Having problems handling your payroll internally? Need help developing a bankable financial picture of your business? Or do you need someone to help you create a corporate tax strategy? If so, you might need to hire a chief financial officer (CFO). Can't afford one of these pricey execs? Try hiring a temp.
"We manage the financial side of a business, and that can mean hands-on development of policies and procedures for cash management," says Michael J. Kettner of CFO Resource Group Inc. in Lexington, Massachusetts. "It could also mean negotiating with vendors or helping find a banker who works with companies in your industry." Kettner's firm has part-time CFOs for hire so companies can get the services of a permanent CFO without the expense of a full-timer.
CFO Resource Group provides assistance to start-up and existing small businesses on an as-needed basis. There is no monthly retainer; a day rate of $500 to $1,200 is usually charged. "Our typical client is a [fast-growing] company with $2 million to $25 million in revenue," says Kettner, whose three-year-old firm primarily services clients in the New England area.
There are several other independent companies nationwide that outsource CFOs, including CFO2Go Inc. in Bothell, Washington, and CFO Associates in Stamford, Connecticut. Check your local Yellow Pages for more resources.
Two For One
Financial pundits constantly urge consumers to invest now to maintain a good lifestyle during their retirement years. For some, that means investing in variable annuities.
"Variable annuities are commonly referred to as a mutual fund inside a tax-deferred insurance wrapper," says Patrick Reinkemeyer, editor of the Morningstar Variable Annuities/Life newsletter.
Variable annuities have two basic components, he explains. The investment component lets you invest in stocks and bonds through mutual funds. The second part, an insurance policy, guarantees a steady income for a pre-selected time. Variable annuities differ from mutual funds in many ways.
Variable annuities are usually more expensive, says Reinkemeyer. For mutual funds, the average expense ratio is 1.4 percent of assets; for variable annuities, it's 2.13 percent.
"However, in variable annuities, money accumulates tax-deferred," says Reinkemeyer, adding that typically, mutual funds are not truly tax-deferred unless housed in a retirement vehicle such as an IRA or 401(k). "Every year, I pay [capital gains] taxes on any securities bought and sold within the mutual fund."
In contrast, securities can be freely bought and sold within a variable annuity. "Mutual funds don't annuitize," says Reinkemeyer. "When you take money out of a mutual fund, you pay taxes on it because it's being sold."
Tony Sagami of ProFutures Financial Group, an annuity distribution firm in Austin, Texas, offers another caveat. "[When distributed,] variable annuities convert capital gains into ordinary income, which is taxed at a top rate of 39.1 percent compared to 20 percent for a top mutual fund's [capital gains] rate," he says. "So when you take money out of variable annuities, you'll pay more in taxes."
Reinkemeyer says the best candidates for variable annuities are people who've maxed out their annual IRA and 401(k) contributions and are willing to invest for eight to 10 years. Be prepared to ante up at least $2,500, and be aware you'll be charged if you cash in an annuity before age 591|2.
If organization is not your forte, a new software program from Nolo Press may be just what you need. Personal RecordKeeper 4.0 for Macintosh and Windows 3.1 and higher allows you to organize 27 areas of your personal and business lives, from emergency information to business contacts. Once you've input the raw data, Personal RecordKeeper lets you generate reports including home inventory and net worth statements to aid in estate planning.
Organized as a database, the program also has the ability to assign a password and lock specific categories. Personal RecordKeeper, which retails for $49.95, is available at major computer software stores or from Berkeley, California-based Nolo Press.
CFO Associates, (203) 322-8262, http://www.cfoassociates.com
CFO Resource Group Inc., 4 Militia Dr., Lexington, MA 02173, (781) 674-1117
CFO2Go Inc., (425) 488-4096, email@example.com
Morningstar Inc., (800) 735-0700, http://www.morningstar.net
Nolo Press, (800) 992-6656, http://www.nolo.com
ProFutures Financial Group, 1310 Hwy. 620 S., #200, Austin, TX 78734, (800) 320-1775