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The following article was written by Steven L. Jager, CPA, and published in the September 1991 issue of Beverly Hills Business Magazine, Volume One, Number Twelve, Page Six
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Special Focus: Small Businesses

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Accountancy Services
and Small Businesses

by Steven L. Jager

All too frequently, CPA’s are still viewed as mere record-keepers and tax return preparers – this is a self- fulfilling prophecy for accountants, because all too often we become so focused on these routine compliance matters, we may overlook the chance (or not make the time) to offer you the additional (and more interesting) services that we are able to provide. In general, accountancy services may be placed into two major categories: (1) Control and Reporting Services, and (2) Analysis and Planning Services.

Control and Reporting Services

These are what CPA’s are best known for – the necessary evils endemic to all businesses.

Recordkeeping and Bookkeeping – At the most basic level, this involves posting and balancing the general ledger and often includes producing financial statements. Who reads the financial statements is an important question for the entrepreneur/business owner to reflect on. When prepared by a CPA, the financial statements will include an " accountant’s report", which will indicate whether the statements have been "compiled", "reviewed", or "audited".

Income Tax Return Preparation – Everyone’s favorite document.
Internal Accounting Controls - This can be a very valuable service, although not suggested often enough. The internal accounting system itself, and strive to ensure the correct data will be efficiently captured and processed by the "accounting system". A strong system would detect discrepancies or irregularities in the normal course of performing recordkeeping tasks.

Analysis and Planning Services
These next services pick up where the above services leave off, and treat your operation as a business (it really is one), and attempt to help shape it and give it direction. Tragically, many business owners do not make the time to involve themselve in their own business' direct financial affairs.

Projections and Budgets - This service is intended to answer questions like "Did the business earn as much as expected?", and raise questions such as "Do you know where your cash is?" Every business periodically runs out of cash. Wouldn't it be nice to know when that will be, and have an advanced plan as to how and where it will be obtained?

Computer Systems - The CPA can be very helpful in assessing the needs of the business operation. We almost never (and should not) become directly involved in the sale of computer hardware. Our value is really in analyzing the utility of specific software packages. Does the program provide meaningful information, and are routine tasks automated, thereby promoting efficiency? This service can be integrated nicely with an analysis of the Internal accounting controls.

Federal and State Income Tax Planning - Depending on the legal form of the business, there are strategies available for minimizing tax. If there is a closely held corporation involved, the plan should include integrating the analysis with the shareholders' personal income tax position as well.

Estate and Retirement Planning - Here the CPA often becomes the coordinator or "quarterback" of a team that should include the client's attorney, pension administrator and insurance agent. The important thing to realize is that you have options - if you plan for them now. What will happen to you and your business when you retire? What will happen to your heirs and your business when you die?

Personal Financial Planning - This service actually includes many if those described above, plus, planning for education funding, disability planning, asset positioning, insurance analysis, and investment analysis. While the CPA may be engaged to prepare the written plan and recommendations, it is up to the client to implement - which may involve the CPA again as "quarterback", together with the client's attorney, insurance agent, and others.

Other Services/Practice Management - These are like after-dinner liqueurs - and may include services such as assistance with drafting the personnel manual (every employer with two or more employees should have one), negotiating leases, lines of credit and major purchases.

It should be noted that most of these "products" involve a dynamic process - which at its heart involves education and awareness. If you see a service not presently being provided, ask your waiter (the CPA firm partner or principal). After all, whose business is it anyway?

Steven L. Jager is principal of Steven L. Jager, CPA, An Accountancy Corporation, in Sherman Oaks, CA. The practice emphasizes services to entrepreneurs, executives, professionals and their closely-held corporations.

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