NEW YORK (AP) – Ron Finklestein found a good reason for not compiling his business tax return: $1,600.
That's how much Finklestein says he would have overpaid the government if he had gone ahead and submitted a return he had completed as an experiment. When he ran it past his accountant, he discovered he hadn't claimed all the deductions he was entitled to.
Many small business owners try to compile their companies' returns, and they also try to keep the books too. Many, like Finklestein, discover it's better to turn the financial part of the business over to someone with a head for finances – the work will be done faster and better. Moreover, outsourcing finances allows owners to focus on building their companies.
Finklestein, an author and business consultant in Akron, Ohio, only recently handed over the task of keeping the company's books to his accountant, a step he needed to take to have a better handle on how the business was doing. He wasn't consistently updating the books, and so he didn't know the state of his cash flow. With his accountant in charge of his finances, he's able to make more informed decisions.
Moreover, “it's allowed me to focus my time on where my strengths are, in the sales and marketing side of the house,” Finklestein said, estimating that he's gotten back 10 hours a month from not trying to do the books himself.
“What really helped me is the peace of mind knowing that it's done, and done right,” Finklestein said. “I don't stay awake at night anymore thinking about it.”
Elizabeth Gordon, who owns a management consulting firm in Atlanta, kept her own books the first year she was in business.
“It was a nightmare,” recalled Gordon, president of Flourishing Business. “It's just not my strength. … I need to put myself in the visionary leader role rather than worry about the minutiae better outsourced to someone else who's good at it.”
Her solution is to have a bookkeeper pick up her receipts and other papers every two weeks and enter them into an accounting program. She also uses an accounting firm.
Gordon, who has seen plenty of her clients struggle with running their companies, said it's very common for new business owners to try to do their own financial work. “You feel like you have to do it all,” she said – although many entrepreneurs are sitting up at 2 a.m. trying to get these tasks done.
The cost can be more than sleep – it can take the joy out of running a company, she said. “It (the business) turns into this chore that you feel negatively about, is the exact opposite of what you need in this startup stage.”
Of course, there are many small business owners who easily handle tax returns and their company books. The important word there is “easily” – if doing these tasks doesn't encroach on taking care of other aspects of the business, and it makes sense for them to work this way, then why shouldn't they do it?
It's also not necessary to outsource the work if there's an employee or a partner able to take the financial work off an owner's hands.
Richard Dukas said the chief operating officer of his New York-based company, Dukas Public Relations, is handling the company's books after taking time to learn how to use accounting software. The COO, who is Dukas’ wife, Gail Katz Dukas, doesn't have a financial background, but got some training and is now able to keep track of sales, profits and losses, outstanding balances and more.
Richard Dukas said he doesn't do the work because “I know what my strengths are.”
The company also relies on an accountant who periodically looks at the books and also helps with financial planning. Dukas said he had to switch accountants at one point because he wasn't getting the help that a growing small business needs. He said, “I'm paying significantly more money now, but I'm thrilled”