By Mandy Cao
For Northwest Asian Weekly
We all know that starting up or running a business in an unstable economy is not an easy task. Contrary to what we would expect, start-up and smaller companies are less affected by economic downturns than large companies with big, rigid infrastructures.
Smaller companies — in particular those that are operating in the environment of a close-knit community such as the International District — are not as seriously affected by the state of the economy. These businesses’ close relationship with the community allows them to maintain personal contact with existing clientele while gaining new clients. As large, inflexible companies get battered, small companies are more flexible and able to quickly adapt their business policies, their prices, and their marketing campaigns to meet the continually changing demands of their customers.
Though we can’t completely ignore the state of the economy, as both consumers and investors are feeling pinched in hard times, it is not necessarily a problem if customers become more price conscious. This might actually create an opportunity for small businesses to offer products and services that add value and save the customers money.
There remain, however, two big obstacles that can affect small companies faster than larger corporations. Running out of revenue is one of the obstacles that result in the immediate death of small companies.
Successful entrepreneurs of small organizations must be hyper-vigilant about controlling start-up and operating costs. They make their companies recession-proof by running them as efficiently as possible.
The other main obstacle is created by the fact that most entrepreneurs tend to neglect the administrative side of their businesses. In most start-up and small companies, there is a strong desire for entrepreneurs to be in total control of their operations, but they neglect to account for the day-to-day administrative and back office duties.
Millions of people have lost their jobs during the past 12 months. Income tax revenue dropped 44 percent from last year. Studies by the American Institute for Economic Research say that the present drop in federal and state revenues has been the biggest since 1981.
As a result, all government agencies have increased their efforts in collecting their funds in time. This also means finding additional revenues in the form of interest charges on overdue accounts and heavy penalties on those companies that neglect their duties to file and pay their dues accurately and in a timely manner.
The way to accomplish this is to dramatically increase the number of audits and investigations in the months to come.
The budgets of small companies often do not allow for the hiring of full-time staff members. Entrepreneurs are faced with an obstacle. They can neglect their operations and concentrate on office duties themselves, at the risk of losing some control of their businesses, or they can find a reliable and professionally qualified partner that can provide the services that are needed. Unlike a full-time employee, an outside helper is paid only when needed.
In today’s market, we can’t just hire a bean-counter accountant or a service provider. Today, the ideal partner is a company that has many years of practical experience in understanding the mentality of entrepreneurs and is experienced in dealing with smaller companies. In addition to providing professional expertise in keeping your books and filing your taxes, outside helpers can become reliable partners in dealing with all aspects related to the administrative side of a small company.
It’s best to find a partner that is also the owner of a small company, who is familiar with the way business is conducted in ethnic and bilingual communities, and who understands the daily struggles entrepreneurs are faced with. ♦
Mandy Cao is an IRS Enrolled Agent (EA) and a certified accounting specialist. She is also a member of the National Association of Enrolled Agents (NAEA) and the Washington Association of Accountants (WAA), and she is a certificated QuickBooks Pro-Advisor. She is the owner of YMC Tax & Accounting Co. in Tukwila. For more information, visit ymctax.com.
Mandy Cao can be reached at email@example.com.