@082 CHAP ZZ 旼컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴� 쿞ELECTING PROFESSIONAL ADVISERS FOR YOUR BUSINESS� 읕컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴� "Woe unto you also, ye lawyers." -- Luke 11:46 Almost no one is smart enough to go it alone in business. At some point you will probably be better off to swallow your pride, if you are the independent type who never needs to rely on anyone else, and seek one or more of the various kinds of business advisers that are commonly available and utilized by small businesses. Often the best place to start is with free, or nearly free, advice, of which a great deal is available these days for anyone seeking to start a new business. For starters, con- tact your local Small Business Administration office, and find out about the regular (and inexpensive) seminars they put on regularly for small businesses on a variety of sub- jects, such as how to comply with payroll tax requirements, if you have employees. The SBA provides help to small busi- nesses in obtaining financing, including active involvement up to the point of guaranteeing (or even making, in rare cases) small business loans; but it also is a tremendous information resource, with helpful booklets on almost every conceivable business subject. Another key feature offered through SBA offices is consult- ing services, which are provided on a volunteer basis by experienced older individuals through SCORE, the Service Corps of Retired Executives. There are a large number of SCORE chapters throughout the country, most with a consider- able list of participating retired executives, with back- grounds in many different business fields, all of them ready to help your new or small firm solve some of its problems, without your having to reinvent the wheel over and over. Another free or nearly free source of help and information throughout the country is the large number of Small Business Development Centers that are funded by the government and operate at colleges and universities. Here you can draw on the talents of academics and business students who, while often lacking the kind of experience of SCORE volunteers, can and will devote much more time to doing research and helping to develop projects or plans for small businesses. Check with your nearest college or university, and you should be able to find an SBDC, even when the college is located in a fairly small town, in many instances. Most state governments, and many local governments, also have business and economic development agencies that are eager and ready to provide all kinds of useful business information and help in locating financing for small or new businesses. A recent trend in many states is to also set up "One Stop" centers where a new business locating in the state can often handle ALL of its state permit, licensing and registration requirements, as required by a whole host of state agencies, at one office set up for the purpose of making the process somewhat easier. (In fact, a number of such one-stop centers are now using this software program....) Notwithstanding all the free or inexpensive help and ad- vice described above, there will usually come a time for almost every business when you will need to retain a professional business adviser of some type, such as an attorney, accountant, or consultant. The following para- graphs outline for you a few pointers and guidelines to use in finding and using such advisers, discussing each of the major types of business advisers in more or less the order you are likely to need them, as your business grows in size and complexity (and profitability). ACCOUNTANTS. Select your accountant carefully, for this is the one person outside your business who is most likely to be closely in touch with almost everything going on in your operation. Besides helping to set up your books and to establish systems for handling cash receipts and disburse- ments, a good accountant can provide a wealth of practical advice on a wide range of subjects that are important to your business, including taxes, managing your money, ob- taining financing, and evaluating business opportunities. What kind of accountant should you use? CPA, Enrolled Agent, Public Accountant, or bookkeeping service? There is no simple or "right" answer to this question. Many small firms will do quite well with a Public Accountant (sort of like a Certified Public Accountant in most states, but usually with less educational or experience requirements) or a bookkeeper with no professional credentials. Many of these people, if experienced, can be quite good, and they usually charge a lot less for their services than an Enrolled Agent (someone who has passed a difficult Enrolled Agents exam, and who is authorized to practice before the IRS on tax matters--usually ex-IRS agents), or a CPA. A CPA will typically charge the most of any kind of account- ant, and is usually the most highly-trained. Becoming a CPA requires passing an extremely difficult 3-day exam and substantial educational requirements in accounting and related fields (more than a simple bachelor's degree in more than half the states now), and, in many states, a year or two of qualifying experience working for a CPA firm. CPA's and Enrolled Agents tend to be much more proficient dealing with tax matters, particularly the more complex and sophisticated types of tax problems. But, as noted, you pay more to get this expertise. Bookkeeping services and Public Accountants, in this CPA's personal experience, tend to be much more familiar with tax compliance matters such as filing payroll tax and sales tax returns. Note that if you need financial statements for your busi- ness, particularly audited ones, you will need a CPA to do the work. Audits are quite expensive, however, so most small businesses usually do not have audits unless they are either (a) very, very profitable, or (b) some outside party, like a lender, requires the company to be audited by an independent CPA firm in order to get and (keep) a loan. Attorneys and bankers are often in a good position to know accountants whom they can recommend to a small business, so ask a banker or attorney if they can suggest someone. One bit of philosophical advice: Avoid accountants who appear too smooth, too glib, and who look too tanned and well-rested. They are usually better at selling their services than delivering them. The really competent accountant is often a bit frazzled looking, and somewhat lacking in social graces; i.e., slightly nerd-like. That is usually because they are so concerned about doing the job right for their clients that they work about 70 or 80 hours a week, and don't have time to work on their suntans or do much of anything else except ride a com- puter all day and study the Good Book (for CPA's, that's the Internal Revenue Code). THAT'S the kind of account- ant I would want if I had to hire one for my business. (This isn't an absolute Law of the Universe, but, having spent most of his professional life as a CPA in a number of large and small firms, this writer can testify that it's a pretty good rule of thumb to go by in selecting accountants, in most cases.) ATTORNEYS. Unless you start out your business as a sole proprietor, you will usually need an attorney to prepare a partnership agreement or to set up a corporation (or to set up a "limited liability company," in states where such entities are permitted). You will probably do well to con- sult an attorney anyway to make sure you are obtaining ne- cessary licenses and permits or to help you obtain them in some cases. In most parts of the country, local bar assoc- iations have lawyer referral services that can put you in touch with attorneys in your area who practice in various fields of law. However, in most cases, you will be better off asking an accountant or banker to recommend a good BUSINESS lawyer. If you need highly-specialized legal ad- vice or representation, such as on patents or trademarks, ask an attorney you know to recommend such a specialist. BANKERS. Establishing a good relationship with officers of the bank branch where you open an account for your busi- ness is strongly recommended. Even though you may find it difficult to borrow from your friendly banker when you first go into business, he or she will be interested in keeping an eye on your business to see how it develops. It pays to cultivate the relationship and to create a good im- pression long BEFORE you are ready to apply for a business loan from the bank. Ask around before opening an account, to find out if there is a bank in your area that is well known for lending to small businesses. Many of the large banks tend to be more interested in larger accounts, al- though different branch managers of the same large bank may have very different ideas about working with small businesses. Your banker is usually very well "plugged-in" to your com- munity and can be a useful source of free advice at times when you need practical financial advice or to make con- nections with other businesses or people in your vicinity. In short, don't just think of your banker as someone to borrow money from, but as a "money doctor," and one who doesn't usually charge you by the minute for advice. In fact, some savvy small business people will go to a local banker they want to cultivate and ask to buy them lunch in order to ask their advice about something, even if they don't really need the advice, just as a way of making a connection and impressing the banker, if they have a good "story" to tell about their business, and can't find any other good excuse to let the banker know what a great op- eration they are running. @IF121xx]BENEFIT CONSULTANTS. If you want to get the most "bang for @IF121xx]the buck" for a corporate pension or profit sharing plan (or @IF121xx]to establish a Keogh plan, should you cease to operate in @IF121xx]corporate form), you may want to seek out a benefit consult- @IF121xx]ing firm and obtain their proposals as to how any such re- @IF121xx]tirement plans should be structured and operated to best @IF121xx]suit the specific needs of @NAME. @IF120xx]BENEFIT CONSULTANTS. If you intend to eventually incorporate @IF120xx]and establish a corporate pension or profit sharing plan @IF120xx](or even Keogh plans for your existing @ENTITY), @IF120xx]you may want to seek out a benefit consulting firm and ob- @IF120xx]tain their proposals as to the type of benefit plan or plans @IF120xx]you need and how such plans should be structured to fit the @IF120xx]specific needs of @NAME. Since many such firms are primarily engaged in selling in- surance products (life insurance, annuities and "guaranteed investment contracts") designed for retirement plans, the plan those firms design for you will almost invariably in- volve building in their products. Since insurance in your pension or profit sharing plan may or may not necessarily make sense in your particular situation, you should ask your attorney or accountant to recommend a benefit consult- ing firm that does not have a product (like insurance, or other investment products) to sell, other than their con- sulting and plan administration services. On the other hand, insurance-based benefit consulting firms often charge little or nothing for their plan administration and consult- ing services, in the way of direct fees, instead being paid commissions by the insurance companies who products they sell to you. This can be very attractive, as compared to the thousands of dollars a year an independent benefit con- sulting plan will typically charge. But just remember that those healthy commissions they get paid have to come from somewhere, ultimately -- not from the Tooth Fairy. MANAGEMENT OR BUSINESS CONSULTANTS. Last, but not least, are other business consultants, whose skills and areas of practice may range from things like insurance risk manage- ment to inventory management to export trade, to name only a few, as well as more general management consulting and executive recruitment. We've listed this catch-all cate- gory of business advisers last, and you may never need one of them, but such a consultant may in some cases be the FIRST outside adviser you retain, perhaps even before your business is started, to help you create a business plan, or to do a feasibility analysis to help you make the ultimate decision of whether or not you should even start the business you are planning go into. You'll find a lot of people listed under "Management Con- sultants" in your local Yellow Pages, but to find someone who has expertise in the particular area or areas that you need help with will not always be easy, or even possible. In most cases, rather than picking a name out of the phone book, you will be most likely to find someone who can real- ly do the job you need done only by talking to a lot of people in your industry, and trying to find out if any of them have used consultants, and if so, whether they felt the consultants they used were knowledgeable and worth their fees. Finding the right consultant can frequently be a bit like finding a needle in a haystack -- but if you find the right one, who really knows the area you need help in, a good consultant can be an invaluable resource to your busi- ness.