Hiring: When It Makes Sense to Use a Professional

While you may be able to handle most of the issues that
will arise as you start a small business, you will want
professional assistance for more complex issues,
particularly legal and accounting issues.

by Jim R. Sapp

Use a two-step approach to find a good attorney and
accountant. First, carefully select a firm by getting a
personal reference and then examine the firm’s Web
site. The Web site can give you information on that
particular firm’s areas of expertise and their
specialty.

Legal and tax issues are already complex, and they get
more complex by industry. Many "gray areas" will need
to be interpreted and analyzed. If the firm you’re
checking specializes in construction companies, but
you’re in the retail business, it may not be a good
fit. You don’t have the time or money to pay someone to
learn about your specific industry, so find a
professional who is servicing your business sector
already. If your company is highly specialized, a
business trade publication may list professionals who
will understand your specific needs.

Here are basic questions to ask any professional adviser:

* What is your hourly billing rate?

* How often do you increase your rate?

* Can I talk to one or two other small-business people
you work for?

* What types of work do you most enjoy?

Remember to make your final selection carefully. It is
expensive to switch firms!

Hire an Attorney for Complex Issues

It may be prudent to hire an attorney when you first
start your business. An attorney with small-business
expertise can assist you in completing the
documentation necessary to incorporate your business,
especially if you have some unusual circumstances or
need special bylaws. Further, it’s important to have
the name and address of counsel for a loan document or
any leases you need to have reviewed. This doesn’t
mean, however, that the lawyer has to do everything.

You should do as much as you can yourself; however, a
small-business lawyer should review the complex issues.
To begin, write a list of exactly what you want the
attorney to do for you. For example, you may understand
the monthly rental fee and term of your building lease,
but you may want to ask the lawyer to "explain items
10 and 12 in my building lease," or "help me
understand the CAM charges and the tax section, so that
I’ll be clear on what I owe."

While there are many exceptional lawyers, their image
precedes them for a reason. Be careful about using a
"superstar" firm or any firm with more than six to
eight attorneys; you probably cannot afford their rates.
Select a smaller firm or a one-person office, preferably
someone who has expertise in your area of business. Go
in and say, "I am starting this company and here is what
I want." Have officers, stakeholders and addresses all
written up. The more preparation you do, the lower your
cost will be.

You can fill out the state and federal papers yourself;
there is no need for a lawyer to charge you $200 for
filling out forms. Then the incorporation papers will
come back to your address with state and federal ID
numbers. You can handle any renewal information needed
by the state and save expenses there too.

Remember, lawyers make their money by invoicing you.
Use them only as necessary. I have found that most
business owners can do about 80 percent of the work
themselves and hire a lawyer to do the rest.

Hire an Accountant

A competent accountant who understands new businesses
is probably the most valuable professional consultant
you can hire. A good accountant can give you pertinent
advice on taxes, accounting systems, depreciation and
all the other "numbers stuff" you need to know for your
new company. The more successful your business becomes,
the more difficult it will be to keep the government’s
tax fingers out of your checking account. A good
accountant will help you keep what is yours in the
bank, and he or she can be a great adviser and mentor.

Find a good small- or medium-sized firm in your
vicinity – you’ll get personal service and you’ll pay
for less overhead.

I also highly recommend using a non-traditional
calendar year for your business. All accountants are
overbooked at Dec. 31 and April 15. Why not set up your
accounting so that your business year ends on June 30
or Sept. 30? Many accountants will offer discounts of
up to 40 percent if you use a non-traditional year-end.

Your accountant should be able to recommend an
off-the-shelf software program for use in your office.
They know the systems that work for small businesses,
which systems are good for inventory and which are
better for retail or professional offices.

You may need more highly specialized software for your
particular industry; just be sure you can justify the
expense. Many times, you can find off-the-shelf systems
that are adequate for your first few years of
operation. This is preferable to buying expensive
software that is so sophisticated you only use a
fraction of it. Be lean and mean when you start out.

Hire a Part-Time Controller

The accountant is your tax adviser and tax preparer.
Who is going to do your business accounting and books
on a day-to-day basis? Even the smallest business may
need assistance.

The best solution is a part-time controller, who will
probably cost several hundred dollars a month. There
are many talented, experienced people who can give you
advice and accounting assistance, with rates that are
half those of a large firm. This person can do
month-end closing and write checks; they may also be
able to help with software installation or advise you
on computer purchases.

You may think, "I can do that myself." That might be
true, but look at the big picture. You’re the leader of
the pack. Cash rules the business world, and you won’t
be helping your company generate more sales by
balancing the check ledger in QuickBooks. Delegate that
job to the controller.

A few words of caution: Always open and review bank
statements yourself. Do not allow your front office
staff to balance the checkbook. It’s usually over their
head, it’s none of their business and embezzlement does
happen. Finally, do not allow your controller (or
anyone else in the business) to sign checks. That is
your job.

To read this and other related articles online, visit:
http://www.nfib.com/object/IO_17625.html

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JIM R. SAPP is an international business consultant and
speaker with more than 25 years experience as a
business owner and entrepreneur. He is founder and
director of the American Small Business Institute, and
recipient of both the "Entrepreneur of the Year" award
and "Blue Chip Enterprise Award" for inspirational
achievement in business. His book Starting Your First
Business is available from http://www.sappbiz.com or by
calling 800.570.5436.