Q: A friend has offered me a partnership in his business

after I retire. What should I be considering?

Conny Cash, a Naples-based professional coach, answers:

Retirement is an opportunity to create the life you want,

but it is also a major life transition. You need to conduct some due diligence

on yourself before you accept or reject this offer.

First, take the time to clarify your expectations about

retirement. Retire-ment can last 30 years or more, so it is important to define

your vision.

Consider these questions:

• What are your goals and dreams?

• Who else will be affected by the decision you make?

• How does being in this specific business support your vision?

• What are the implications for your continued financial

security?

• Will this decision place limits on your lifestyle choices?

• Why do you want to be in this

business?

• How long do you want to be committed to this business?

• How much time and energy do you want to contribute?

Then conduct a detailed review of the business. Hire an

accountant and an attorney to help you evaluate it. Consult with other

financial advisers to see how this investment affects your long-term financial

status.

Investigate the business’s financial condition, including

contractual obligations, outstanding debts, business plan projections, tax

liabilities and expected rate of return on your investment. You don’t want to

be surprised later.

And don’t neglect the other owner or owners. Know whom you

are going into business with and be clear on each person’s responsibilities.

Conny Cash owns Balancing Act, a firm specializing in chief

financial officer and chief operating officer consulting services. She can be

reached at (239) 597-0107.

Q: I will be conducting interviews for an open position I

have in my company. Do I need to use an employment application as part of the

process?

Libby Anderson, a Naples-based human resources consultant

and trainer, answers:

Yes. Applications are important because they provide a

concise record of the person’s qualifications and can reveal red flags that

will tell you whether or not this is a person you want to consider. Some red

flags are unexplained gaps in employment, vague reasons for leaving and

questions left blank. It is critical that every applicant, including those who

provide a resume, completes an application.

When you obtain an application, keep it for one year. Do not

write on the application when conducting your interviews because it is a legal

document. Most office supply stores carry blank applications.

Anderson can be reached via e-mail at edahrsvcs@aol.com. Her

Web site is www.edahr.com.

Q: Is it true that the cash method of reporting for

inventory and as an overall method of accounting is now allowed for income tax

purposes? If so, what effect does it have on my business?

David Schultz and Richard Shield, certified public

accountants with Schultz, Chaipel & Co., answer:

Yes. The IRS now allows certain small-business taxpayers to use

the cash method of reporting. Qualifying taxpayers are those with average

annual gross receipts less than $10 million and not engaged in certain

specified business activities. These changes are effective for tax years ending

on or after Dec. 31, 2001.

The effect that switching from the accrual to cash method of

accounting would have on your income requires an analysis of the books during

the year of change. For businesses that are growing, a change can defer the

imposition of tax until receipt of the cash. This can create a significant

amount of savings. The tax savings should continue until the business matures,

and sales and receivables levels reach stability. At that point, the deferral

will cease and the deferred tax will be due. However, during the intervening

years the government is acting as a creditor with an interest-free loan.

If you decide to change to the cash method, you will need to

file Form 3115 on or before the extended due date of the tax return for the

year in which the election is to be effective. You should indicate at the top

of Form 3115 that it is being filed pursuant to Rev. Proc. 2002-28.

Schultz, Chaipel & Co. can be reached in Fort Myers at

(239) 939-5333.