For Small Business Owners & the Self-Employed

Insider Secret:

Insider Secrets for Reducing Your Professional Fees

by Alex Goumakos CPA

In his book, "Think and Grow Rich", Napolean Hill wrote: "No individual has sufficient experience, education, native ability, and knowledge to insure the accumulation of a great fortune, without the cooperation of other people."

In other words, to succeed in business--you need advisors!

It's no secret that highly successful business owners consult with their advisors on a regular and consistent basis. In my own practice, owners who consult with me regularly are much more successful--and get faster results--than those who I see once or twice a year.

Having access to competent legal, accounting, tax, marketing, e-commerce and other expertise is important to help your business grow as rapidly and efficiently as possible.

In fact, a qualified and experienced professional can be worth his or her weight in gold when it comes to your business success.

Yet so few small business owners seek the professional help they need. Instead, many just drift along, making different mistakes and never getting the kind of professional advice and insight that could help put them on the fast track to success.

Of course, as you may already know, hiring a professional advisor doesn't always come cheap. In fact, cost is the number one reason why most small business owners don't seek the help they so desperately need.

If cost is the reason you're not reaching out to the people who could help accelerate your business success, here are some strategies for getting the most out of your professional fee dollars:

STRATEGY #1 - GET ALL COSTS UP-FRONT

Business professionals mainly charge on either an hourly, fixed-fee, or per project basis.

If I had to choose the perfect way to pay for professional fees, I would choose a fixed fee or per project payment option. With these types of arrangements everything is up-front and there are no surprises.

Of course, not every professional works on a fixed-fee or per project basis.

But the bottom line is this: A responsible and ethical professional should give you--at the very least--a projected total cost for using his or her services.

Just about every project or job can be reasonably estimated. If a professional says it can't, then ask them for a "worst case scenario". If they can't even give you that, then they either don't have the experience you need or the integrity you want.

STRATEGY #2 - DO THE LOW-LEVEL WORK IN-HOUSE

You can frequently save hundreds--maybe even thousands--per year by preparing or filing certain, low-level forms in-house.

Examples of these forms are the Employer Identification Number Application, Power of Attorney forms, basic tax notices and other simple documents. Many of these forms ask simple and basic questions such as what is your name, address and telephone number.

Read a form carefully before automatically sending it off to your accountant or attorney.

Another great way to save on professional fees is by doing a lot of the mundane, repetitive and fact-gathering tasks in-house.

For example, don’t hand a box of receipts and bills to a CPA. You will pay dearly--and unnecessarily--for having him or her summarize all the information for you. In today’s computer age, there’s no excuse for not doing your books with software.

Also, consider hiring part-timers or subcontractors to assist with low-level assignments.

For instance, instead of hiring an accountant to summarize your books, hire a bookkeeper instead. You’ll pay a much lower hourly or project rate. The same goes for legal work: consider hiring a paralegal instead of an attorney to do the lower level work.

STRATEGY #3 - DON'T PAY FOR A PROFESSIONAL'S MISTAKE

Professionals--like everybody else--make mistakes on occasion. If your professional makes a mistake, make sure you don't get charged for the time it takes for them to correct the error.

For example, if you get a tax notice because your accountant forgot to staple a wage statement to your personal return, make sure you don’t get charged for the time it takes to resolve the issue.

By the same token, if an attorney or accountant didn't file a form or meet a deadline--and it caused your company to pay a financial penalty or lose out on an important opportunity--make sure you ask them to compensate you for the error.

It's amazing, but so many small business owners never ask for the restitution they're entitled to.

Any professional with an ounce of integrity will do the right thing and reimburse or credit a client for an error they caused.

STRATEGY #4 - KEEP AN EYE OUT FOR BILLING ERRORS

The best way to reduce a professional's invoice is to know what mistakes to be on the lookout for. Here are some of the most common:

• Factual discrepancies. Most professionals track the amount of service they provide in great detail. They record who did what, how long it took and what outside services, if any, were hired on your behalf. You should absolutely do the same. Keep a file or notes of every contact with a professional. When you receive bills, compare your notes with the itemized charges and confirm that you’re paying the right amount for the proper services.
  
  
• Duplication of effort. When you get a bill, inspect who’s working on your project. It should clearly identify the professional--including subordinates, if any--who have accumulated billable hours on your behalf. If several professionals collaborate on your project, you shouldn't have to pay whenever someone new enters the picture and reads your file for an hour or two just to "catch up."
  
  
• Ambiguous descriptions. By requesting that your professionals provide detailed and specific information for each task, you hold them accountable for an even more detailed listing of their time. This tactic decreases the odds that you’ll be incorrectly charged or over-billed.
  
  
• Learning time. Learning time is time the professional spent getting acclimated to your case, industry, or business practices. It also includes learning about a particular tax form, rule, law, statute, method or principle. Learning is great--but I don’t feel business owners should have to pay for the education--at least not all of it. Simply enter into a discussion with a your professional regarding any area where you feel learning time was involved. Ask them specifically what experience, if any, they have in handling certain matters. If it sounds like they don't have alot, you can be sure your bill includes amounts for learning time. Frequently, many professionals will consider a reduction in the bill just because the issue was brought up in the first place. If they don’t, at least you’ll have put them on notice for next time.

STRATEGY #5 - BUDGET PROFESSIONAL FEES

Many business owners don't budget for professional fees and as a result, they use their advisors haphazardly.

Additionally, those owners who don’t include professional fees as a line item in their company's budget have a tendency to view them as excessive and costly. This attitude contributes to the non-use of professionals.

Consulting with a professional is one of the costs of doing business. Be sure to budget this amount just like materials, supplies, office expenses or taxes.

STRATEGY #6 - GIVE YOUR PROFESSIONALS A REGULAR CHECKUP

Don’t get caught into thinking that you have to have the same professionals for life. Many businesses grow a lot quicker than the professionals they hire. As a result, you should make it a point to ensure that your needs are continually being served.

For instance, since there are different issues required for a start-up company than an established one, the professionals you hired in the beginning may not necessarily be the best choice now.

Keep in mind that your company's most expensive professional is the one who can no longer satisfy your company’s needs. Even though you might be paying a low fee, it could be costing your company dearly in the form of lost opportunities.

Take advantage of free consultations to find out if another professional is better suited to handle your needs.