Community Economic Development Fund

Articles and podcasts to help plan and operate your enterprise.

What exactly is an accountant?

A recent article in Inc. magazine online discusses six excellent concepts – three things you should never ask your accountant and three things you absolutely should ask. They're provocative ideas and a great way to bring focus to the overall theme of the article, choosing the right accountant for your business.

The end of tax season brings the time when CEDF business advisors are reminding clients to provide their tax returns as continued required documentation for their loans. But this time of year also reminds me of a couple of other things I encounter, especially with novice business owners.

It may seem surprising, but I periodically find myself defining “accountant” for someone, or trying to interpret what they mean by “accountant.” Unfortunately the term is used very loosely in the small business world. So I have to ask, “Do you mean a Certified Public Accountant who has a five-year accounting degree plus required professional experience and a state license?”

“Or someone who has a Master of Science degree in accounting but is not a CPA? Someone who is an Enrolled Agent who has taken an IRS exam and can represent you before the IRS? Someone who has done bookkeeping or taxes for a living and refers to himself as an 'accountant?'  Someone who has gone through the short course of one of the national tax preparation firms?” 

There are numerous possibilities. In Connecticut, “accountant” is actually defined in state law and a CPA may understandably bristle at being lumped in with an individual with far less training. As a business advisor, I've learned to ask if a client is using a CPA because for many purposes it matters a lot. Besides creating the assurance of qualified tax advice, a CPA also has likely been exposed to a wider array of businesses and operations with greater complexity.

Such professional experience can come in particularly handy, but only if a business owner uses the CPA properly and hires one who is a good match for the business. If the extent of the relationship is to drop off a pile of papers on April 14 and then pick up a completed tax return later (sometimes without even any conversation about the business), then this represents either poor usage of (expensive) professional services or a poor hiring choice or both. I have encountered this situation numerous times with clients  who do not seem to even come away with the adjusting year-end entries for the bookkeeper. 

A good relationship with a CPA requires an investment of time and professional fees to solicit appropriate advice considering the scale and complexity of the business.

–  Frederick Welk
CEDF Business Advisor

Five things business ownership will surely teach you

by Jennifer Avallone
CEDF Business Advisor

A few weeks ago I read an article dealing with the reality that even a graduate degree from a business school won't prepare you for all of the lessons that real business experience delivers. Unfortunately, “The Game of Life” didn't bless me with the ability to start out with an MBA. When I spun the wheel, my “car” landed on the chance to run a business.  And, boy, did it come with some lessons. 

Sacrifice -- In business, an owner will have moments that will require true sacrifice. In school you may be taught what the dictionary definition of sacrifice means. But when real life circumstances present themselves, one really learns what sacrifice means. 

Standing alone -- At any point in time during a business crisis, an owner may be forced to make a decision alone. When you are learning in school or training at a job, it is comforting to look back for approval or guidance from a more experienced mentor. But when you are in business, often you will look back and all you will see is your own shadow.

Communication skills -- Several people are involved in daily operations of most businesses. Great communication is a skill that will further relationships positively. With people who have power to impact some of your business decisions, like the health inspector, zoning or town officials, vendors, irate customers, or injured patrons, one would be wise to learn great communicate skills. The result can be successful relationships.

Quick decision-making skills -- All the preparation in the world can never prepare an individual for split-second decisions. The ability to make judgment calls at lightning speed is a learned skill. After years of making emergency decisions that not only affect one’s own well-being but may greatly impact customers or staff as well, a business owner will face times when asking for help or advice will not be an option. Remaining calm and level-headed while thinking about the greater good is a learned skill.

Accountability -- With power and control comes the chance of making a wrong decision for someone else. It is important for leaders to have the strength to admit to their staffs, customers, vendors, or even themselves that they messed up. Roy T. Bennett, author and public official once said, “It takes guts and humility to admit mistakes. Admitting we're wrong is courage, not weakness.” 

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