The Small Business Start-Up Guide
by Robert Sullivan

. . . brought to you by The Small Business Advisor

Get Professional Advice

We've already mentioned a number of times that it's necessary to confer with your attorney and accountant (or certified public accountant, CPA). This chapter will give some basic advice on finding and dealing effectively with attorneys and accountants, as well as insurance agents, all of whom you should be contacting for advice on a regular basis. Another important professional is your banker who is discussed separately in Chapter 8.

It is very important that you seek advice often and early enough to keep you out of trouble. It's equally important that you are able to ask the right questions. One of the primary objectives of this book is to give you enough information so you are comfortable asking questions. You need to find business professionals with whom you are comfortable and have confidence. This is not always easy to do. Going to the Yellow Pages is probably not the answer. A better approach is to first ask for referrals from other small business owners. In this manner you can obtain a listing of individuals who are providing services in the areas of interest to you and you can begin a process of selection by interviewing.

Lack of professional advice often and early
will surely cause problems sooner or later.


This book frequently recommends that the advice of an attorney be obtained on various matters. You should be dealing with your attorney often and on a wide range of issues, so thoughtful selection is a must. Do not use attorney referral services, including the bar association in your area, since these services are generally "name brokers." What you need is a referral by someone who knows that a certain attorney is well versed AND INTERESTED in the problems of small businesses. A good place to start is with recommendations from your banker, accountant, and other owners of small businesses.

Meet with and interview at least three attorneys. Remember, you will be working closely with whoever you select and it can be difficult and expensive to switch later. During the interview you should try to determine if the attorney has an understanding of the problems associated with your type of small business and is interested in working with you. In all likelihood, you and your business will at best represent only a small percentage of the attorney's time so don't expect a lot of attention after the interview! You should also make certain you understand the rates and how you will be charged for services. Also, determine before the interview if you will be charged for the interview time. If you are not completely comfortable during the interview, move along to your next choice. Remember that you may get better service from one of the smaller law firms.


Remember that attorneys are trained to solve problems and may not necessarily understand the business ramifications. They are, of necessity, generally very conservative. As such they may not have your entrepreneurial qualities. Keep this in mind when asking for their advice.

Do not blindly follow your attorney's advice ... ask lots of questions so that you fully understand the basis for the advice. Ask for any documents to be prepared in "plain text" and not "legalese." If legal terminology is used, make certain you understand the meanings. After you fully understand the advice and any associated documents, you may decide against it for reasons of your own. Your attorney's job is to ensure you are aware of the risk involved in making or not making a certain decision.

During one of my early business ventures, I asked my attorney for assistance in develop-ing a contract form to use with my potential clients. Well, I got my form ... all three single spaced pages of it with a total of around 30 items! My attorney had attempted to protect me from every possible contingency but in doing so, generated a document so onerous that no one would sign it, including my current customers. I should have given my attorney more direction ... he assumed, in keeping with his training, that I needed as much protection as possible. With no customers, I needed no protection!

Your business attorney will not be proactive.

Since you are probably a very small client, your attorney will probably not be thinking about you unless you bring a specific issue to his or her attention. In other words, you need to find the potential problems and not wait for your attorney to alert you.


  • Ask questions until you fully understand the issues and the "legalese."
  • Remember that your attorney will not be giving advice from your entrepreneurial perspective but rather from a conservative point of view. The advice you get may or may not be right for YOU.
  • Never hesitate to get another opinion on a specific matter if you are not completely con-fident with your attorney's advice. There is a tendency to take everything one hears from an attorney at face value.
  • Ask for a cost estimates for every matter before you take it up with your attorney. Ask how expenses may be held down.
  • Never, never be less than totally honest with your attorney.
  • Ensure extra charges such as copying and faxes are being charged without padding. (The ABA requires lawyers charge actual costs for these extras).
  • Ask for detailed invoices including hours spent on each item and review carefully.
  • Invite your attorney to your place of business at least every 6-months to show him or her what you are doing. The better your attorney under-stands your business, the more effective the advice.

Again, select with great care. Your prospective accountant should be a member of the American Institute of Certified Public Accountants (AICPA). Contact them at (212) 575-6200. The National Society of Public Accountants produces several useful booklets such as "How Accountants Set Fees." Contact them at (703) 549-6400.

Your accountant (or CPA), will be involved in every phase of your business and, if you are dealing with someone who understands the problems of a small business, you can benefit greatly from his or her advice. Your accountant can help you in the following areas:

  • Setting up your books
  • Selecting of an accounting package
  • Tax planning
  • Money management
  • Setting up retirement plans
  • Generating various financial reports
  • Incorporation advice
  • Dealing with the IRS
  • Help with deciding to buy or lease
The advice given for selecting an attorney also applies when selecting your accountant. Locate and interview at least three. Select someone who is sensitive to the problems of your small business. A good accountant is a very valuable resource for you but, as with an attorney, it is up to you to get and keep their attention.

A good source of referrals for an accountant is your banker and owners of other small businesses in your area. Look to businesses that are closely related to yours in terms of operation: Manu-facturing, retail, etc.

It is preferable to work with an independent accountant or very small firm to take advantage of the fact that you will probably represent more than a name on an invoice and the service received will be more personalized (they can grow as you grow). However, we would be remiss if we didn't mention the potential advantages of working with one of the "big 6" accounting firms (for you who need to know, these are Price Waterhouse, Arthur Andersen, Ernst & Young, KPMG-Peat Marwick, Coopers & Lybrand, and Deloitte & Touche). These big firms have every conceivable accounting service available and are usually perceived to be so reputable that, in some cases, having your business audited by one of these companies as part of the paperwork for a loan can make the difference in obtaining the loan. However, as a small business, you may have a difficult time getting the attention you require. Or, for that matter, being able to afford them!


Accountants will make suggestions based on a very conservative point of view, just like your attorney, and it is up to you to accept or ignore the advice and make the final decision. You, the entrepreneur, may always be testing the limits of whatever you are involved with, whereas the accountant will usually be quoting "from the book" on any given issue.

Some accounting chores, such as bank deposits, check writing, posting to your ledger, etc., can be satisfactorily handled by a bookkeeper whose services will certainly be less than that of an accountant. However, an accountant should be involved with preparation of your financial statements and all taxes to ensure statements are prepared in accordance with accepted accounting principles and that you are in compliance with all tax submissions.

Consider having your business accountant also prepare your personal tax returns so they can help with your financial and estate planning.

Numerous Federal and State requirements imposed on businesses with employees (See Chapter 11) makes payroll a complicated issue. Neither you nor your accountant need to get involved in this thankless task. It would be a poor use of your time and too expensive to use your accountant. Fortunately, there are excellent payroll processing services in nearly every major city throughout the United States. These services are inexpensive, complete, and, if a mistake is made, they pay any penalties that may be imposed by government agencies. Their services include preparing and delivering the checks, preparing the payroll register, sending all funds to the state and IRS, as required, preparing and filing all quarterly and annual reports. Check your local yellow pages for a service near you.

Checklist #5 (Working with your attorney) is also applicable to your accountant.


Chapter 10 includes a discussion of the various forms of insurance you may be involved with in your business. You might glance at this chapter now just to take note of the variety and complexities involved with business and personal insurance issues. This will give you a better understanding of the importance of your insurance agent's role.

Once again, you should shop around and interview a number of commercial agents until you find one that you are comfortable with who understands your needs as a small business owner.

TRUISM 15 An independent insurance agent is most likely to provide unbiased advice.

Ask for references from the agent and, if possible, talk to another client who has had to make a claim against one of the agent's companies. Determine how helpful they were and how quickly and easily the claim was settled. You can learn a lot about an insurance company in this manner.

The agent you select must be aware of the details of your business. The interview with the agent should be at your place of business so that he or she can gain a better understanding of exactly what your business involves. This is especially important if you have manufacturing facilities.

It is a good idea to select an agent who is a Chartered Property/Casualty Underwriter (CPCU) and a member of the Independent Insurance Agents of America (IIAA). See references at the end of the chapter for additional IIAA information.


  • Invite the agent to your place of business on a regular basis.
  • Be sure to keep the agent up to date on any changes that would affect your insurance program such as new employees or equipment, change of location, etc.
  • Periodically, about every 6-months or so, review your entire insurance program to be sure you are adequately protected but not over-insured.
  • When purchasing a new item requiring in-surance coverage, call your agent and get a binder. Follow up within a few days to make sure the binder has been attached to your policy.

Working with professionals such as attorneys, accountants, and insurance agents will be a fact of your business life. You are responsible for selecting these individuals and ensuring they are aware of your specific concerns and problems. They work for you and your responsibility extends to ensuring that you are getting good value for your money. The professionals you deal with, in most cases, may not understand your motivations as an entrepreneur, but they can help to keep you out of legal hot water. Listen to and make certain you understand their advice ... then decide if you want to accept it based on a clear assessment of the risks.