Taxes, accounting, and legal issues present increasingly complex and ever-changing challenges for business leaders who are navigating critical situations such as succession planning.
While many businesses rely on readily available software programs to manage personal and business finances, the first key step in preparing for the retirement or loss of a company’s leader is to find the right outside advisors who can coordinate and manage the changes
In the U.S., 98.6% of all manufacturing companies are small businesses, and the majority have fewer than 20 employees. With so many small and family owned businesses in our industry, it’s common practice to keep all business operations in-house. However, as Jason and Jim discussed in this week’s podcast, certain situations such as succession planning and setting up trusts is best done with the help of outside counsel.
There’s a line in the movie, The Godfather, when Consigliere Tom Hagen (Robert Duvall) tells Santino "Sonny" Corleone (James Caan), “A lawyer with a briefcase can steal more than a thousand men with guns.” This quote is a great reminder that, while a good attorney can do a lot to protect your family and your business, a bad one can dismantle all you’ve built and saved. At the same time, topics such as inheritance and succession can cause rifts among heirs and other complicated situations. For this reason, it is important to find trustworthy, bi-partisan professionals to help you plan ahead for your family and your loved ones.
Throughout my twenty five year career I’ve hired accountants and attorneys on several occasions to help navigate certain situations and, thankfully, I’ve always found good people. Below I’ve listed some questions to help, if it’s time for you to vet a new accountant or an attorney.
Vetting a New Accountant
1. Does this person know anything about manufacturing?
Many accounting firms specialize in particular industries, or in companies of a certain size. When you are vetting an accountant, first find out if they know anything about our industry. Though knowledge of manufacturing is not required, it has been my experience that someone familiar with the way our industry works will give you “more bang for your buck” because they have prior experience with clients who have had to navigate similar financial obstacles, tax situations, and market concerns. Another question you may want to ask is if they are used to working with small businesses. Small, medium, or large -- accounting needs change based on the size and scope of a business
2. Is this person familiar with foreign affairs?
International business requires an accounting firm with global expertise. Not every manufacturing business needs their accountant to be an expert in international business, but if you do work in a particular country then you need an accountant with clarity on international tax codes and how to manage the relationship between the IRS and the foriegn taxation office.
3. How closely does this person follow the news?
Regulatory changes, tax overhaul . . . financial topics are always in the news. Staying in the know is a huge burden for small business owners which is a great reason to hire an expert. But make sure your expert is someone you can rely on. If a new law passes and your accountant doesn’t raise the issue with you, that might be a clue that it’s not a good fit.
4. Did you check this person’s references?
Never disclose financial information to anyone who has not been fully vetted. (Remember The Godfather!) Do an online search, check with the Better Business Bureau, ask for a client list and call around. If you are using a certified public accountant (recommended) check the national and local chapters of the American Institute of Certified Public Accountants, and look for any disciplinary actions taken by your state's board of accountancy. Hiring someone you trust will make it easier for you to start delegating quickly.
5. What is the turnaround time on calls and emails?
Accountants should respond promptly when you reach out, and treat even basic questions with respect. The IRS doesn’t accept excuses for missed deadlines or filing mistakes, and neither should you.
Vetting a New Attorney
There are a few reliable online services to help you find lawyers to meet your needs, and I recommend starting with the American Bar Association. While it is pretty common to do an internet search to find out who is the “best” lawyer in your area, the truth is, as long as a lawyer is qualified in the area of practice you need, the “best” lawyer for you is often the one in which you feel you could establish a long-term relationship and good rapport.
There’s a saying that goes: if you need to find a lawyer then it’s already too late. Obviously that’s an exaggeration, however it speaks to the fact that a good lawyer is one you have built a relationship with over time. Therefore, the first step is to talk to multiple lawyers before making a decision. It may seem like a hassle or waste of time to introduce your company and your needs repeatedly, however comparison will give you a sense of what you like and what you don’t, what type of expertise different attorneys have and, most importantly, how they would approach whatever legal issue or event you are facing.
During an initial consultation, here are some questions you should consider asking to understand how a lawyer runs their practice and whether they are a good fit for you, your business, and your legal needs:
- How many years have you been practicing?
- Who is your typical client in terms of industry and size?
- How often do you handle issues like mine?
- Are there other lawyers in your firm who will be working on my matter?
- What types of fee arrangements are available - flat, hourly, capped, contingency, other?
- Is a retainer required and what is your rate?
- If others work on my project, how much will their rates be?
- What is involved in the project at hand - how long will it take, what information will you need from me, and how many times will we need to meet?
- Will you be my primary point of contact?
- What is your typical response time to clients?
- How do you like to communicate with clients - phone, email, text?
- Can you provide client references who either are like me in terms of size/industry or for whom you’ve done similar work?
One last question that is worth asking or investigating is one I learned from an article in Entrepreneur Magazine: “Are you a finder, a minder, or a grinder?”
It turns out, most law firms have all three types of lawyers. The "finder" brings in new clients; the "minder" takes on new clients and keeps existing ones happy; and the "grinder" does the actual clients' work. If you get the sense you are talking to the “finder”, ask to meet the other lawyers who will be doing the work and fostering the relationship with you. At the end of the day, your success in vetting a good accountant or lawyer will be measured by both the integrity of the work and the relationship you build over time.