Show me the $ Entrepreneurs: Put Your CPA on Speed Dial

By Marc Rubin



Entrepreneurs are a special breed. You're dynamic big-thinkers and risk-takers. You're one of the only professions for whom an attention-deficit can be more job description than disorder. As you're caught up in the energy of your groundbreaking idea, it's easy to lose track of the back-office minutiae that could secure your success or guarantee failure. That's where we accountants come in; we're the yin to your yang, taking care of the details.

Most entrepreneurs have a CPA they can turn to, but what are the appropriate issues for them to address? Following are some of the most important questions you, as a business owner, should consider as you navigate the various phases of your business and work with your accountants. Your CPA may not have all the answers, but he or she will have the resources to find the answers.



Startup Planning

¥ What ownership structure is best for my particular business, and what are the advantages/disadvantages to organizing as a sole proprietorship, partnership, limited partnership, limited liability company or corporation?

¥ What permits and licenses must I obtain and how do I go about securing them?

¥ What's the best personnel approach for my business - am I better off with employees (W-2) or contractors (1099)? What are the tax implications of both? Are there norms in my industry, and will I raise red flags if I choose the other approach?

¥ Should I use personal funds, bank loans, venture capital, credit cards, stock sales, etc., to fund the enterprise? What's the right mix for me? Can you help me acquire financing? Are there grants available that are particular to my industry, economic background, gender or ethnicity?

¥ Should I purchase or lease office and manufacturing space? If I currently own the space, are there tax advantages to selling it and leasing it back from the new owner? Or should I have a related entity own the real estate and lease it back from that entity?



Operations

¥ How can you help me with budgeting and forecasting for my various departments? Are there computer models I should be using? Can you train my staff in their use, or is it better for you to handle all of that?

¥ I realize that I need to think about taxes 365 days per year, not just on April 15. But what are the key dates throughout the year? How can I be proactive with my tax planning, minimization and reporting?

¥ We keep our books in an Excel spreadsheet, but I know that's inefficient and doesn't give us the analytical tools we need. Should we consider off-the-shelf bookkeeping software such as QuickBooks or Peachtree? Is a custom system more appropriate?

¥ On paper, we're a very profitable company, but several times a year we seem to run out of cash and worry about making payroll. How can we better manage cash? Can you help us with cash flow projections and recommend an appropriate line of credit to smooth out the bumps?

¥ We're one of two firms in contention for a huge new client. We just noticed a line item in the request for proposal that requires audited financial statements with our proposal. Is this common? We don't have audited financials; are we out of luck or is there a way to get these done in the next six weeks?

¥ We provide a variety of services and products. Particularly in light of the sales tax changes in Annapolis, we're not sure what is taxable and what is not. Can you guide us on that?

¥ My insurance agent seems to have a bias about the right level of coverage for us. Can you give us an objective review?

¥ Although we recently hired a controller, I'm concerned about fraud. Are there internal controls I can implement to help me sleep better at night?



Transition

¥ Sales are through the roof and we're almost exceeding our capacity. Is it better to outsource or expand capacity? If we expand, should we pay for capital improvements with cash on hand or should we seek outside funding?

¥ Ideally, we'll grow this company and take it public. What should I be doing now to make that happen? What data should we compile?

¥ I recently became ill and would like to retire in two years or less. Is it too late to start thinking about succession planning? How will the potential sale of my business affect my estate plan?

¥ I either want to sell the company or transfer ownership to the employees through an employee stock option plan (ESOP). Can you do a valuation to tell me what my company is worth?



Marc Rubin, CPA, CVA, is managing partner of Berman, Goldman & Ribakow in Ellicott City, Maryland. He can be reached at 410-418-4400 or MRubin@bgrllp.com.