In this Think column, Emerging Business CFO founder Dan Schmidt shares three ways to drive him, and other accountants, crazy. The Think column helps entrepreneurs to stop and think about the various aspects of starting and running a business.
Accountant and finance professionals are generally known to be level-headed clear thinkers, able to ride the crests of emotion that other business functions might produce and logically evaluate the implications of any situation. (In other words, people think we are boring).
However, if you’d like to see your certified public accountant or CFO become unglued, you may try one (or all) of these approaches.
(1) Co-mingle personal, business account
Co-mingling personal and business accounts is considered a cardinal sin of accounting by the IRS, banks and nearly everyone else.
What it means is not keeping business and personal accounts separate — paying personal expenses out of business accounts, and vice versa. It turns into a record-keeping nightmare, and if you are ever audited, could lead the IRS to detail-examining all claimed deductions (including documentation) in all your accounts.
In addition, it can cause legal problems, such as voiding the personal protection afforded by an LLC or corporation (aka piercing the corporate veil). Bottom line, don’t do it. Have separate accounts, and only transfer money between them when you pay yourself.
(2) Show up unprepared (with a shoebox) at the last minute
This happens most often in tax preparation, although I also see it in accounting and financial projections.
A request for information is sent out, but nothing is done by the business owner until two days before the deadline, at which point information is sent over in an unorganized pile. The reality is that there is a lot of data in accounting and finance, and it takes a serious time investment to sort, analyze and summarize into a usable format. But the results are well worth the time.
(3) Argue about professional opinion issues
Everyone is looking to save money on taxes, and there are a lot of strategies floating around — some great, some in the vast grey area, and some that are just plain wrong.
Certified public accountants and enrolled agents are required to spend 40 hours each year keeping up with changes in standards and laws, so when a tax professional says that a particular strategy is a bad idea, you should believe him or her, regardless of what you heard at the industry conference last week. It’s extremely unlikely you will unlock a piece of the IRS code that magically produces deductions that your professional was unaware of. As a side note, attorneys have the same problem — everyone likes to argue about legal issues regardless of their background and training.
The good news is accountants and finance professionals really ARE the consistent, laid-back individuals they are portrayed as. With a small dose of mutual respect, you can know that your business needs are being covered, and that someone has your back.
Dan Schmidt is founder of Emerging Business CFO, a company that provides accounting and financial services to startups and small busin