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For business, a CPA is like a ‘CFO for hire’

(Pressmaster / Depositphotos.com)

(Pressmaster / Depositphotos.com)

Rick Miller likes to watch his seedlings grow.

“I call my startups my seedlings because I am helping to plant them and watch them grow,” said Miller, a longtime SCORE volunteer and a certified public accountant in Brentwood, Tenn. “Most people say starting a business is the most difficult thing they have ever done, and I agree.” SCORE is an organization that provides free small business mentoring.

The job of a CPA, Miller said, is to be an active participant in entrepreneurs’ small businesses. He was inspired by the other mentors he met in SCORE to leave the banking and finance industry and open his own CPA business, Miller CPA & Advisory, three years ago. So he gives back to SCORE by mentoring other business owners, and is the chairperson of SCORE’s Nashville chapter.

MILLER (Submitted photo)

MILLER (Submitted photo)

“In SCORE, I am the teacher and guide, and I point and direct,” he said. “In my business, I do the heavy lifting.” Miller’s firm has about 50 small business clients now, mostly in Tennessee.

Some small businesses try to handle their financial affairs on their own, or hire a bookkeeper and tax preparer. But Miller usually urges entrepreneurs to rely on CPAs, who are strategic business advisers who work with business owners on their accounting and taxes. CPAs offer another level of service.

“For a startup business fresh out of the gate, they need to consider bringing in a CPA who can help it establish and navigate its tax and financial structures,” he said. “The No. 1 problem with startups is they want to do it themselves. A good CPA is forward-thinking and will help the owner budget, plan performance, and interpret results to make wise future business decisions.”

The most common first question Miller is asked by entrepreneurs is whether they should be a limited liability corporation or sole proprietorship. “Those decisions have big implications for your business. It doesn’t depend on the size of the business; it depends more on the capital structure. Among the questions I ask: Are there shareholders or is it family money or bank loans? How will the business be funded?”

Other questions Miller asks: Is ownership involved on a day-to-day basis, or is it a managing group of owners, or is it all employee-operated? How will the owners be compensated? What makes the most sense legally in protecting shareholders? Every business plan is different and complicated, so it takes time to select the smartest path, he said.

“So many business owners choose to become an LLC or corporation because they like the status of it,” he said. “They need to discuss their options first with a CPA.”

When Miller is approached by entrepreneurs, he usually peppers them with questions.

“First, have you run a small business before, or do you have experience running a general ledger or accounting system? If the answer is no, we need to talk. It’s not that they are incapable of doing it. They should let a CPA set up the correct structure they can work in, and if the owners have questions, the CPA is there to keep them in line.

“Second, what is your time best spent doing? Is it being your own accountant, or being a salesperson and advocate for the business? Instead of spending their time on bookkeeping and taxes, they may choose to work on growing their business.”

Small business owners need to be flexible, Miller said. “Today they might be the marketing manager, tomorrow the sales manager, and the day after that, customer service. As a result, accounting is generally one of those functions that gets put on the back burner.”

Miller said CPAs provide much-needed budgeting guidance and prepare financial statements, as well as other financial services that keep things running smoothly. Most CPAs offer levels of service and their services can be critical to the success of a startup.

“I see myself as a CFO for hire,” he said. “Accounting is a people business. It is managing people and operating costs. Relationships mean a lot, and I prefer to be an active participant, engaged in the business and consistently providing value to the owner.”

 

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