recently hired junior staff person, about an inch of checklists to document their thoughts and prayers... and then do a cut & paste of an auditors' report template from a reference book onto the financials and notes that Tom supplied. Hopefully the auditor will remember to change the name in the template from "XYZ Company" before it is issued. /endsarcasm My highest level at this point are review statements, and it IS a lot of work even without the all of the documenting of the work I do, but I don't have all the fancy programs and have designed all of my workpapers and analytics on my own in Excel that I update each year. All of that flows directly to the financials, again of my own devising that I tweak each year as needed or required. I'm scheduled for my 3-year peer review on that work between now and February too. It truly is a lot of thought and work that goes into it, but all the clients see are the final resulting statements and notes that, to them, look much like they did 30+ years ago. In almost 40 years of practice, I only remember one client that truly had a complete set of financials including a complete all of the required disclosures, and that was in 1986 for a 72-store regional chain of pharmacies with a huge bookkeeping dept headed up by a someone with multiple degrees and many letters after his name. The only question for the accounting firm was for us to recheck his MACRS depreciation because the law was new at that time. I helped with that but was not involved in the overall audit at year-end. I did work on the separate audit of its pension plan though. That company was ultimately swallowed up by one of the well known national chains.

From the payroll side. Draw could have more than one meaning. Could be an advance against wages, would be withdrawal of (hopefully) profit by owner. Assuming the intent/requirement is to be paid as an employee, then if there are funds available, employee(s) (owner or not) need to be paid at least minimum wage for all time worked. Owner/employees need to meet the reasonable wage parameters. Pay frequency must meet state regulations (if any), so monthly may or may not be an option. If this is the first paycheck the business is to create, then there needs to be consideration to the other issues, such as making sure a UI account is in place, WC insurance, payroll posters in place, W4, I9, etc. Given the knowledge funds will be short, I would suggest not holding any withheld taxes, and depositing with every payroll. (Good advice for most businesses, since there is little to gain on the float, much to lose on not remitting on time, and reconciliation costs are less.) <soapbox>Big miss for many owner/employees is remembering to treat the employee part of the process as if it was a stranger and comply with all regulations for any employee. No "I want to withhold this", and instead, withhold based on the last valid W4 received. No "pay themselves whenever and whatever they want, but collect time card information, pay as often as required via the posted pay cycle the business has, and for at least minimum wage - more if possible to meed reasonableness "tests". None of the one big paycheck a quarter or year shenanigans - since there will likely be use of the money (withdrawals) during the entire year. Interestingly, the owner/employee who does not do the above is usually not caught by a tax agency (assuming reasonable taxes are paid in some form), but are "caught" when they want or need to sell, or if they want or need to borrow against business or against income and struggle to quickly fudge up the books to show the proper results.</soapbox> If the funds run out, then the business needs to obtain more funds, or lay off the employees. (Owner/employees can sometimes claim UI.)

I am sure many lessons We are fairly like minded, which made the working relationship both easy and hard. The big lesson he shared with me is there is no such thing as an "accounting emergency". I have tried to apply this to as many things as possible, the "not an emergency" principle.

I just LOVED your sarcasm paragraph!

I don't get it, what's the point of this supposed fictitious scenario?

Thanks Yardley. I, too, am interested in your feedback and what hiccups, if any, you encounter.

Happy to do that, Tom.

oh let be snarky for a minute, but don't CPA firms do anything any more?

Found this old post that was updated this summer with a different link, and someone commented that it worked last month. Maybe it will help, or not. Don't know. Check out the last 2 posts here: