Introduction
John wants to assist a new client who needs a loan and could generate substantial future income, but he is concerned about why her former provider discontinued services. Sue owns a small household goods manufacturing business with five full-time employees, which has operated for three years. She is now seeking a $300,000 loan to expand, having recently lost her accountant and managed the finances herself for the past six months.
Case Analysis
The case study under analysis involves John and Sue, both of whom need help. John aims to help the new client secure the loan she requires, while Sue seeks to grow her business by acquiring a $300,000 loan. As a result, this essay will examine John’s steps to assist Sue in obtaining the loan she needs. It will also examine John’s obligations in this situation and how he can best provide her with the necessary information and guidance to apply for the loan. Additionally, it will discuss the regulations and guidelines set forth by the Internal Revenue Service (IRS) that John must consider when helping Sue obtain the loan.
Possible Courses of Action and Professional Boundaries
Firstly, if I were John, I would do everything possible to assist the new client in obtaining the loan she needs. I would seek to understand why her previous provider is not completing the work, making sure to ask all the pertinent questions to get to the root of the issue. It would be crucial for me to ensure that the client has all the necessary documentation and information to facilitate her loan acquisition.
I would also explore the best possibilities for her and provide her with any additional resources she may need. This would be done to obtain the loan she requires as soon and painlessly as feasible. Furthermore, in this case, I can support the new client by supplying her with the necessary paperwork and documentation to apply for the loan, and by providing advice and assistance in navigating the loan process.
As observed, the best way to proceed is to obtain all the essential paperwork and information for the loan application. As per IRC (“26 USC Ch. 61: Information and Returns,” n.d., sec. 6001), the documents in this situation include financial statements, tax returns, and other relevant documents. Moreover, John should make sure to collect any additional information that may be necessary, such as proof of income, insurance policies, or other relevant records.
Additionally, it would be wise for him to have a conversation with the client to discuss her needs and to ensure that all the necessary paperwork is complete and accurate. Likewise, this conversation should provide an opportunity to discuss any questions or concerns the client may have about the loan process and to determine if any potential issues arise and need to be addressed before the loan application can be submitted.
Approach to Completing Financial Statements and Tax Returns
John could complete the financials since a business owner is not the only one responsible for keeping financial records. Depending on the size and complexity of the business, the owner may need to hire an accountant or bookkeeper to help maintain financial records. Additionally, Internal Revenue Code Sections 6001 and 6011 (“26 USC Ch. 61: Information and Returns,” n.d.) require taxpayers to maintain sufficient records to determine their tax liabilities. Hence, John can make the internal financial reporting as the company’s accountant or bookkeeper.
However, John should not complete the tax return preparation himself due to the regulations and guidelines set forth by the IRS. Namely, the section “26 CFR § 301.7701-15 – Tax Return Preparer” (n.d.) states that the taxpayer is responsible for preparing tax returns. When assistance is needed, any person who aids in the preparation of a tax return must be adequately qualified and maintain records of any advice given (“26 CFR § 301.7701-15 – Tax Return Preparer,” n.d.). Hence, John should provide the client with the necessary information or refer her to a qualified tax professional.
Client Support, Ethical Obligations, and Loan Assistance
To help the client attain her $300,000.00 loan, John should prepare to give her information regarding documents for the lender. As such, these include proof of identity, proof of income, proof of residency, credit score, and bank statements. Furthermore, the customer should be aware of IRS regulations, such as “26 U.S. Code 167 – Depreciation” (n.d.), which defines the requirements for depreciating assets.
The concept of accrual, which describes the rules for recording income and costs as they occur rather than when payments are made, is one of the Generally Accepted Accounting Principles (GAAP) relevant to the loan (Corporate Finance Institute, 2022). In turn, John should guarantee the correctness and completeness of the accounting entries and financial statements under GAAP and IRS regulations. He must also ensure that all required information is provided to the IRS promptly. Therefore, John can help Sue by providing her with advice and guidance on how to manage the accounting work for her business, as well as helping her find a new accountant if necessary. Additionally, John can offer advice and support to Sue to ensure she succeeds in her business venture.
Conclusion
To conclude, John can best assist Sue in obtaining the $300,000 loan by delivering her with the necessary information and documentation, providing advice and guidance on the loan process, ensuring the accuracy and completeness of accounting records, and assisting her in finding a new accountant if necessary. Finally, John’s mission should be to assist Sue in reaching her business objectives and obtaining the loan she requires.
References
26 CFR § 301.7701-15 – tax return preparer. (n.d.). In Cornell Law School.
26 U.S. Code § 167 – depreciation. (n.d.). In Cornell Law School.
26 USC ch. 61: Information and returns. (n.d.). In US Code.
Corporate Finance Institute. (2022). Accrual principle.