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Working with our clients.
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Do you need immediate help with an accounting or tax questions? Are you considering
making a financial gift and want to know the impact it may have on your estate? Just call
a professional at Carneiro, Chumney & Co. Over 80 years of service tells you that we are
client focused and responsive! We don’t just tell you that we offer excellent client service,
we do it every day.
If you want the level of service that the rest of our clients have received for the last 80
years - contact us.
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Audit and other assurance services consist of the auditing of financial statements
and our opinion, as independent CPAs, on the fairness of the presentation of the
financial position and operating results.
We believe the best approach is a constructive approach. For example, as a result of
acquiring an intimate knowledge of your financial and administrative structures, we
recommend improvements for more efficient operation, stronger financial position, and
improved accounting and administrative controls. Our philosophy of practice is to blend
the technical, the practical, and the business approach in each engagement.
Our commercial audit and assurance clients include a variety of industries and
professions. These clients are engaged in manufacturing, wholesale, finance, retail and
professional services as well as other businesses. We also serve a significant number of
not-for-profit organizations, employee benefit plans and governmental entities.
Our assurance department also offers a variety of other services that improve and assure
the quality of information or its context for business decision-making.
For more information, contact Eddie Guerra.
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Our purpose in the area of accounting services is to enhance your record keeping
ability so that the information passed to you and your management team is as
accurate and up-to-date as possible.
Usually, this may involve such items as helping your staff before more efficient with your
current accounting software or perhaps recommending a package that’s more appropriate
for your industry and needs. We may help determine adjusting entries to bring everything
into proper balance. We may review your current record keeping and recommend and
train your bookkeeping staff. In some cases, you may want our professional staff to
provide complete accounting record-keeping and prepare financial statements.
Additionally, Accounting services include direct assistance and advice in the:
• Preparation of financial statements
• Preparation of projections and budgets
• Accounting for leases
• Accounting for mergers and acquisitions
• Presentation of supplementary financial and operating information to management
Contact Bernita Helberg if you’d like to discuss how we can help you with accounting.
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Strategic Planning and how it will help your business
Most business owners know or have a reasonable understanding of what steps they need
to take to achieve their long-term business goals. However, as we all do, you get lost
in the day-to-day “fires” inherent in any business and quickly lose sight of the goals. At
Carneiro we have a very defined approach to Strategic Planning.
1. Strategic Analysis
This activity can include conducting a scan, or review, of your environment (for example,
the political, social, economic and technical aspects). We strive to carefully consider
various driving forces in the environment, for example, increasing competition, changing
demographics, etc. We also look at the various strengths, weaknesses, opportunities and
threats around your organization.
2. Setting Strategic Direction
Our planners carefully come to conclusions about what your organization must do as a
result of the major issues and opportunities facing your organization. These conclusions
include what overall accomplishments (or strategic goals) your organization should
achieve, and the overall methods (or strategies) to achieve them. The goals are designed
and worded as much as possible to be specific, measurable, acceptable, realistic, timely,
extending the capabilities of those working to achieve the goals, and rewarding to them, as
well. (An acronym for these criteria is “SMARTER”.)
At some point in the strategic planning process (sometimes in the activity of setting the
strategic direction), our planners usually identify or update what might be called the
strategic “philosophy”. This includes identifying or updating the organization’s mission,
vision and/or values statements.
New businesses (for-profit or nonprofit) often work with a state agency to formally register
their new business, for example, as a corporation, association, etc. This registration
usually includes declaring a mission statement in their charter (or constitution, articles of
incorporation, etc.).
3. Action Planning
The most important component of the strategic planning process are the action plans
which layout exactly what steps are necessary to achieve the goals and the monitoring,
which gives us, your objective advisers, the opportunity to keep you on-track with your
goals.
Action planning is carefully laying out how the strategic goals will be accomplished. Action
planning often includes specifying objectives, or specific results, with each strategic goal.
Often, each objective is associated with a tactic, which is one of the methods needed
to reach an objective. Therefore, implementing a strategy typically involves
implementing a set of tactics along the way -- in that sense, a tactic is still a strategy,
but on a smaller scale.
Action planning also includes specifying responsibilities and timelines with each objective,
or who needs to do what and by when. It should also include methods to monitor and
evaluate the plan, which includes knowing how your organization will know who has done
what and by when.
Contact Bob McAdams if you’d like to discuss how we can help you with strategic planning.
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Are you ready? Are you sure?
We help our clients build a clear path to financial security–an essential step amid what can
seem like a bewildering array of choices and an uncertain economy. Using careful analysis
and research, practical good sense, and a wealth of knowledge and experience, our
professionals prepare a complete written financial plan for you, and personally assist you
with the implementation of the plan’s recommendations. Depending upon your goals,
a formal plan will contain specific guidance pertaining to one or more of the following:
Pre-Retirement Planning
Our professionals are highly experienced in all the facets involved in helping you plan for
a comfortable and secure retirement. We use sophisticated planning models, research
databases, and comprehensive data gathering techniques to prepare a series of specific
plans and investment recommendations for your retirement planning needs. Every pre-retirement
client receives a financial asset allocation and lifetime income protection plan.
Financial Planning
Our professionals have the experience and tools to help you meet your financial goals.
This help includes maximizing investment returns, reducing long-and short-term risks,
and providing expert advice on their tax, insurance, college and estate planning needs.
Mid-Career Planning
If you 15 or more years in the workforce, we’ll help you to make the right financial and
investment decisions, including developing debt reduction strategies, determining disability
and life insurance needs, selecting college savings plans, and projecting future retirement
income needs.
Contact Julie Norton if you’d like to discuss how we can help you with your retirement planning.
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What’s Next for Your Business?
Business succession planning involves planning for the smooth continuation and success
of your business which depends greatly on the availability of competent people. Be it a
profit or non-profit organization, one of the chief concerns is there may be no successor to
drive it once the leader or key person leaves – either by choice or by circumstances.
What is likely to happen to your organization when a key leader is eliminated without
succession planning in place? Here are some things to expect. First, there would be either
no able successor or where there is, the successor is often either unprepared to handle
the heavy responsibilities placed upon them or he/she simply does not have the ability to
manage the organization in the way it used to be. Whatever the case may turn out to be,
the situation can be dire. Profit may be lost. Business can become untenable to continue.
In the case of the unplanned death of an owner, the remaining co-owners and the heirs
may be embroiled in a relationship crisis that threatens to wreck the business.
In an unplanned situation, ineffective quick-fixed solutions are the only answers left. If no
able successor can be found, a temporary replacement is often the only choice left, and
the ultimate result may still be the downfall of your organization. It is difficult enough to
run an organization with experience and ability. Without the requisite qualities in the new
leader, the rot of your organization is almost likely to set in immediately; unless it is lucky
to have a replacement who happens to be suitable and motivated. If not, an unmotivated
successor is equally bad news for the set-up. Without the drive, the organization will stay
stagnant and more than likely, to slide.
Without succession planning, a business that has become successful can just as easily
fall. Your business grows because there is a leader with experience, drive and ability.
Without proper succession planning, the future success of your business is left to chance.
Under such a circumstance, if it succeeds at all, it is by default rather than planned. That
is not all. The passing of the baton from one generation to the next is often clouded by the
stakeholders’ differing views and agendas. Without proper planning, the clashes of views
and agendas can pull your business in several directions and this may wreck an otherwise
viable business.
With so much at stake, business succession planning has to be a priority and
should be part of every business planning.
There are two main options available to business succession planning, which are:
1. Retention Planning: Retention of your business within the family circle; and
2. Buy-sell Planning: Selling of your establishment to other business owners or key
employees or interested outsiders.
Contact Allen Robertson if you’d like to discuss how we can help you with succession planning.
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Taking the time to have professional take a good look at your current business
activities may yield some surprisingly positive results.
There are countless tax planning strategies available to a privately-held or mall business.
Some are aimed at the owner’s individual tax situation, some at the business itself.
But regardless of how simple or how complex a tax strategy is, it will be based on
structuring each transaction to accomplish one or more of these often overlapping goals of
accelerating deduction and deferring revenue.
Our team focuses on:
Income
• Advance payments
• Prepaid intercompany services
• Trade discounts
• Deferral of sales revenue
• Deferral of gift card revenue
• Disputed receivables
• Cash discounts
• Warranty income
• Nonaccrual experience
• PCM to accrual
• PCM - other
Deductions
• Prepaid expenses
• Catalog/promotional costs
• Materials and supplies
• Self-insured medical
• Medical portion of workers compensation
• Cooperative advertising
• Accrued professional fees
• Software development costs
• Depreciation
• Rotable spare parts
• Bad debt expenses
• Sales incentive/rebate reserves
• Warranty accruals
• Payroll taxes on deferred compensation
• Accrued bonuses
• Cash discounts
• Stock options
• Lien-date method for property taxes
• Transaction costs
• Section 263A Uniform Capitalization
• LIFO IPIC
Contact Allen Robertson if you’d like to discuss how we can help you with business taxation.
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Reducing the amount of taxable income Claiming Tax Credits
Reducing your tax rate The AMT
Controlling the Due Date for Taxes Restrictions on Tax Planning
Helping you reduce your individual taxes.
Tax planning is a process of looking at various tax options in order to determine when,
whether, and how to conduct your personal transactions so that taxes are eliminated or
reduced. As an individual taxpayer, you will often have the option of completing a taxable
transaction by more than one method. The courts strongly back your right to choose the
course of action that will result in the lowest legal tax liability. In other words, tax avoidance
is entirely proper.
Although tax avoidance planning is legal, tax evasion — the reduction of tax through
deceit, subterfuge, or concealment — is not.
How a tax plan works.
There are countless tax planning strategies available, particularly if you own a small
business. Some are aimed at your individual tax situation, some at the business itself. But
regardless of how simple or how complex a tax strategy is, it will be based on structuring
the transaction to accomplish one or more of these often overlapping goals:
• Reducing the amount of taxable income
• Reducing your tax rate
• Controlling the time when the tax must be paid
• Claiming any available tax credits
• Controlling the effects of the Alternative Minimum Tax
• Avoiding the most common tax planning mistakes
In order to plan effectively, we can help you estimate your personal and business income
for the next few years. This is necessary because many tax planning strategies will save
tax dollars at one income level, but will create a larger tax bill at other income levels.
You will want to avoid having the “right” tax plan made “wrong” by erroneous income
projections. Once you know what your approximate income will be, you can take the next
step: estimating your tax bracket.
It takes professionals like us to come up with reasonable estimates of future taxes. The
better your estimates, the better the odds that your tax planning efforts will succeed.
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Reducing the amount of taxable income
Of course, the best way to reduce the part of your income that is subject to tax is to take
full advantage of all available tax deductions, both business and personal. In order to do
this, it is very helpful to work with professionals like us who know what is deductible and
what isn’t, and who understand the special rules that apply to certain types of deductions
such as meals and entertainment, automobile expenses, and business travel.
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Reducing Your Tax Rate
It may be difficult or impossible to actually lower your tax rate, but there are certain actions
we can assist you with that will have a similar result. These include:
• Shifting income from a high-tax-bracket taxpayer (such as yourself) to a lower-bracket
taxpayer (such as your child).
• Structuring an investment or transaction so that payments that you receive are
classified as capital gains. Long-term capital gains earned by non-corporate taxpayers
are subject to lower tax rates than other income.
• Choosing the most beneficial form of organization for your business (such as sole
proprietorship, partnership, or corporation). If your business income is under $75,000
and your business is not a personal service business like medicine, law, architecture,
engineering, accounting, the arts, or consulting, you may be able to save tax dollars by
incorporating. Otherwise, the sole proprietorship or pass-through entities (partnerships,
LLCs, S corporations) usually offer more tax benefits.
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Controlling the Due Date for Taxes
For tax planning purposes, it’s often possible to delay your taxes indirectly, by taking
actions that delay the time when particular income items must be reported on your return.
As professionals, we may recommend a strategy that will postpone receipt of income until
the next year, and accelerate payment of expenses into your current tax year. (This will be
much easier to do if you use the cash method of accounting.) In this way you can delay
your tax liability to the next quarter, or even the next tax year.
As a general rule of thumb, you should always try to minimize your taxes in the present
year, even if doing so means you may have to pay slightly more tax in the future.
After all, no one knows what the future holds. The tax laws are constantly changing, and
there’s a good chance that whatever you think you may owe in the future will be different
by the time you get there. Furthermore, economic conditions or personal plans can
change, and your business may look entirely different even one year down the road. In the
worst-case scenario, you could die unexpectedly, and in some cases you can avoid tax
altogether if you die before paying it.
In broad terms, you can minimize taxes in the current year by postponing the receipt of
income so that more of it will be taxed next year, and by accelerating deductions into the
current year.
Postponing income, accelerating deductions. A few specific how-to ideas are listed below
but we don’t recommend you engage in any of these strategies without the assistance of a
tax professional.
• Delay collections—delay year-end billings until late enough in the year that payments
won’t come in until the following year.
• Delay dividends—if you operate your business as a C corporation, arrange for any
dividends to be paid after the end of the year.
• Delay capital gains—if you are planning to sell assets that have appreciated in value,
delay the sale until next year.
• Accelerate payments—where possible, prepay deductible business expenses,
including rent, interest, taxes, insurance, etc.
• Accelerate large purchases—close the purchase of depreciable personal property
or real estate within the current year.
• Accelerate operating expenses—if possible, accelerate the purchase of equipment,
supplies, or the making of repairs.
• Accelerate depreciation—elect to expense the cost of new equipment if you are
eligible to do so, rather than to depreciate the equipment.
Note that any strategies aimed at changing the year in which items of income and
deduction will be accounted for will be much easier to accomplish if you use the cash
method of accounting.
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Using tax-advantaged retirement plans
Another way to defer the day of reckoning is to plow as much money as you can into
qualified, tax-free retirement plans. In most cases, you or your business will get a tax
deduction for the amount contributed, and you won’t have to pay income tax on the
amounts until you start taking money out of the plan when you retire.
Meanwhile, any income earned on the investments made by the plan will build up, tax-
free. If you are a business owner, you have a great deal of control over the way the plan
is set up, and there’s sure to be a plan that fits into your business goals and retirement
objectives. If you are an employee, you can work within the plan (if any) your employer
provides, or set up your own plan through an IRA account.
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Claim all the tax credits available to you.
When they’re available, tax credits are generally better for you than deductions would
be, because credits are subtracted directly from your tax bill. Deductions, in contrast, are
subtracted from the income on which your tax bill is based.
So, a dollar’s worth of tax credit reduces your tax bill by a dollar, but a dollar’s worth of
deductions lowers your tax bill by 35 cents if you’re in a 35 percent bracket, by 30 cents if
you’re in a 30 percent bracket, etc. In cases where you have a choice between claiming a
credit or a deduction for a particular expense, you’re generally better off claiming the credit.
As wonderful as tax credits can be, with the IRS (as you’ve probably figured out by now)
there’s almost always a catch so your tax professionals can help you determine what
credits are available to you.
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The Alternative Minimum Tax (AMT) was intended to prevent higher-income
taxpayers from substantially reducing or eliminating their tax liabilities through
incentives offered by the tax code. In practice, however, the AMT affects even
middle-income taxpayers because the AMT exemption amounts have traditionally
not kept up with inflation. For example, the exemption rates set in 1992 were not
increased until 2001.
As a result, many taxpayers are required to compute their income tax liability twice:
once under the regular method and once again under the AMT method. An individual
will be subject to the AMT if his or her AMT liability is more than the regular tax liability
for the year.
What types of things can trigger the AMT? The most common items that can cause you
to become subject to the AMT are listed below. These items must be added back to
your taxable income in order to compute your AMT:
• All personal exemptions
• The standard deduction, if you claimed it
• Itemized deductions for state and local income taxes, and real estate taxes
• Itemized deductions for home equity loan interest (this does not include interest on a
loan to buy, build, or improve your home)
• Itemized deductions for miscellaneous deductions
• Itemized deductions for any portion of medical expenses that exceed 7.5 percent of AGI
but not 10 percent of AGI
• Deductions you claimed for accelerated depreciation that exceed what you could have
claimed under straight-line depreciation
• Differences between gain or loss on the sale of property for AMT purposes and for regular
tax purposes; these differences most commonly occur as a result of the different depreciation
methods required under AMT, as described above
• Addition of certain income from incentive stock options
• Changes in income from installment sales, since the installment sale method generally can’t
be used for AMT purposes
• Changes in certain passive activity loss deductions
• Seductions relating to oil and gas investments, or drilling or mining operations
• Interest on certain private activity bonds that would otherwise be tax-exempt
If you have large amounts of any items on this list, and your adjusted gross income exceeds the exemption amounts, you’ll definitely want to speak to one of our tax professionals.
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Restrictions on Tax Planning
Planning is not an exact science. As tax professionals we analyze both the form and
substance of a transaction to determine the possible tax consequences. Generally the
IRS holds that its the substance of a transaction, not its form which determines its tax
consequences. However, a taxpayer who casts a taxable transaction in a particular form
may have a difficult time changing his or her mind later, and then trying to convince the
IRS that the substance of the transaction differs from its form for tax purposes. So, the
general rule is that the IRS may look behind the form of a transaction in order to determine
its substance for tax purposes, but taxpayers are generally locked into the form of the
transaction. The thinking here is that since a taxpayer can freely choose how to set up a
transaction, it’s only fair to require him or her to live with its tax consequences.
Contact Paul Roth-Roffy if you'd like to discuss how we can help you with individual taxation.
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Business Valuation Services
Consult with us to maximize the value of your business through benchmarking and
planning for increased value. Our diverse services include helping you transfer the
business within your family. We know it can be an incredible challenge to determine
the worth of a private enterprise. It is more than the sum of property, office
equipment and profit margins.
That’s why Business Valuation Services are an increasingly critical financial tool for
private businesses. Through careful analysis of a business’ financial records, future
worth potential, diverse assets, operations, procedures and other complex facets of the
enterprise, we can help you arrive at a reasonable value determination for company
executives, owners, investors and other stakeholders.
Entrepreneurs, executives and stakeholders trust Carneiro, Chumney & Co. because
we have a detailed understanding of the specific issues that affect your business and
industry. Our knowledge of the South Texas business landscape, sharpened through
well-established community relationships and contacts, amplifies our experience.
Formal Appraisal Report
Following a comprehensive review, we will issue a written report on your business
that meets all taxation requirements and industry standards.
Valuation Consulting
This provides you with an indication of your business’ value for internal use. This can
be especially valuable for strategic planning to position your business for future success
and stability.
Our Valuation Professionals are most experienced in the following industries:
• Medical
• Manufacturing
• Distribution
• Service
• Retail
Business Valuation is an essential service for:
• Partnership Disputes
• GiftTaxes
• Succession and Estate Plans
• Divorce
• Family Limited Partnerships
• Financial Benchmarking
• Merger and Acquisition
• Venture Capital or Bank Financing
• Litigation Consultation
• Buy/Sell Agreements
• Intangible Assets
Contact Joyce Skekel if you’d like to discuss how we can help you with business valuation.
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“How do I know if I need to make an estate plan?”
Surprisingly few people see the need for an estate plan. Unfortunately, most interpret
“estate” as some amount of assets more that what they have. So heres how to decide:
The first place to start is to take a look at your family situation. If it fits into one or more of
the following personal “red flag” categories, then, regardless of your net worth, you need
an estate plan.
You have minor children. When it comes to minor children, there’s no time like the present
to start making your plan. There are two areas that need to be addressed when planning
for your children in the event of an untimely death: Who will take care of the children until
they become adults, and how their care and education will be paid for until they become
adults. Without a plan, a judge will decide these important matters.
You have problem children or other beneficiaries. Are you concerned about a child or
other beneficiary squandering their inheritance, or perhaps being unduly influenced by
an overbearing spouse after your death? Or how about a beneficiary losing their inheritance
in an ugly divorce or lawsuit? These concerns can be addressed in your estate plan.
You have a disabled child or other beneficiary. Regardless of the value of your estate, you
must put a plan in place for a disabled child or other beneficiary. Otherwise, the beneficiary
will lose their government benefits and instead your estate will be depleted to pay for
the beneficiary’s care.
You don’t have any children. This is the group I find the most difficult to plan for since they
usually don’t have any “natural” objects of their affection. The bottom line is that without a
plan, the intestacy laws of the state where you live at the time of your death will make a
plan for you, and in most cases it won’t be the plan you would have chosen for yourself
had you taken the time to make a plan.
You’re in a second (or later) marriage and/or have a blended family. If there is one group
in desperate need of estate planning, it’s couples involved in second marriages with blended
families. There are all sorts of pitfalls and traps for these couples, ranging from failing to
understand the state laws which prevent one spouse from disinheriting the other (called
“elective share” laws), to improperly titling assets so that one spouse’s children inherit
everything and the other spouse’s children get nothing. Planning now will prevent resentment
and costly lawsuits later.
Your spouse has recently died. If you and your spouse had all of your assets jointly titled,
and/or you were the beneficiary of your spouse’s life insurance and retirement accounts,
then, fortunately for you, probate wasn’t necessary. For your estate, however, this won’t be
the case since now all of those assets are yours and yours alone. Now is the time for you
to sit down with an estate planning attorney to discuss your options for making the transfer
of your assets to your heirs just as easy as it was for you.
You’ve recently divorced. If you didn’t have an estate plan before the divorce, then you
should make one after to insure that your assets go where you want them to go and you
and your former spouse have complied with all of the terms of your property settlement
agreement. In addition, now that you have assets titled in your sole name, you’ll want to
create a plan that addresses both mental disability and death.
If after reviewing these personal red flags you still believe that you aren’t in need of an
estate plan, then you should take a look at the financial red flags to see if you fit into one
of those categories.
Contact Julie Norton if you’d like to discuss how we can help you with estate planning.
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We know good accounting and tax staff when we meet them.
So let us help you:
• Search
• Recruit
• Screen
• Run background checks tests
• Provide you with the best candidates for your next open accounting position
We can help you plan your hiring requirements or staff a
• Last minute crunch
• Temporary project
• Special project
All at a moment’s notice.
We have affiliated with Creative Financial Staff of San Antonio. CFS provides outstanding
finance and accounting staff throughout the state, from entry-level accountants to CFOs.
Our services include:
• Permanent/Executive Search
• Temporary and Temp-to-Hire staffing solutions
History of CFS:
Founded in 1994, CFS offers you a network of over 49 offices. They are the only
temporary and direct-hire staffing company to function as a fully-integrated division of
some of the nation’s leading accounting firms, including ours.
Contact Morgan Hoogvelt if you’d like to discuss how we can help you with accounting staffing.
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Is there fraud occurring at your business?
• Decreasing cash to total assets ratio
• Decreasing ratio of cash to credit sales
• Flat or declining sales with increasing cost of sales
• Increasing accounts receivable compared with cash
• Delayed posting of accounts receivable payments
• Unexplained cash discrepancies
• Unexplained differences in deposit slips
• Customer billing and payment complaints
• Rising in-transit deposits during bank reconciliation process
• Increasing “soft” expenses like consulting or advertising
At Carneiro, Chumney & Co. our team of Certified Fraud Examiners has spent years honing our expertise to help you deter, detect and document fraud to maximize your chances for recovery.
Our sophisticated Fraud Services include:
• Testing your internal control system to identify weaknesses and suggest
practical solutions
• Conducting Forensic Audits designed to detect fraud
• Applying computer-assisted techniques to investigate suspicious transactions in
your accounting system
• Providing expert testimony if a fraud case goes to trial
Our Certified Fraud Examiners have extensive experience in fraud detection and
prevention including our application of knowledge of the underlying factors that motivate
individuals to commit fraud.
We have been called on to participate in successful fraud investigations. We can present
evidence and explain how fraud may be occurring in simple, easy-to-understand language.
Certified Fraud Examiners can help by:
• Examining data and records to detect and trace fraudulent transactions
• Interviewing suspects to obtain information and confessions
• Writing investigation reports, advising clients as to their findings and suggesting ways
to prevent future incidents
With the right attitude and philosophy, you can create an environment in your organization
that discourages fraud.
EXAMPLES OF FRAUD
It’s closer to home than you think.
RETAIL FRAUD
An employee working at the sales counter has been understating cash sales and pocketing
the difference.
BOOKKEEPING FRAUD
Your longtime bookkeeper has been authorizing checks to herself and recording them as
“consulting” expenses.
PURCHASING FRAUD
Your buyer has been purchasing items with the company’s credit card for his own
side business.
EXPENSE FRAUD
Your leading salesperson has been expensing hotel stays and “client dinners” while on
personal vacations.
Contact John DuPree you’d like to discuss how we can help you with certified
fraud examination.
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