While most owners of small- and medium-size businesses know the details of their companies intimately, there are often highly technical matters of law, accounting, management and marketing that are best handled by outside experts.
Attorneys, accountants, and management and marketing advisers have specialized knowledge about niche areas that few business owners can hope to duplicate. Reality often dictates the necessity of relying on others for assistance in unfamiliar areas, and this reality is easier to accept if that outside/independent advice is affordable. But where can this professional assistance be found and at what cost?
Truly Helpful Help
Having access to legal, accounting and other expertise is important to help any specialty fabrics operation survive and grow as rapidly and efficiently as possible. Areas where advisers might benefit your business include:
• Real estate
• Business planning, brokerage and appraisal services
• Personnel services
• Marketing, advertising and public relations
• Website development
Some jobs, such as auditing financial statements to satisfy the requirements of lenders and/or investors, must be done by a professional with specific credentials such as a certified public accountant or CPA.
More flexibility exists when it comes to looking for other professionals. Although someone with a master’s of business administration or MBA might be well-trained, highly experienced people without the diploma and initials might be just as effective (and more affordable). Evaluating the worth of someone’s credentials can be tricky.
When it comes to help with tax questions or preparing tax returns, the Internal Revenue Service offers free advice—but it is free advice at a price. The IRS will not advocate aggressive tax solutions, nor can its answers be taken as gospel. In fact, the IRS will not stand behind incorrect advice or even its own erroneous interpretation of IRS rules.
Bookkeepers are great for the day-to-day recordkeeping of a business. Accountants, on the other hand, crunch the numbers tracked by the bookkeeper, translating and even evaluating those figures into a format understandable and usable by the average business owner. When looking for an accountant, don’t underestimate the importance of a CPA.
While many CPAs do advise and prepare tax returns, keep in mind that the CPA designation does not require special knowledge of U.S. tax laws. Although CPAs and attorneys are permitted to practice before the IRS and the tax courts, other practitioners who have passed a three-day test administered by the IRS can also represent taxpayers in those venues.
Typically, attorneys specializing in tax law are not ardent disciples of tax return preparation. Such legal professionals most often confine their work to complex transaction issues and document preparation. Also keep in mind that nonlegal tax professionals are afforded only a degree of client confidentiality. For issues requiring absolute confidentiality, consider the use of attorneys who enjoy legal extremes of data protection.
How and where to find help
Referrals from other professionals and business associates are the best way to find new professional service providers. Ask your accountant for an attorney’s name and your attorney for an accountant’s name. Bankers, insurance and real estate professionals are also good sources of referrals. Don’t forget to ask suppliers and customers.
The first step in finding the right professional requires an inventory of the services and advice you need and, most important, how much you can afford to pay. It is also critical to determine beforehand just how much of the work you will do and how much of it will be done by the professional you hire.
You might also find out how well-connected the professional and his or her firm are. CPAs, for instance, are often a valuable resource for a business needing to borrow money or to raise capital from other sources.
Check credentials first
Before hiring any licensed professional adviser, check the individual’s credentials. Most professionals are licensed in one or more states, so you are looking for a professional who holds a current license in your state. You also want to know if there are any outstanding complaints against this person, either by his or her professional organization or by previous clients.
You can search the IRS website to see if a tax preparer has been disciplined or convicted of fraud by the IRS. And the Better Business Bureau’s website will often list complaints that have been filed against professional advisers.
With referrals in hand, start shopping. Yes, shopping. You are not only looking for reliable, knowledgeable and affordable professionals, you are looking for professionals who complement your specific efforts and business strategy. Having an accountant who takes a different approach than you do can sometimes be a good thing. A financially conservative business owner may become more successful if exposed to a more aggressive financial strategy. Of course, no professional should pressure clients to do anything they are not comfortable with.
Shopping around for quotes from several providers is a good strategy. Beware, however, of comparing one provider with another on the basis of fees alone. The lowest hourly fee may not indicate the best value; an inexperienced professional may take twice as long to complete a project as someone who is more experienced yet slightly more expensive.
Your Shopping List
When shopping for a professional, consider:
• Ability to communicate
• Reasonable fees
At the beginning of any professional relationship, general rules of thumb should be established to minimize the need to call the adviser too often. Discuss what the adviser will handle and what might be better handled by you or another professional; this is part of the shopping process.
If you begin working with an adviser only to later discover that you avoid calling him or her when issues or questions arise, or you don’t like this person, sever the relationship quickly. This is yet another reason not to work with friends or family; you don’t need personal relationships interfering with the business relationship. It is not necessary to provide reasons for severing the professional relationship; just be polite and firm.
The price of advice
Many professionals offer free initial consultations to discuss expectations, desired services, extent of involvement by the professional, time constraints and, above all, costs. It is not tacky to discuss fees before engaging the services of a professional, although, as mentioned earlier, money should not be the sole criteria for selecting someone.
Keeping the cost of that much-needed advice or guidance affordable begins when the professional is hired. He or she will draft an engagement letter that details the scope of the services that are to be performed and at what cost.
For complex legal matters and other matters such as reducing property taxes, many professionals are often willing to work on a contingency basis. This means they are paid a percentage of the proceeds or savings their customers receive due to their efforts—usually between 25 percent and 40 percent. If they fail to reap savings for the client, they may receive only out-of-pocket expenses.
For those who anticipate having a lot of routine questions or needing services on an ongoing basis, one option is to set a monthly fee that entitles the business to all the routine advice needed. Additional billing, if necessary, is usually done at a reduced hourly or project rate.
Some attorneys and other professionals may suggest a flat fee for certain routine matters, which eliminates the uncertainty of the final cost. But all these billing practices must be spelled out in the engagement letter.
The professional services marketplace is a buyer’s market these days, making now a great time to shop for a qualified and affordable professional. Remember, you are not looking for the one promising the lowest bill, but rather, a professional or firm that can best guide you and your business through these turbulent economic times.
Mark E. Battersby writes extensively on business, financial and tax-related topics. March 2018, Specialty Fabrics Review