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Accounting for the Celebrity Client

July 31, 2014

CPAs are typically in a position of trust and loyalty with their clients.  For many high-profile or “celebrity” clients, the trust and loyalty placed in their CPA is even greater.

Many celebrities come into fame at a relatively young age with little understanding of finances and how to plan for the future.  As an example, professional athletes tend to sign contracts soon after graduating high school or college.  In their late teens or early twenties and with their first big pay check, it’s important that the CPA meet with these young clients and get them involved with their finances from the start.  Careers of professional athletes are typically short-lived so it is imperative that they effectively plan for the future.

CPAs can provide advice during contract negotiations assisting in layered compensation packages, reviewing the contract and to focus in on their client’s best interest.  In addition, they are also there to assist with estate planning, insurance and asset protection, entity selection and structure, budgeting and planning, state tax compliance and planning, international currencies, organizing and controlling the athlete’s cash flow —even on a daily basis, if needed and overall planning for the future.  In order to help extend their short-lived careers, CPAs can provide assistance in generating lasting value by effective brand creation and management.

For those more musically-inclined or artistic or author celebrities, CPAs are able to perform an analysis on contracts to identify the royalty rates, payment schedules and discover any unpaid royalties due to the artist and copyright holders.  CPAs that are able to provide trustworthy recordkeeping and a realistic future planning strategy can help maximize the artists’ personal net worth and long-term wealth and financial security.  With a successful music career, artists typically tour the country and the world showcasing their music.  CPAs can help properly budget for upcoming tours and provide oversight to avoid mismanagement of the artists’ portions.

There’s a benefit of having a CPA, a Certified Public Accountant (contrary to a “Celebrity Personal Assistant”), not only for those new celebrities inexperienced with their new fortunes, but also for the more “seasoned” veterans. CPAs can help advise their client in investing opportunities and new business ventures by performing projections, investment analyses and matching the investment to the celebrity’s long-range goals. Occasionally, assessing risk can be the most important thing a CPA can do.

All of the services provided by CPAs for celebrity clients are not exclusive or unique to that type of clientele.  Even the non-celebrities of the world can benefit from the financial advice, future planning and management of finances by a CPA.

This was adapted from an article originally published in the WithumSmith+Brown, PC Journal written by Michelle Morris from our Morristown, NJ office.

 

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