The Trusted Advisor: Accountants advise business owners on tax planning, expansion and more
For many people, visiting their accountant is akin to seeing the dentist: An unpleasant yet necessary task. The only difference is a visit with the accountant only comes once a year (and you don’t get a free toothbrush).
For many business owners, however, the relationship is not at all painful. Instead, it is much more of a partnership. By discussing matters throughout the year, the two can determine the scope of business with a better short- and long-term perspective, consider the ramifications of expansion or selling, and in general set a tone that eliminates the need for last-second changes, panic, or unexpected payments to Uncle Sam.
Here we talk to five different business owners and their accountants about their relationships.
Paul Britten, owner of Britten, and Jim Bauters, CPA and business advisor
The first time he met Paul Britten at Britten’s then small banner shop on Cedar Run Road in Traverse City, CPA and business advisor Jim Bauters saw the potential – and the problem.
“Paul was out on this little platform, yelling orders and cutting vinyl and hand-painting signs,” Bauters recalled about that initial visit 20 years ago.
Britten had heard about Bauters, who was with Follmer Rudzewicz Advisors in Southfield (now UHY Advisors), from an existing Bauters client. He was intrigued enough to pursue a meeting, and thus began a relationship that has helped Britten’s sign business grow to become one of North America’s largest sign and banner companies.
Bauters said he believes a business advisor-business owner relationship delivers two key benefits, the first being focus.
“Entrepreneurs have more ideas than the ability for them to properly fund the ideas with people and financing and stay with idea to the end before they start the second idea,” he said. “Paul is very brilliant, but the biggest problem with closely-held business owners is don’t have anybody to serve as a sounding board on all those ideas.”
Britten echoed the value of the input.
“He cares about my business as much as I do instead of just pocketing as much as possible in fees,” Britten said. “It’s always my final call, but Jim always has snap answers for me with our long-term growth in mind.”
Bauters also pointed to helping his client rise above administrative tasks yet learn important lessons from the company’s operations.
“During those early years I had zero experience on the financial and administrative side,” said Britten. “I was a designer and craftsman. Jim came in and made me promise I wouldn’t be running screen printing presses. Another time he actually made me put a padlock on a dumpster; the only way to use it was with me holding a legal pad writing down and understanding how much waste we had and where it came from and why. Very basic things but I had never thought to do.”
Speaking of dentists, when Dr. Brian Klym got an emergency call from his financial advisor (she’d lost a crown), he didn’t have far to go. He was cutting the grass at his office. When his advisor arrived she told him he shouldn’t be doing that. Klym said he was trying to save money. His advisor suggested he meet with Jennifer Christopher. After looking through his books, Christopher told Klym she could get him a refund of $10,000. “And she did. She’s very smart,” said Klym.
Christopher said they have now been working together for nine years. “I meet with him several times a year to make sure he’s in the best place (financially),” she said.
Christopher said she works with Klym to provide expertise and guidance in areas involving his cash flow. “He’s into the latest dental technology. He wants to be on top of things with the latest equipment,” she said. If he asks if he should buy a new piece of equipment, she can tell him what it will save in taxes. In effect he could end up purchasing something at a 40 percent discount.
Klym said his biggest takeaway from his relationship with Christopher is that one should hire experts to do what they’re experts in. “Trust is huge. Our tax code is so complex you need an accountant that is up to date and knows what’s legal. You can be set back if you don’t.”
As an example, he tells of his father, who was a dentist in Detroit before moving north. “His accountant got him and others involved in loopholes,” he said, getting him to invest in a chinchilla ranch and a pistachio farm, among other ventures. “He lost a lot of money,” Klym said ruefully.
Blaine Ackerman, owner of Kwik Print, and Vernon Lalone, CPA at VDL Certified Public Accountants
Lalone and Ackerman first met as parents of students at Elk Rapids schools. Lalone became a customer at Kwik Print as well, and when Ackerman found himself looking for a new accounting firm, he turned to his friend. They’ve now been working together for over 15 years.
Ackerman and Lalone both say a key to their partnership is communication. That means talking more than once a year at tax time, which Ackerman said was previously the case. That could mean it’s too late to do anything other than pay a hefty tax bill, and foregoing other business or personal opportunities.
“I’ve used three other (accountants), and they were all great, but Vernon talks to me,” said Ackerman. “We keep in close contact.”
For his part, Lalone says the two share traits that make the relationship work. “Service is my forte, and Blaine’s as well. He’s a great guy, client, and business owner,” he said.
Ackerman said for him the best thing is the total confidence he has in Lalone’s judgment as to what is proper and legal and what isn’t. “The relationship hinges on me not having to have any gray areas. He doesn’t tolerate any gray areas himself, and I like that. If the IRS would audit me I’d never have to worry about anything.”
Ackerman said having a good CPA is a must, and that working together throughout the year is a key. That way Lalone can guide Ackerman in telling him when to spend money and when not to. “He can see a problem in the books I can’t,” Ackerman said.
For example, last year Lalone suggested Ackerman buy a new piece of equipment. While it wasn’t essential to his business, it did make things easier, both in terms of his service and in what he owed the government. “I cut my taxes by two-thirds. This guy is a partner in my business.”
Chris and Jim MacInnes, owners of Crystal Mountain Resort, and Ken Doud, CPA at Rehmann
Crystal Mountain owners Chris and Jim MacInnes say they work people and firms they see as the best match for what they need. That includes Ken Doud and Rehmann. “We try to engage with people we trust, experts in their field,” said Jim. “Taxes, for example, are very complicated.”
They previously worked with Doud before his company merged with Rehmann, and continued to do so. “We like the way they do business. They’re honest and trustworthy – they don’t shoot from the hip. They either know it or they find out,” said Chris. That is a key to the relationship from the MacInness’ perspective. “Not only do we appreciate what they know, but we respect consultants who understand what they don’t know.”
Doud says working with the two and their staff is a pleasure for him because of the clarity of their approach. “The have a great idea of what they want to do and are extremely well-organized,” he said.
“That’s how we do a lot of work,” agreed Chris. “They know the principals and we know what we want to do. It’s a back-and-forth approach. It’s not who is right but what is right.”
“It’s extremely important to have a advisor, and to know what each side is doing,” said Doud. “Running a business, especially the size of Crystal Mountain, is complicated.”
The MacInnesses also worked with Rehmann on creating a Human Capital Master Plan. That part was headed by Rehmann’s Heidi Bolger, assisted by other Rehmann staff and the top management staff at Crystal Mountain. “We brought in key managers,” said Jim. Together they determined both the needs of the resort and the staff’s skills, enabling management to plan for the future.
Frank Lerchen, owner of the Village Inn and Joe’s Friendly Tavern in Empire, and Shaunna Bradford, CPA at WB CPA Group
When Frank Lerchen bought the two Empire restaurants from Mike Wiesen 10 years ago, along with the businesses and equipment he got a bonus: CPA Shaunna Bradford.
He said the stereotype of an accountant being dry and dull doesn’t apply here. “She’s fun-loving. We get along really well. When I go to see her, I talk to her like I talk to anyone else,” he said.
While the two may only meet a couple times a year, Lerchen said they speak frequently on the phone. “Shaunna’s really good at teaching me to remember timelines. Doing taxes and books is the furthest thing from my mind, from what I want to do,” he said.
Bradford said Lerchen’s attitude is a key component of their relationship. “He’s appreciative of my comments and recommendations. I feel I can provide assistance how best to approach (things),” she said, such as whether to spend money to take advantage of special depreciation or other options to save taxes.
Bradford said the trust implicit in their relationship is of paramount importance. At times she’s decided not to work with potential clients she didn’t trust to tell the truth about their business. “Accurately reflect(ing) the operation on their tax return – that’s part of my responsibility,” she said.
They agree their ability to be honest and open about financial matters is what makes things work. “There’s not a business person who likes to pay taxes,” Lerchen said, which can lead to friction. For these two, that simply doesn’t happen. “It’s been such a calm relationship.”