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This video and article originally appeared on the
Techopia website and have been reproduced with permission.
Tech companies devote resources to protect their source code but often overlook the details to protect key stakeholders and directors. Directors must ask questions of the finance team to ensure they are adequately protected as well.
The cycle for tech companies typically includes periods of low cash flow where decisions must be made about what should be paid versus what can be paid. Debts that have director liability implications are often overlooked or postponed in hopes that a new round of financing or SR&ED tax credits will cover the arrears.
Directors must keep their eye on the following:
In summary, key stakeholders and directors must pay attention to the details to ensure they are not called upon to satisfy claims not paid by the company in the event cash flow isn’t sufficient to sustain operations.
All directors are jointly and severally liable – one single director could potentially pay any or all of the amounts mentioned above. Don’t let it be you.
For more strategic tax planning ideas, contact John Haralovich, CIRP, LIT, CPA, CA, CMA, at 613.691.4262 or
Related Topics:Technology; Financial Reporting
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