Venture Capital, the 7 Secrets Your Big CPA Firm Won’t Tell You
Brian Zucker, CPA
August 9, 2016
7 Secrets Your Big CPA Firm Won’t Tell You
About Investing in or Starting Up a Company
Starting up a company and looking for venture capital? Or do you have venture capital and want to invest in the next “unicorn”? Either way, you probably haven’t given much thought to the fees and services charged by big CPA firms to handle your work. That’s because entrepreneurs and VCs view accounting fees as a cost of getting the deal done.
Yet outsized fees can burn through a lot of early VC funding. That’s money that could have been spent getting the business off the ground.
We’ve looked at a lot of start-up deals and corresponding fees over the years and have come away with one simple conclusion: you’re probably being overcharged. That’s because big CPA firms know you aren’t paying close attention.
But now it’s time to start. Knowing these seven secrets of the business will help you to control excessive costs and still get good service.
- Startups don’t need a big CPA firm. When consumers have incomplete information about product availability, quality, and alternative prices, they tend to rely on “brand” names. People assume a name brand is “safe.” However, inside the accounting profession, it’s widely acknowledged that big CPA firms overcharge and underserve smaller clients.
- Ask the big CPA firm to explain its “Memorandum of Work.” Most big CPA firms churn out client work memos without custom-tailoring them. Staffers who have never met you or spoken to you craft these memos. To make up for their lack of knowledge, they throw in everything but the kitchen sink. Make the big CPA sales team explain the need for each item in the work memo and why it costs what it does.
- Who will be doing the actual work? Many big CPA firms charge expensive, partner-level rates for their services. But what are the chances an actual partner will be doing project work? Probably zero. Your “engagement partner” will probably sign off on the final product, but the real work will be done by junior cubicle dwellers. So why pay partner-level prices for staff work? We don’t think you should.
At CFO Financial Partners, along with our parent RRBB Accountants and Advisors, you get partner-level work from actual partners with many years of experience. All of our services are customized specifically to your needs. We assist during any transaction with due diligence and proper tax structuring approaches to ensure your value. Then, once a transaction has been consummated, we provide a full array of accounting, audit, tax planning and preparation, and comprehensive advisory services.
4. Is the big CPA firm really your business partner? Most big CPA firms talk about partnering with you, and they are good about returning your calls. But is that the kind of business partner you need? Someone who simply returns your calls?
When you partner with us, our goal is to be your trusted advisor and confidant. We don’t wait for you to call us. We call you. We keep everyone apprised of what is happening at all times and ensure that all covenants are followed. We monitor the cash and ensure that proceeds guidelines are followed, so that everyone gets paid when they should.
As former auditors, we eliminate most audit problems with complete and accurate audit packages. The result overall is better financial statement and tax return preparation.
- “Only big CPA firms can sign off on financial statements.” Some big CPA firms provide this rationale to win your business, but the statement is false. The Public Company Accounting Oversight Board (PCAOB) oversees the audits of public companies and other issuers. More than 2,000 accounting firms are registered with the PCAOB, including RRBB Accountants and Advisors, our parent company.
- “Only a big CPA firm can provide interim CFO services.” This is one of biggest reasons why startups choose a CPA firm. They don’t have the funding for a full CFO, so they outsource it to a big firm. It’s a grave mistake, because the job of a startup CFO is very hands on.
We understand that you need of financial expertise and business advice but can’t afford the services of a full-time CFO. So we go beyond tracking expenses to provide assistance with budgeting, forecasting, and explaining financial statements. We also cultivate relationships and take care of other responsibilities that involve an experienced financial advisor.
- Big CPA firms and startups: imperfect together. It’s important in the early stages of a business to set up policies, procedures, and processes that enable scalable, repeatable growth. Often there is a lot to organize and not much time to so do. To get around this problem, startups turn to big CPA firms hoping that they can provide streamlined processes. They can if you are a Fortune 500 company.
We focus on startups, so your business benefits right from get-go. Our CPAs and consultants advise you during the entity selection and structuring process. We also consult with you on shareholder agreements, management agreements, buy-sell agreements, and continuity planning, no matter how complex or simple. After your entity is shaped, our startup accounting and tax and advisory services are comprehensive, ranging from business management and bookkeeping to management consulting.
Call us today!
So why settle for off-the-shelf service when you can get partner-level work at a fraction of the cost? CFO Financial Partners, along with our parent RRBB Accountants and Advisors, provides a full range of accounting, tax, due diligence, and a variety of consulting services to startup companies and early-stage ventures. Contact us today for a free consultation. Let us show you how we can add value to your business!
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