As a business owner, you are your own Board of Directors, as all of your major business decisions are made by you alone. This can be a big job, especially because you may be an expert at running your own business, but you are not an expert at everything.

Who do you turn to when you need an expert’s advice?

For many small business owners, the answer is simple; you turn to your accountant or your attorney for help. Is this a good idea? It may be in some circumstances, but there are important caveats for using this advice.

What about my attorney?

Your attorney is probably very specialized as almost all attorneys are. They may be in family law or specialize in personal injury claims. This specialization in the legal field is only going to help your business if you are using the appropriate attorney for the appropriate reason. You should have a business law attorney as your primary counsel, and then employ a more specific attorney if necessary, like a business litigation attorney if you are party to a lawsuit or an attorney who specializes in labor laws for a labor dispute.

What if you want to sell your business?

If you are looking to sell your business, then you will need an attorney who specializes in business transactions.

Why not just use your primary business attorney?

There are a few reasons. First, business transactions require specific knowledge just like any other area of the law, so a business transaction attorney is going to be the most knowledgeable.

Second, selling a business, like all other business related decisions, comes with a bit of risk. The job of your primary attorney is to protect you from any and all risk, so they will likely be forced to advise you against your own business sale because of the inherent risk. Non-transaction attorneys kill business deals every day, deals that would have been fine had the appropriate counsel been sought.

Third, transaction attorneys are more efficient at negotiating and closing business deals than an attorney who has never closed a business deal before. It will mean less billable hours and more money in your pocket if you use a transaction attorney instead.

What about your accountant?

Accountants are different from attorneys because they are typically not as specialized, although you should really use as your primary accountant a CPA who has experience in your particular industry. Your primary accountant should be able to help you organize your financials and prepare your tax returns.

What your primary accountant should not do is give you a valuation for your business, or give you a valuation for any business you are looking to purchase.

Why? Business valuations are complex, and there are accepted methods for preparing a business valuation that an accountant who does not specialize in this field will not know. Typically valuations done by an unqualified accountant leave business owners with unrealistic expectations in the business market. Avoid this pitfall by hiring an accountant who specializes in business valuations.

What’s the lesson? Who’s advice is better, your attorney’s or your accountant’s?

The answer is neither if they are giving you advice outside their realm of expertise. As a business owner, you will need advice, but make sure that it is good advice. Hire a team of experienced professionals, and only use each for what they specialize in. In the long run, it will save you from suffering the consequences of uninformed advice.

Are you a small business owner who has dealt with the consequences of uninformed advice? Leave us a comment or question here, and we will be happy to assist with getting you more informed answers.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com