Rimberg Online Bookkeeping

Two years ago, I was recommended by a long time client and friend to a family member that owned a business. The first meeting took place in a very expensive attorney’s office in midtown. The attorney was discussing Chapter 11 and present were my prospective client, her comptroller and the business CPA, who was known as an “expert” in the industry.

The CPA presented the most current financial statements which were from March 2006. The prospective client owed big bucks to the IRS, NYS Sales Tax and the Labor Dept as well as hundreds of thousands of dollars to vendors. The attorneys and the CPA were recommending bankruptcy, even though Chapter 11 is very expensive. Two hours into the meeting the prospective client pronounced loudly, “Rob, you’ve been sitting there for two hours and you haven’t said a word, what do you think?”

I asked why we were looking at March 2006 numbers in July 2006 and trying to make a determination as to the future of the business. The CPA had a perplexing look. “Well, it takes a long time to prepare financials. We have been requesting information and not receiving it in a timely manner”. The Comptroller then stated “You have no idea what that office is like. My three assistants and I work day and night and are always behind. There are not enough hours in a day.” Clearly they were overwhelmed and not handling things very well.

They had a good core business that had been neglected and what they didn’t have was a plan of attack. So they hired us and we implemented the following action plan:

1. We fired the comptroller who was a high strung individual that was there for many years
2. We contacted the government agencies and negotiated payment plans
3. We worked with the assistants in how to close a month quickly
4. We were able to present internal financials by the end of the following month
5. We set up a system whereby the company paid all of their bills COD. This allowed us to match current expenses with current revenues.
6. We set up a budget with weekly cash flow projections, this included targeted dates when we would get out of the “trick bag”

And the beauty of this, we did it all remotely at an amazingly low cost to the client. Today this client has a positive cash flow today and is well on their way to being financially sound.

The moral of the story? Businesses can be turned around. It just takes the right team, the right systems, and a solid plan. Sometimes, it takes letting go of key people if they are part of the problem. Look at your staffing and see if you need to make changes.

And if you know of a business that could use our help, give me a call.

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Accounting and bookkeeping expert, Robert Rimberg, CPA and President of Robert Rimberg and Associates LLC, is known for creating simple solutions to help small to mid-sized companies achieve success. Rimberg founded Rimberg and Associates LLC, an accounting and bookkeeping firm, in 1985 to help a broad range of businesses from different industries effectively grow their businesses.

In addition to his business, Robert enjoys golf on the weekends, involvement with his synagogue, a good cigar, and time with his family.

(c) copyright 2009 Robert Rimberg. All rights reserved.
Email: Robert@Rimberg.com, Office: 914-376-1111

WANT TO USE THIS ARTICLE IN YOUR E-ZINE OR WEBSITE? Please do! Feel free to reprint this article on your website, own newsletter or message boards as long as you include the following resource information:
(c) 2009 Robert Rimberg. Request a free copy of the special report, “Learn how to read your financial reports to track your success, prevent mistakes, and find out what all those numbers really mean!” by visiting RimbergOnlineBookkeeping.com

You might have heard about Aliens vs. Predators. They are two different species from two different galaxies. In the accounting world, it can sometimes seem like that as well, and since I’ve had clients recently ask me what the difference is between bookkeepers, accountants, and CPAs, I’ve decided to write this article to show you the differences and also point out what to look for when you hire one.

Bookkeeper - Is just that, a keeper of the books. It helps if this person is meticulous and very organized. A bookkeeper should know QuickBooks software cold, know how to do bank reconciliations and have a very good knowledge of “where things belong.” They need to know the differences between the following:

1. Assets
2. Liabilities
3. Income
4. Expenses

If your bookkeeper doesn’t know which is which, you won’t know if you’re making or losing money.

You may only need a bookkeeper if you have an accountant, and then the accountant or CPA would take it over from there. You may have a bookkeeper and the CPA will fill in the gaps from where the bookkeeper left off.

So how would you know if your bookkeeper isn’t a “keeper” as we say? If they are disorganized! The tell tale signs are a desk that looks like a bomb hit it, with papers all over the place. Their appearance may be quite disheveled. When they are making a collection call, there is a proper way to handle that. Remember, the person is speaking to your customers and is a reflection of you. How do you want the outside world to perceive you and your business?

Another thing to factor in is accessibility. If the person gets hit by a truck, do you know where everything is? Is the person computer savvy? There are a number of bookkeepers who are very old school. “This is the way it was done, and the way it always has to be done.” That might not serve you as there is so much new technology around.

Be on the lookout also of having the same person doing everything. For example, if your bookkeeper is preparing checks to be signed, another person should be signing the checks, not the bookkeeper. The bank reconciliation should be prepared by a third party. This is designed for your protection, We’ve all heard stories of business owners being blindsided by thievery and so just be aware to have different people doing these various functions.

Accountant- Besides knowing what the bookkeeper knows, which by the way, most accountants don’t, the accountant should know what the financial statements mean and be able to explain it to you in a way that makes perfect sense.

This information on what’s happening in your business should be used by you to make the business more profitable.

When you choose an accountant, (see all the negative things about the bookkeeper, and multiply by two), you have to be much more careful! Why? Because if the accountant is responsible for deadlines, payroll taxes, sales taxes, estimated payments, these things are time sensitive. If these deadlines are missed, you could be looking at large dollar penalties and interest charges, so you have to notice if the accountant waits for the last minute, because then you have a problem.

CPA- These folks should know what the bookkeeper and the accountant know and should be able to prepare the financial statements so that it can be used by investors, potential buyers, banks and lending institutions. Most CPAs have a pretty good grasp of what is right and wrong in the eyes of the Internal Revenue Service.

The question I want you to ask yourself is, “Is my CPA making money for me?” If the answer is no, what do you need him for? Very few CPAs are savvy business people. They understand taxes and financials but don’t understand how the business side of things works. What new business ideas does your CPA supply you with?

Remember, you get what you pay for. If you have a guy you are paying $500 a month to and at the end of the year he prepares your tax return, what you have is a $6,000 tax preparer. If you are paying $2,000 a month and all the guy does is prepare your taxes, go hire the $6,000 preparer–it’s a better deal.

How does a CPA make you money? If your business is successful, how can it be more successful? A CPA should have the ability to analyze the business and tell you what you are doing right and wrong. If you are doing everything right, do nothing and stay the course. Not doing so well? Ask why. What changes have to be made to turn the business around?

When things are going poorly, what people look to do is cut back on expenses…but you should ask, “Am I getting what I am paying for?” You may be better off by hiring a very expensive CPA who will do something versus someone who’s not going to do anything.

At Rimberg Online Bookkeeping we have expert Bookkeepers, Accountants and CPAs. We work with you to make sure that you know where you have been, and where it is you are going. As our motto says, it’s “Our Solution, Your Success.”

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WANT TO USE THIS ARTICLE IN YOUR E-ZINE OR WEBSITE? Please do! Feel free to reprint this article on your website, own newsletter or message boards as long as you include the following resource information:

(c) 2009 Robert Rimberg. Request a free copy of the special report, “Learn how to read your financial reports to track your success, prevent mistakes, and find out what all those numbers really mean!” by visiting RimbergOnlineBookkeeping.com

Is your business protected?  Are you keeping the maximum amount of money in your pocket?  I’ll give a few suggestions here that you can do right away.

1. The maximum Code Sec.179 deduction is $250,000 for tax years beginning in 2008. That means that if you purchased equipment for your business you can expense the entire amount up to $128,000 this year, amounts above must be depreciated. Transportation, Equipment, Leasehold Improvements and Real Estate do not qualify. If you need equipment that will make or save significant money for your business, purchase it now, as opposed to waiting until next year. Financed purchases qualify.
2. If you are sitting with money in a money market account and you have debt- pay down the debt. This is the equivalent of a guaranteed return on your money.
3. Buy Sell Agreement- If you are in a partnership- Do you have one of these agreements? When was the last time it was updated?  You don’t want to be caught with a problem because this wasn’t in place.
4. Estate Planning- When was the last time your will was looked at? Do you have a living will? Does anyone know where to find it, in case of an emergency? You have family heirlooms that you want to give to your children after your gone? Make the list now, and be specific. Don’t rely on your children to “do the right thing”.
5. Exit Strategy- Do you have one? If your business is all about you, what is it worth? The best business plans involve building a business that does not require you, in order to run it efficiently. Without you in the middle, the business is worth a heck of a lot more.

Stay tuned for the next post when I share more tips.

Robert Rimberg, CPA