Client letter Essay

A company Is expansible to paying dividend on share It sells to the real owners of the business as well as Income taxes of capital revenues. However, It Is clear that any time a company raises capital by taking on a debt: that company can write such debt payments off of its income taxes. We should understand that the tax advantages of debt capital or financing in this case is the primary reason why it is better for viable business- company to raise fund or capital by debt instead of by equity financing.

According to Miller (1 977), equity financing is more advantageous because repayment is flexible and as compare to the debt. Bailey (1969) also argued that equity financing is advantageous because businesses always have money in hand for possible business expansion and there are some tax credits for corporations. In my opinion, I will recommend debt financing for the client to consider because the interest payable on debt financing can be waived-written off. The fact is that, interest payments on debts tax returns are deductible.

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In the first step, you have to try as much as possible to find out the relevant issue that could help solve the problem of the client. Here, you can find out the principles the client uses to operate his work. In the second step, you have to identify the primary issue at stake. This can be done in a question form. Here, you can ask question pertaining to the type of accounting principle the client is using. In the third step, you can find out the legal authorities supporting the operation of the business/ company.

Were those authorities registered practitioners and are they capable. In the fourth step, you should assess the authorities to choose the one or those to follow especially where they conflict. If possible, you have to look Into related cases and how those authorities helped solved them. This would help you do a fair evaluation of hose authorities. The fifth step has to do with you analyzing the facts you have gathered In terms of applicable authorities.

In this case, one should consider how scalar case was dealt with and relate It to the case at stake. Finally, you should communicate the conclusions and recommendations to the client. In fact, many firms require that a researcher’s conclusions be communicated to the client in writing. Even though, oral questions may be asked and answered, but their oral conclusions should be followed by a written communication to the client (Anderson, Pope & Rupert 2014). Truly yours Director Cannas Accounting Firm


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