Sometimes, important business conversations extend past your team. Learn how (and when) to include the experts—like your accountant, financial advisor or attorney.
Part of growing your small business is building a solid team—one that makes you excited to do your job. However, that does not necessarily mean you need to blow your budget on payroll. Aside from the freelancers or contractors you hire, your team might also include an accountant, financial advisor, banker and attorney. These are the team members who can help you accurately account for income and expenses, save for the future, obtain financing for your business, handle legal issues and perform a wide range of other crucial business activities that you may not have the time or expertise to manage on your own.
You may have someone in mind for these roles already, or you may need to ask around for referrals. Once you have your support team in place, here are a few important ongoing conversations you want to have to keep your business on track, at all times.
Conversation #1: Business Structure
Does my current business structure still make the most sense?
Many freelancers and small businesses start out as sole proprietorships, but as your business grows, it may make sense to consider transitioning to a limited liability company (LLC) or corporation.
The typical organization loses 5% of annual revenues to occupational fraud.
Of all the choices you make when starting a business, one of the most important is the type of legal structure you select. This decision will impact how much you pay in taxes, the amount of paperwork you are required to do, whether you are exposed to personal liability for your business actions, and your ability to raise money.
There is no one-size-fits-all answer to whether your business should be set up as a sole proprietorship, partnership, LLC or corporation. You’ll need to consider your company’s financial needs, risk, and ability to grow. There are legal and tax benefits of incorporating, but there are also costs.
Who to Talk to: Attorney and Accountant
Your business lawyer is a good place to start. An attorney can help you select the most advantageous legal structure and draft the appropriate agreements, articles, and bylaws. Your accountant or CPA can help you weigh the tax consequences of your legal structure, including the cost of preparing separate business returns and payroll.
Conversation #2: Cash Flow and Financing
Does My Business Have Adequate Cash Reserves or Access to Financing?
A 2016 report from the JPMorgan Chase Institute found that only half of small business owners have enough cash to support 27 days of typical outflows in the event of a cash flow crisis. Often, the business is making money on paper, but slow-paying clients mean too much of the company’s revenues are tied up in accounts receivable. It’s a constant challenge to get clients to pay on time so there is enough cash available to pay suppliers, salaries and other operating expenses.
Ideally, your business should have enough cash reserves to see you through seasonal slowdowns and collection delays. If that isn’t possible, you may be able to get a short-term loan or line of credit to smooth out cash flow.
Who to Talk to: Accountant and Banker
Your accountant can work with you to improve cash flow by ensuring you are properly tracking receivables and trimming expenses to boost cash reserves. They can also help you put together the financial statements and reports that your banker will need to approve a loan or line of credit.
Conversation #3: Security Check-Up
Is my business at risk for fraud?
According to the Association of Certified Fraud Examiners’ Report to the Nations for 2016, the typical organization loses 5% of annual revenues to occupational fraud—that’s fraud perpetrated by the business’ own employees, managers and executives. Every business owner would like to believe that his or her employees are honest and loyal but, unfortunately, that’s just not always the case.
The best way to prevent this from happening to your business is to set up internal controls, or a system of checks and balances to detect problems or avoid them altogether. Large companies often have formal internal control procedures in place but, in a small business, it can be difficult to implement the separation of duties necessary to detect and prevent fraud.
Who to Talk to: Accountant
Your accountant or CPA can help you set up a system of internal controls, no matter how small your business is. They may recommend locking up checks, having two people count cash, having the business owner review bank statements and reconciliations, two signatures on checks over a certain dollar amount, amongst other controls. In even the smallest organization, an accountant can help you put procedures in place to help prevent otherwise honest people from crossing the line and catch fraud before it becomes too serious.
Conversation #4: Business Insurance
Is my business adequately insured?
You may have purchased small business insurance, but have you reviewed your coverage recently? It can be pretty easy to just renew your policy every year without considering whether your current coverage is enough or not.
Many owners of home-based businesses are surprised to find out that their homeowner’s insurance policy does not cover business losses, but you may be able to purchase a rider to your homeowner’s policy to cover damage to business property, such as computers, printers and other office supplies.
Perhaps you have a separate small business policy, but your coverage and limits are no longer adequate. As a business grows, its insurance needs change. You may need to consider increasing general liability limits or adding professional liability coverage or workers compensation for your employees.
Who to Talk to: Insurance Agent
Sit down with your insurance agent to discuss any changes since you purchased the policy. If you’re currently relying on a rider attached to your homeowner’s insurance policy, it may be time to upgrade to a separate commercial insurance policy. If you don’t already have an agent, use the Find an Agent tool to help you locate an independent agent that can shop your coverage with multiple insurance carriers to find you the best coverage at the best price for your situation.
Keeping your business on track is ultimately your responsibility, but that doesn’t mean you have to do it alone. Build a team of experienced accounting, law, tax, finance and insurance professionals. They will save you money by bringing intimate knowledge that will save you money in the long run.
Conversation #5: Retirement Planning
Are you and your employees saving enough for retirement?
When you first started your business, chances are you weren’t thinking about how to save for retirement.
When you first started your business, chances are you weren’t thinking about how to save for retirement. Maybe you put some money in an Individual Retirement Arrangement (IRA) but was unaware that you could save a lot more in tax-deferred accounts as a small business owner.
You may be able to contribute up to $54,000 to a Simplified Employee Pension IRA or set up a Savings Incentive Match Plan for Employees (SIMPLE) IRA that will allow your employees to defer up to $12,500 per year (plus an additional $3,000 in catch-up contributions for employees age 50 or over). Both of these plans are easy and affordable to set up and maintain and, if you have a staff, providing retirement benefits can be a good way to take care of key employees and also attract new ones.
Who to Talk to: Accountant and Financial Advisor
Your accountant or financial advisor can help you identify retirement plans you are eligible for and recommend a plan trustee to receive plan contributions and invest them for you and your employees.
about the author
Forbes, Parachute by Mapquest, Capitalist Review, Guyvorce, BonBon Break and Kard Talk. Janet lives in Arizona with her husband and son and their rescue dog, Dexter. Outside of work and family time, she enjoys cooking, reading historical fiction and binge-watching Real Housewives.Janet Berry-Johnson is a CPA and a freelance writer with a background in accounting and insurance. Her writing has appeared in