A tag-team tax approach cuts woes, boosts efficiency

With tax time come and gone, many small businesses are probably motivated to pursue new tax year resolutions.

At one extreme, they may be planning to spend more time with their accountants to avoid end-of-the-year messes; at the other extreme, they may intend to buy a complex financial software package and keep the books themselves.

But industry experts warn that either approach by itself is a doomed strategy. Small-business owners, accountants, and financial software manufacturers all say a combination of face-to-face expertise and do-it-yourself programs is the key to accounting success.

''These programs have not eliminated the need for an accounting firm," says Rich Carlson, president of Carlson Communications Corp. in Northboro. ''But they've given us the ability to use the accounting firm's expertise more efficiently."

In the past, Carlson says, small businesses relied on accountants for everything from data entry to invoicing to tax preparation. ''You don't want to be paying top dollar for an accountant to be doing tedious things," he says.

Carlson, who uses Intuit's QuickBooks at his seven-person marketing firm, says his employees do invoicing and bookkeeping tasks while his accountant focuses on higher-level duties such as cash flow projections, job costing, and increasing profitability.

Jim Gilson, president of Partners Coffee in Atlanta, also has his employees cross-trained on the company's financial program, Peachtree for Manufacturers 2005.

''If we had just one person doing data entry, we'd have a bottleneck." He says three people do order entry, inventory control, and monthly financial statements for the 20-person private-label micro-roasting firm.

The sophistication of the newer financial packages has allowed him to save money by reducing the time he needs with an accountant. And, like Carlson, he says the time he does spend with one is more efficient. ''We use the accountant to make year-end adjustments and to do tax returns," he says.

But he warns companies need to closely monitor initial software setup. ''You have to make sure the chart of accounts is done right. I strongly advise getting help to think through how you want your reports to look and how to handle inventory, including numbering and classification," he says. ''If you don't, you end up with numbers and data you can't use."

And information entered poorly leads to wasted time and money with accountants, according to Denise Cataldo, a certified public accountant in Marlboro. ''The information is only as good as it was set up originally" she says.

Cataldo says small businesses can learn what they need in a two-hour session.

''Starting out right can give them more control over their business and help make better business decisions," she says. Accountants can then be used more sparingly. ''Companies might use the software to key-punch their payroll and data entry, then we'll do their bank reconciliations and their quarterlies."

She says software packages allow companies to send their financial information via the Internet to their accountants, alleviating the need for face-to-face meetings.

Even software manufacturers recommend using an accountant on a regular basis. Liz Sophia, senior product manager at Peachtree, says small businesses should ''match their software program to their accountant," making sure the accountant helps them choose the right package for their business.

''Business owners are wearing a million different hats. You need everyone in the company to do as much as they can, and it's hard to dedicate someone full time to the accounting role," she says. But financial programs, used in conjunction with accountants, allow companies to reallocate people from bookkeeping and accounting to more important roles.

If your small business is facing a challenge, describe it to us at smallbiz@globe.com.