by: rick telberg
nov. 30, 2000 (smartpros) ? more and more tax and accounting professionals are finding that getting their piece of the so-called new economy riches isn’t that much different from winning in the old economy.
dot-com companies may seem different than others. but at heart, each of them is a business with basic business needs. that’s how cpa stephen king got started several years ago providing basic bookkeeping services to a host of web startups in new york’s silicon alley. as “the virtual accountant,” king found that his clients wanted to work digitally, mostly by email and eventually directly through the internet. today he’s the visionary behind virtual growth, one of a new breed of accounting service providers.
but most importantly, king found he was mainly providing basic business services to small and growing businesses in desperate need of the knowledge of the fundamentals of business.
just ask jim darragh, cpa at clark nuber in bellevue, wash., and linda gill, cpa at ss&g in cleveland. they told a meeting of the leading edge alliance that they are focusing their practices on dot-coms and finding, with a few exceptions, that working with new economy companies requires many of the same technical and client-handling skills of any small business client.
for instance, the services dot-com companies seem to need most are:
strategic planning,
business plan development,
financial projections,
pulling together a board of advisers or directors,
properly segregating costs between capital and expense categories,
tax issues, such as research-and-development credits, nexus, sales taxes, and electing methods of accounting and depreciation.
legal matters, like entity selection, capital structure, articles and bylaws,
business valuations,
teaching founders the hard facts about dilution in equity financing,
developing or reviewing stock option plans, stock option plan administration, and tax consulting for stockholders and option holders; and
developing overall accounting systems, as basic as selecting software, installing internal controls, and helping to generate management reports.
the risks of taking on any new client are significant, and maybe even more so among starry-eyed dot-com entrepreneurs. so at ss&g, they created special thresholds for these higher-risk engagements. the companies don’t know what they don’t know: they simply lack real-world business experience. they need speedy turnaround and a lot of hand holding. and they can try to get a lot of free advice by shopping from one cpa firm to another.
dot-coms are some of the fastest growing and most lucrative areas at an increasing number of tax and accounting firms. but more than one firm has established at least one ironclad policy every accountant will understand: get paid in cash, up front.