Jess S. Morgan & Company, Inc

Business Managment & Invesment Advisory Services


13 post(s) found

Start-Up Accounting Methods (Hiring Employees)

By: Jeremy D. Stahl, CPA |  (0) Post comment »  |  Read comments »

Start-up Business – Options for Accounting and Financial Operations (Part 3)

There are 3 different options for managing your Start-Up venture’s accounting and financial operations, the Do-It-Yourself approach, outsourcing to a CFO/Accounting Firm, or hiring the employees directly.  Each of these approaches has both positives and negatives and each may be the right fit for your Start-Up at different times of the growth cycle.  This blog will address the third option: hiring employees approach.

Hiring employees directly approach is where the entrepreneur will hire its own staff to handle the accounting, treasury and financial reporting functions.  There are many positive and negative aspects to this approach, so let’s point out some of these to help determine if this approach fits your current business needs.


-          Fully dedicated staff focused on your business only.

-          As the size of your company grows, the cost benefits to having your own staff begin to take effect.

-          You have greater control over financial reporting, software and process integration, and integration of financial operations into all other aspects of your company.

-          The ability to make personnel changes in all levels of your financial team become at your discretion and budget.


-          Time consuming in the early stages of implementation.  You have to get your team hired, trained and fully implemented in to the company and its culture.

-          The costs of bringing everything internal are much greater. You have full time staff, benefits, office space, software and hardware purchases, and training costs to incur.

-          It is more difficult to adjust should your company’s growth hit a bump and you need to temporarily downsize.

This approach is where you eventually want your start-up venture to be.  It shows that you are on the right path to growing your company into what you always wanted it to be.  Deciding when the right time to take this approach will be crucial in the overall management of your company.  It is important to make sure the process is completely thought out and thoroughly detailed for its implementation.  If we at Jess S. Morgan & Company can be of any assistance during your analysis please feel free to contact me.


Start-Up Accounting Methods (Outsourcing)

By: Jeremy D. Stahl, CPA |  (0) Post comment »  |  Read comments »

Start-up Business — Options for Accounting and Financial Operations (Part 2)

There are 3 different options for managing your Start-Up venture’s accounting and financial operations, the Do-It-Yourself approach, outsourcing to a CFO/Accounting Firm, or hiring the employees directly.  Each of these approaches has both positives and negatives and each may be the right fit for your Start-Up at different times of the growth cycle.  This blog will address the second option: outsourcing to CFO/Accounting firm approach.

The outsourcing to a CFO/Accounting Firm approach is where the entrepreneur will hire a firm to handle all of the accounting, treasury and financial reporting functions.  There are many positive and negative aspects to this approach, so let’s address both aspects of this to help determine if this approach fits your current business needs.


 - The ability to pay for the full oversight and operation of your finances.  By hiring a firm you get several people and multiple levels of expertise to give overall attention and focus to managing all of the financial operations.

 - Less expensive and more cost effective approach to hiring internally.  While the costs are more than the DIY method, it is less expensive than hiring, training and acquiring the hardware and software to run the financial operations internally.  Not only are these hard costs, but the time needed to set this up is costly as focus is taken away from other aspects of building the business of the venture.

 - Adds a layer of internal controls at a lower cost.  By outsourcing to a firm that already has internal controls and staff in place, this can be a time and cost save to the Start-Up.

 - Gives the entrepreneur the ability to focus on the core business.  This can be crucial to the development and success of the Start-Up venture. 



 - This option is more expensive than the DIY approach and may not be a viable option at the earliest stages of development for the Start-Up.


 - The team is not internal, rather a paid consultant.  This can create problems for the start-up as the firm will have other clients that will require its attention.  Thus you have a team that isn't 100% focused on only your Start-Up.


 - At later stages of Start-Up development it be needed to have the internal staff to support the day to day financial operations and could be more cost effective as well.


In order to figure out whether this option is the most viable for your Start-Up, you would need to analyze your current needs and look at the cost/benefits of taking this particular approach managing the financial operations.


Start-Up Accounting Methods (DIY)

By: Jeremy D. Stahl, CPA |  (0) Post comment »  |  Read comments »

Start-up Business — Options for Accounting and Financial Operations (Part 1)

There are 3 different options for managing your Start-Up venture’s accounting and financial operations, the Do-It-Yourself approach, outsourcing to a CFO/Accounting Firm, or hiring the employees directly.  Each of these approaches has both positives and negatives and each may be the right fit for your Start-Up at different times of the growth cycle.  This blog will address the first option: Do-it-Yourself approach.

The Do-It-Yourself (DIY) approach is where the entrepreneur will handle the accounting and financial operations themselves.  There are many positive and negative aspects to this approach, so let’s address both aspects of this to help determine if this approach fits your current business needs.

Some of the positive aspects of the DIY approach are as follows:

- Low costs.  Since the entrepreneur is providing the majority of the accounting and financial operations themselves there is little financial cost for doing so (ie. No need to hire any staff at a weekly or monthly cost).
- No staff training or oversight required of the entrepreneur.  The burden of overseeing and managing employees will not exist if none are hired.
- Keeping overhead and staff to a minimum helps keep the start-up lean and flexible as the company starts out.

Some of the negative aspects to the DIY approach are as follows:

- Best use of the entrepreneur/owner’s time.  Spending time managing the day to day cash management, bill paying, etc. can be very time consuming and take away from what the entrepreneur needs to be doing to grow the business effectively.
- Not having the expertise in managing financial operations can lead to missteps that could lead to stalling the company growth or even to its eventual failure.

When a new company is starting out the entrepreneur/owner can wear many hats and control many aspects of the company.  They can keep the company lean during the early stages of development to better manage cash flows.  In the early stages the cost savings by the DIY approach can outweigh the possible negative outcomes from doing so.  In those instances it can make the most sense to take the DIY approach.  It is recommended that you take this approach cautiously and continue to evaluate the need to move on to one of the other options (outsourcing or hiring employees.)


Songwriters and the Importance of Performing Rights Organizations

By: Ben Edmonds |  (0) Post comment »  |  Read comments »

If you are a songwriter and are not yet affiliated with a Performing Rights Organization (PRO), it might be time to consider signing up.   PROs, such as ASCAP and BMI, collect royalties on behalf of publishers and songwriters for the public performance of their music through a wide variety of sources.  These sources include the performance of music on television, radio, live music venues, clubs, new media, restaurants and retail outlets, and just about anywhere else that you hear music being played in public.  The PROs remove the burden from individual songwriters and publishers of having to issue licenses to and collect royalties from what would be an overwhelming number of sources.

In order to join a PRO, you must be able to verify that you have at least one work that you have written or co-written, that has either been released (physically or digitally as part of an EP, album or as a single download) or has been performed publicly in a venue that has a license with a PRO (i.e. a live music venue).   That being said, if you are currently recording songs onto your computer at home and have no plans for a release or live performance, you do not need to affiliate with a PRO.  Once your membership has been approved, you will be able to register all of your songs with the PRO in question on an ongoing basis.

Upon making the determination that it is time to affiliate, you need to consider which organization you wish to join.  In the U.S., there are three PROs for composers/songwriters: ASCAP, BMI and SESAC.   There are some differences in the way each operates.  ASCAP was established by a composer, Victor Herbert, in 1914 and is member-operated as a  not-for-profit organization.   BMI, also a not-for-profit organization, was established in 1940 by the National Association of Broadcasters in order to provide a cheaper alternative - cheaper for the broadcasters that is - to ASCAP.  SESAC, while far smaller in size than ASCAP or BMI, differ in that their membership approval process is more stringent than that of ASCAP and BMI.  Furthermore, SESAC is a for-profit organization.

In terms of pay-outs, each organization keeps their royalty calculation methods a closely guarded secret, so it can be difficult to make a definitive determination on where you will be better off based on a forecast of what you might earn.  However, there are some differences between the societies, based on the genre you operate in, which is something you should consider.  For example, BMI has a strong presence in Nashville and endeavors to pay its country music songwriters the most competitive royalties in the industry.  BMI also has a classic rock bonus based on radio play, while Top 40 songwriters at ASCAP who have smash hits might be eligible for significant bonus payments.

At Jess S. Morgan & Company, we act as on behalf of our clients in all of their dealings with their respective PRO.  If you have any questions related to any of the issues discussed above, please feel free to contact us. 


What is a Private Family Foundation, and Why Set It Up?

By: Jeremy D. Stahl, CPA |  (0) Post comment »  |  Read comments »

A private family foundation is a vehicle designed to allow families to achieve their philanthropic goals in  a tax efficient manner.


A family foundation has an initial board of directors which typically includes the family patriarch and/or matriarch.  Subsequent or additional board members usually consist of family members or close personal advisors that are familiar with the Founders’ goals and aspirations for the Foundation.  When established, a private family foundation is funded with cash, appreciated securities, or other assets.  The Foundation then reinvests these assets to fit the investment goals set forth by the board. It then uses the investment income and appreciated assets to make future donations or grants to charities approved by the Foundation Board.


There are several primary benefits to having family members on the board of the Foundation.  Most clearly, it allows a high level of control for the Founder with the Foundation’s investment assets, and its charitable giving processes and decisions.  A secondary but equally important benefit of the private family foundation, are its educational capabilities in serving as a training base for younger family members.  It can teach invaluable lessons in charitable giving, handling money, choosing investments, articulating family values, and managing intra-family relations.


The tax benefits include income and estate tax benefits in one vehicle.  All contributions to a private foundation provide immediate income tax deductions during the donors’ life.    A private foundation will also provide estate tax benefits when receiving gifts at death.  These gifts at death can include an IRA, a life insurance policy, or a charitable remainder trust, all of which pass onto the Foundation without incurring any estate tax.


The IRS imposes a tax of 2% per annum on the net investment income of the Foundation, which creates an excellent tax break when contributing appreciated assets that normally incur a 15% capital gains tax upon their sale.  Additionally, the IRS requires that the Foundation distribute a minimum of 5% of its total assets every year.


Setting up private family foundations and administering them is complex.  It is advised that both an experienced CPA and estate lawyer be consulted.



Family Office Formation Considerations

By: Jeremy D. Stahl, CPA |  (0) Post comment »  |  Read comments »

Earlier in the year I described what a family office is, namely an organization created for the purpose of supporting the financial needs of a specific family.  Over the last months we have spoken with several wealthy families who have asked us if it would be more appropriate for them to form their own office or to rather become part of an existing family office that already has an established infrastructure to operate and administer family activities.

The answers to these questions are usually based on the size, type, complexity, activity, revenue of the assets, and sophistication of a particular family.  Generally, the larger the overall asset size (usually in excess of $100mm), the more complex the investments, ( i.e. real estate & active businesses vs. more passive market investments) the more likely it  would be that a family would opt to set up its  own family office with many of the required professionals and associated costs ( i.e.  accountants, investment professionals,  real estate administrators and other experts capable of managing the specific assets of the family).  Clearly, families with comparable asset and revenue profiles could combine efforts in an attempt to synergize and economize associated costs.  But this can become a difficult endeavor because often privacy concerns come in to play. So the result is to go it alone or outsource some  of the less specific activities to an outside organization such as an existing multi-family office or business management firm with an expertise in many of the areas needed.

Families with a less complex and smaller revenue generating asset base (i.e. under $100mm and more passive type investments), may want to focus on a multi-family office for their family office endeavors.  This would include a family with very large but passive assets ( i.e. $250mm plus investment portfolio and/or concentrated positions) as well.  Privacy concerns aside, this usually is the most efficient and convenient way to go because costs of formation, management and administration, etc. have already been spent.  In this circumstance, the family desirous of a family office can consider becoming a member or even a client of an existing multi-family office.  A multi-family office of course being a family office that handles the affairs of many or several families at once.  The benefit is that established multi-family offices have the infrastructure, financial management experience, and often long serving professionals to handle the diverse needs of a family including sensitivities to privacy, discretion and intra-family issues.

Perhaps the best first initial step for an aspiring family office family is to discuss their family profile with professionals from an existing multi- family office or business management firm to explore what makes sense. The professionals at Jess S. Morgan & Co., Inc could certainly be one such first step.


When to engage a Business Manager when getting divorced

By: Jeremy D. Stahl, CPA |  (0) Post comment »  |  Read comments »

A divorce is not only complicated in separating two intertwined personal lives, but the financial separation can be just as complicated if not more so.  Most married couples engage the same business manager to assist with taxes, financial planning and overall financial needs during their marriage.  This makes sense while their lives are joined together in marriage, but it makes less sense to continue that arrangement once the marriage is in the process of ending.  When a divorce is set in motion one of the parties should engage a new business manager to assist in their divorce proceedings so that they have their own financial representation.


Engaging the new business manager as early in the process as possible is our recommendation.  Having a personal advocate to assist in understanding your financial situation during this difficult process is well worth the costs.  This is especially true if you are the spouse who is not the primary wage earner.  Having to start over personally as well as getting your arms around your own finances and managing them can be difficult and overwhelming.  The business manager will also be very helpful to the divorce attorney in combing through personal assets to ensure all are represented as well as assist in their valuation and submission to the court in the divorce proceedings.


Upon finalization of the divorce the new business manager will be able to you get your finances in order.  This will be done by reviewing your investment strategies; implementing tax planning, reviewing insurance needs, setting up budgets, and assisting with payment of bills as well as making sure any child support or alimony payments are collected timely.


Having a financial professional on your team can make all the difference in understanding your position financially pre and post divorce.  This is especially true for the non-wage earner.  As difficult as the process can be having a good business manager can help make that process feel much smoother.


If you have any questions or need assistance during a divorce please feel free to contact me.


Why Hire an Investment Manager?

By: Jeremy D. Stahl, CPA |  (0) Post comment »  |  Read comments »

This is a question often posed by investors of every category, be they large, small, individual, sophisticated, those with concentrated positions and even sometimes institutional ones.


The reasons to have a competent investment advisor on your team are almost as many as there are types of investors.  However, in many individual and family situations it really boils down to simply the common sense need for discipline, guidance and a second opinion.  The investment environment can be a highly charged emotional landscape to operate in, filled with many, many choices, temptations, opinions, numbers, hot tips, etc. and much too involved for any one person to fully analyze on their own.


The goal of a competent investment advisor should, first and foremost, be to remove as much emotion and speculation from the investment process as possible for the client.  Investing in this day and age is complicated enough.  Many former widely accepted beliefs regarding investments and risk and return have virtually been thrown out the window by the financial crisis of 2008.   The only rule that truly remains and has survived the test of time is diversification – perhaps boring but true.   And while even diversified portfolios took a hit in 2008, they did much less so than non-diversified ones.


Your advisor should therefore assist in setting investment guidelines and objectives appropriate for your personal situation and then help construct well diversified portfolios populating it with major asset and sub-asset classes that have a low correlation to each other (this means assets that don’t move in lock step with one another).  Your advisor should then periodically review your portfolio to ensure that it remains appropriate given your personal situation and the guidelines previously set.


So the next time you question what you are paying your investment advisor or are reluctant to hire one because of perceived cost, the value of your advisor should not be measured in what absolute returns they have achieved for you, (preferably though what risk adjusted returns they helped achieve), but rather whether the advisor has prevented you from getting into hot water, kept you from making abrupt speculative decisions, has helped in keeping your goals and objectives on the straight and narrow, and like a good physician has provided you with a valuable second opinion and has helped manage your emotions in a turbulent investment world.


The Importance of a (Family) Wealth Plan

By: Jeremy D. Stahl, CPA |  (0) Post comment »  |  Read comments »

Over the last years, as the financial, legal, business and economic landscape has become exceedingly complex, more and more clients come to desire a comprehensive wealth plan. Clients are often seeking the assistance of a trusted advisor, such as an investment advisor, CPA/Business Manager or even an attorney.


The motivation to initiate this process are manifold and are usually the result of a particular life occurrence or realization, retirement, sale of a business, taxes, divorce, marriage,  birth of a child, concentrated wealth issues, illness and incapacitation, family conflict,  legacy and multigenerational concerns, establishment of a new business or financial windfall,  etc. or just simply a bout common sense.  Setting and achieving financial goals can be the fulcrum of any wealth management strategy and can lead to a greater sense of security, confidence, and even personal freedom about one’s financial future.


The wealth planning process for wealthy individuals and families in today’s complex world is multifaceted including not only quantitative concerns but initially really focusing on qualitative and philosophical questions.  This is referred to as the Values Based Planning portion of the wealth plan where many questions of intent and desire are openly addressed. These conversations can be lengthy as they may involve the “buy in” of spouses, children, business partners, trustees and others to finalize a vision.


However, once this vision of the values based planning portion is finally articulated, the next step is to review what is possible within the realm of a client’s actual financial situation.  This is where matters of asset allocation and investment management, wealth transfer, insurance, charitable contributions, etc. are determined.   Finally, the process moves from establishing values and financial objectives to setting a strategy, implementing solutions, and continually reviewing the progress.


All the while and within this process, it will be the financial advisor or business manager who will be crafting and ultimately providing you with a comprehensive financial plan document  that includes asset and cash flow forecasts, budgets and even a so-called “Monte Carlo” analysis for various assumptions and contingencies.


It has been our experience that clients who have taken the step to move forward with a comprehensive wealth plan find themselves in a much stronger position to deal with the unexpected and most importantly have a greater sense of security and confidence about their future.



When Is the Right Time for an Artist to Hire a Business Manager?

By: Jeremy D. Stahl, CPA |  (0) Post comment »  |  Read comments »

I am often asked “When is the right time to hire a business manager? I think this is an important question for those people working in the entertainment industry.  It is usually asked around the same time as the question “When is the best time to setup my loan-out company?” 


I think these two questions should go hand in hand as the answer to the second question will help answer the first question.   The right time to set up a Loan-Out company is when the entertainer is earning in the range of $100,000 to $200,000 annually.  Since there are costs with setting up the company, as well as costs associated with maintaining the company, it is in your interest to make sure you are earning enough money to pay the costs and be able to reap the tax benefits afforded by using the Loan-Out company.


Since setting up a loan-out company has accounting, insurance, tax and various other requirements this is usually the “right” time to bring in a business manager.  The business manager will guide the artist through the process of setting up the right type of entity, get bank accounts setup, provide the  required bookkeeping and tax preparation services, put the proper insurance in place, and make sure that the loan-out is providing all of the advantages that it was intended to provide.


I have seen too many Artists create Loan-Out companies without proper guidance and accounting assistance.  If the proper maintenance and filing requirements are not done these newly formed companies will become disqualified to do business.  This could keep the studios and other companies from paying your entity as well as create tax and penalty problems as you try to get your company back in good standing. 


Having a professional like a business manager guide the artist through this process is always worth the costs of doing so.


If you have any specific questions about setting up a loan-out company or hiring a business manager please feel free to contact me.  Look forward to hearing any comments or questions on this blog.



By: Jeremy D. Stahl. CPA |  (0) Post comment »  |  Read comments »

In this and subsequent blogs I will  initially  address the concept of the ” Family Office” an often heard but not always fully understood concept in the high net worth community.


Traditionally and historically the family office was organized to manage and administer the affairs and fortunes of a single wealthy family.  The focus was on managing and coordinating  investments, trusts, legal affairs, accounting, taxes, insurance, real estate,  foundations, philanthropic endeavors, wealth transfer to future generations and much more.


Typically the complexity of such activities required the hiring of extensive professional and support staff and even legally  organizing in the form of an LLC or corporation.  Clearly such  level of activity required an operating budget at least in excess of half million to a million dollars and  certain minimum levels of family wealth (ca. $50mm- $100mm) or  several million in revenues to make such an undertaking feasible.


While there are many families operating their own family office with assets/revenues in this  size range or indeed much larger there are those that have found that consolidating activities of several families into one office can produce many synergies.  Such arrangements are referred to as “multi-family offices”  consisting of up to a dozen families often organized by the families themselves.  Alternatively, “ multi-family offices” have come together as result of one or two smaller families employing the  services of  professional services providers such as larger accounting firms, asset managers or business management firms.


Indeed it is actually the more traditional business management firms (those that have historically  simultaneously serviced  numerous large entertainment clients on the east and west coast)  that have the experience,  pre-existing infrastructure and the multitude of professionals (CPA’s trust, investment, etc)  to attend to the service requirements of wealthy families who are considering a family office structure but who do not want to go it alone.  A family  may not want to go it alone because the matriarch or patriarch of the family may not have the knowledge, business experience, energy or confidence to assimilate the pieces for an effective office or co-equal members of a family can simply just not agree which path to take.


This is where the existing “multi-family” office could certainly assist. I look forward to your comments and please check back for subsequent Family Office related blogs.


Insurance Planning for Physicians

By: Jeremy D. Stahl, CPA |  (0) Post comment »  |  Read comments »
Physicians have specific insurance needs to address in their personal and professional lives.  It is important that you review all of your personal and professional insurance needs together.  By reviewing all of these needs together you can help bridge any gaps in coverage, have a full understanding of all of your insurance needs and can make the most educated decisions about the risks you are exposed to.
The best way to approach this whole picture analysis is to do an overall financial review.  An overall financial review should include an analysis of your financial net worth, your income and expenses annually, short and long term financial needs and goals, and estate planning considerations.  This approach will greatly assist in pinpointing all of the risks a physician is exposed to and also provides greater guidance in assessing the needed coverage amounts.  Being armed with this valuable information you will be able to provide specific instructions to your insurance broker.  
Having a firm grasp on your whole financial picture as well as your personal and professional risk exposure will provide greater clarity and objectivity in placing your coverage.  Once you have this information you will be able to begin the process of getting these policies put into place.  You should look to take advantage of broker discounts for coverage on multiple policies, financing arrangements to help increase efficiency in your cash flows and compare multiple insurance broker quotes and policy coverage limits.
A physician taking this insurance analysis approach will be better prepared to protect their assets and professional livelihood.

Entertainment Executives – The “Hot Seat”

By: Jeremy Stahl |  (0) Post comment »  |  Read comments »

Entertainment executives have long lived on the hot seat, as their position to decide what movies or televisions shows get seen generates a high level of criticism from both the creative and the financial communities.  Being able to get both creative and financial acclaim is a difficult proposition and everyone loves to blame someone for the downfall of a high profile movie or television series.


When executives get either the accolades for success, or the ridicule for failure, it usually means that they will either parlay this into a better employment agreement, or they will be negotiating their exit from the studio.  Under either of these scenarios the executive should be consulting both their attorney and business manager to help obtain the best financial results possible.  This means having both the legal and financial advocates that can help with contract negotiation, compensation and stock option valuation, tax implications, as well as fringe benefits negotiation and evaluation.  Being able to analyze all of these options and scenarios is very important, and can be of significant value both legally and financially.


Also of most importance for executives living on this perpetual hot seat is planning for the eventual end of their current position. Since they live under such scrutiny, it is paramount to make the proper planning in order to maximize the positive opportunities received from this position.  This is especially true if the executive has made it to the upper echelon of company ranks.  The target on their their backs is large, which is one reason why they earn such substantial paychecks.  Investing, estate planning, tax planning, retirement planning, budgeting, and saving for the future are all crucial if your goal is to maximize the financial success that comes along with rising to such heights within the entertainment industry.


The more planning done up front the better you will feel when the ride comes to its eventual end, as so many of these do.


If you have any specific questions about planning please don’t hesitate to contact us.



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