Right Accountant Is Crucial for Success

About a year ago, Marcia Huntley’s bankers strongly urged her to find a more sophisticated accountant to better guide the growth of her family’s manufacturing business.

The bankers felt that Tubular Specialties Manufacturing Inc. needed more sophisticated cost analysis and accounting systems.

“If your accounting isn’t as smooth as glass, it’s amazing what it will do to the rest of the company,” said Huntley, president of the firm that manufactures and sells stainless steel tubing products. “Without good accounting, it’s difficult to make the correct business decisions.”

Because Huntley wanted to do the best thing for the company founded by her father 23 years ago, she diplomatically changed from her longtime accountant, who was a former employee, to Melvin Poteshman, a certified public accountant whom she met through the Rotary Club.

Poteshman, the managing partner at Levine, Cooper, Spiegel & Co. in West Los Angeles, took a hard look at the situation at TSM. He quickly assigned a team of accountants and computer specialists to review and upgrade the accounting procedures. Then he recommended that TSM convert its payroll from weekly to twice a month.

“This cut the payroll costs and hassle in half,” Huntley said. She said at first her 100 employees balked at the change, but gradually they are adjusting.

Now, her accountants are revamping the computer system and changing the way the company prices its products and tracks inventory. Most of the changes are geared toward helping the $8-million-a-year business cope with growth.

Huntley said she wasn’t aware that a company’s accounting needs change as it evolves from the mom-and-pop stage to a bigger enterprise. She said she also never realized how many other services a savvy accountant can provide a small-business owner.

For instance, when she needed a labor lawyer to solve a sticky legal problem, Huntley asked Poteshman for a recommendation.

Poteshman said most small-business owners consider dealing with their accountant as a necessary evil, rather than as an opportunity to gain expert advice.

“People who depend on an accountant to prepare their tax return should learn how to get the most from their accountant,” Poteshman said.

He said business owners would be amazed at how much money they could legitimately save on taxes if they would plan.

Although April 15 is months away, now is the time to grab that shoe box or drawer filled with receipts and canceled checks and make some order out of the chaos.

“One day, while you are watching a football or baseball game, sit on the floor and sort things out,” suggests Poteshman. “Better organization will not only save you accounting fees, but save you taxes.”

Next to being disorganized, one of the worst habits a small-business owner can have is mixing his or her business and personal funds. This not only leads to confusion but can create legal and accounting problems at tax time.

Poteshman advises clients to maintain separate business and personal checking accounts. If you have to borrow from the business to pay personal bills, write a check to yourself from the business account, rather than paying personal obligations with business checks. (This is easily done if you operate a sole proprietorship. Borrowing money from a corporation requires more formal paper work and has various restrictions.)

Another way to become better organized is to buy a computer system. “A small business can be fully automated, including the software and training for about $3,000,” Poteshman said.

A computerized general ledger package will not only help keep your books straight but also produce a monthly profit-and-loss statement to help you make the right decisions about business matters.

What if you are ready to look for a new accountant or ready to hire one for the first time?

First, determine whether the accountant has the skills and experience you need to run your particular business. Then look for someone with the right personality and chemistry for your company. Do you want someone to deal directly with your managers? Do you need the resources of a big firm or the accessibility of a small one?

Today, even the largest, multinational accounting firms have special divisions established to handle small-business clients.

Whomever you choose, be sure you understand exactly what kind of information you must provide and how you will be billed for services.

“It’s important to find a firm that can help you with your company’s growth,” Poteshman said. “We are business people, not just green visor accountants.”

Free Seminar on Drugs in Workplace

“Drugs in the Workplace--Problems and Solutions,” is the topic of a free seminar geared toward executive decision makers. The session, which includes lunch, is scheduled for Oct. 27 from 9 a.m. to 2 p.m. at the Miramar Sheraton Hotel, 101 Wilshire Blvd., Santa Monica.

It is sponsored by Psychemedics Corp., a Santa Monica company that has developed a process that relies on hair samples, rather than urine samples, to detect drug use. Speakers include Psychemedics executives, a representative from the Drug Enforcement Administration and an attorney who will discuss the legal ramifications of drug testing. For information and reservations please call: (213) 828-5224.

Business Directory for Orange, L.A. Counties

The SourceBook, a directory of about 3,000 business groups and networking associations, is scheduled for release later this month. A similar volume with 1,800 Orange County listings is due in late December. Before Oct. 31, the Los Angeles directory is available for $89.97. After that, the price will increase to $119.97. Until Oct. 31, the Orange County version will cost $67.97. After that, the price will be $89.97. For more information about the SourceBooks and how to order them contact: Catalyst Publishing, 1720 E. Garry Ave., Suite 221, Santa Ana, CA. 92705. (714) 250-5566.

Experts to Give Advice on Cash-Flow Troubles

The Culver City Chamber of Commerce is sponsoring a panel of local business experts who will discuss solutions to problems including cash flow management, undercapitalization and taxes. The session will be held from noon to 1:30 p.m. Oct. 23 at the Howard Johnson’s Plaza Hotel, 5990 Green Valley Circle, Culver City. The cost of the session, including lunch, is $12 in advance and $15 at the door. For reservations call the chamber at (213) 397-2626.

ACCOUNTING TIPS

1. Take all the deductions to which you are entitled. Keep accurate records of your business expenses. For example, keeping a record of business auto expenses may result in a bigger deduction than claiming a straight mileage allowance.

2. The deduction for personal interest expenses is being phased out. In 1989, you can deduct only 20% of your personal interest expenses, such as interest on car loans and credit card charges.

3. New tax forms ask businesses to separate their rental expenses into two categories. Machinery and equipment rental must be separate from the rent paid on land or buildings.

4. Taxpayers cannot deduct any part of the basic charges for telephone service at home, even when the phone is used partly for business purposes.

5. When property such as a computer or car is used partly for business and partly for personal use, you must be able to document the business use.