Common sense advice for small and startup businesses

You’ve run your idea by your family and friends. You’ve perfected your business plan. You have a good idea of how the business will operate, as well as your sources of revenue.

Now it’s time to get serious.

For many entrepreneurs, starting a business is the realization of a lifelong dream: being your own boss, setting your own hours and building something that is more than just a job or source of income. That’s why you need help—if not immediately, then surely within the first few months of when money starts coming in.

As president of Launch Accounting Services in West Chester, Steve Schneider, CPA, runs a firm that works with both major corporations and small businesses. Schneider is also a member of the Professional Association of Small Business Accountants (PASBA), a national organization of accountants who specialize in using proven strategies that help smaller firms succeed.

“My first piece of advice is to make sure you are hiring someone who is more than just a tax preparer,” says Schneider, a 20-year veteran of the industry. “You need someone who can serve as both an accountant/financial adviser as well as someone who focuses on small business.

“You also have to make sure that their definition of a small business is the same as yours. For some people, $50 million in sales might be considered a small business while for another person it may be lower than $5 million. If a firm has a majority of its clients that are over $50 million in sales and you are struggling to get to a million, you are not going to be at the top of the list when it comes to getting a question answered or having some service performed.”

You also want to make sure you hire someone who wants to manage your books, says Schneider.

“Most small businesses can’t afford to hire an internal accountant,” he says. “But you also need to make sure that business and record keeping are done on a continual basis, whether it is done internally or by an outside supplier.”

An accountant and financial adviser can help prepare meaningful business statements, which are crucial to the overall and long-term success of your organization. They can also help you understand what those financial statements mean.

“For instance, you need to know what gross margin means and how it compares to the last month, the last year or even the last three years,” says Schneider. “You need to know if there is a trend developing that is either favorable or unfavorable.”

One of the biggest accounting or bookkeeping issues that Schneider sees in the Greater Cincinnati area is that many organizations don’t keep accurate books.

“We will work with them to get them cleaned up, but if we are cleaning up last year’s books, it’s a little too late for tax planning,” he says. “But if we are working with them now for 2022, we can see if there are ways moving forward where they can save on taxes.”

One mistake most entrepreneurs make is that they try to save too much on their taxes, says Schneider.

“Sometimes it makes sense to be a little more profitable and pay a little more on taxes, especially if you are looking at selling or obtaining financing in the future,” Schneider says. “If you apply for a loan, but haven’t shown a good profit, it might be harder for a bank to give you a loan.”