One of the biggest mistakes new business owners make is not taking full advantage of what should be one of their most trusted advisers, their accountant. When most people think “accountant” the first thing that comes to their minds is “taxes”, then they think maybe payroll, auditing, and that funny Joe Pesci character from Lethal Weapon II. If you intend to make a go of this entrepreneurship thing than really get to know and develop a relationship with your accountant, don’t just think of them once a year when you drop off the shoebox full of receipts for your tax return. I sat down and in the space of about fifteen minutes made up a list of over twenty ways your accountant should be helping your small business grow and thrive. The following are some of the best ways to take advantage of your accountants.
- Keep you out of trouble with the IRS – the biggest mistake most new entrepreneurs make is to wait until April 14th to talk to their accountant about taxes. I don’t know how many times during tax season I’ve wrung my hands and lamented that the client hadn’t come and spoken with me earlier about the tax consequences of a decision before they had made it.
- Let you know if you’re making a profit or not – most entrepreneurs are top line motivated, they think in terms of sales and generating revenue. Use your accountant to help you understand your bottom line, profit, and to understand how those sales are contributing to it.
- Let you understand where the money is going – I am shocked at how many times I work with clients that have no idea if their business is making money, what products are profitable and at what price. If you can’t answer questions like these then you’d better start talking to your accountant more.
- Keep your money from walking out the door by helping you set up the appropriate internal controls. If you have even one employee you will need some form of internal control over the assets of your business and the information that you use.
- Expand your network – a good accountant knows lots of people, lawyers, service providers, potential employees and even potential customers. So talk to your accountant, take her out to lunch, buy her a drink, let her know what your business is doing and be amazed at how many times they can guide you to just the person that can do the job.
- Succession planning – because someday you will want to leave the business, or at least have that option available to you. Right now is the time to plan the business so that it can grow and prosper while you’re spending time with your loved ones or indulging in your other passions.
- Wealth planning – most business people start out small and grow successful. Along that journey you will want to have someone that can help you plan to get the most out of every dime you invest and to help you make investment decisions. Since so many business people have such high proportions of their wealth tied up in their business and pay high taxes they need someone with experience in business to counsel them.
- Cash flow planning – Too damn many times the owners of profitable businesses come to me because they can’t pay their bills and wonder how that can be. In the lexicon of accountants, while profits may drive business, “Cash is King.” Your accountant should be helping you understand the cash flow of your business and help you avoid being short when an important bill comes due.
- Help you find financing and manage financing – when you’re shopping for a loan, most banks will want to see your financial statements and tax returns. Beyond helping you prepare these and keep them in order and looking professional, your accountant will know bankers with experience lending to businesses like yours and will talk to you about the tax and financial considerations of the different credit options available.
- Information Technology – most modern businesses run on information and your accountant will be able to help you decide what business information systems are necessary, how to get maximum use from them, and how to keep them protected from potential information thieves both internal and external to your business.
Are you getting all this from your accountant? Were you even aware it was available? Let us know about your good and bad experiences with your accountants and advice on how to find a good one. Also, stay tuned as we post more entries on how to maximize your relationship with your accountant.