Need a Job? Make One

Editor’s note: The City Wire has invited David Potts, an accountant with more than 25 years of experience, to provide a series of detailed commentaries on the accounting side of starting and maintaining a business. This is his first in the series.
 
guest commentary by David Potts

I started my business in May 1984. Why? I needed a job so I made my own. 
 
In 1984 the economy was much like it is today. I worked for an oilfield service company when a boom went bust. The company reduced its work force, including me, and I found myself in need of a job. At the time the national unemployment rate was just north of 7.5% and good jobs for a young CPA seemed scarce.

My wife Brenda and I had just moved into a new house, she was pregnant, we were both native to Fort Smith and we didn’t want to relocate. I asked City National Bank for a $25,000 loan and started my practice as a Certified Public Accountant. Twenty-five years later I’m still in business and I like what I do. 
 
Are you unemployed? Do you hate what you are doing and want to try something else? Maybe you need to make some extra money to get out of credit card debt or save for a down payment on a house. Maybe then you should consider starting your own business. 
 
Today the country is in a recession. The national unemployment rate is 7.2%. Fort Smith’s manufacturing plants are laying off workers or closing their doors. Economists are telling us that it’s going to get worse before it gets better. You might think it would be foolish to start a business today? Not necessarily. 
 
The economy doesn’t stop in a recession. Production slows, some people lose their job, and less money is made. But the economy doesn’t stop. Businesses made money in the Great Depression and businesses are making money today. 
 
Small businesses may have advantages in a recession. For example a small business’ overhead may be less allowing it to price its goods and services more competitively making their goods and services more attractive to larger businesses striving to cut costs. In a strong economy it’s hard to find good help; in a slow economy good help is more abundant and more affordable. A small company can adapt to changes quicker
than a large company. These advantages could help your new small company compete against larger competitors. 
 
You reap financial, mental and emotional rewards when you own your own business. What about failure? It is an option. But success in an option too — the better one. 
 
In the next few weeks I will discuss the basics of starting a new business. Should I be a C corporation, S corporation, or Limited Liability Company? What kind of bookkeeping system do I need? What are self-employment taxes? How should I pay my help? 
 
If you have suggestions for future commentary or questions, email me at [email protected]. You can also follow my blog at ThePottsReport.com. 
 
I wouldn’t be fulfilling your expectation of CPAs without a disclaimer, so here it is: The information discussed in this article is of a general nature and no action should be taken without first consulting your own professional advisor based on your specific facts and circumstances.

David Potts is a certified public accountant also accredited in business valuation. Owner of Potts & Company, Certified Public Accountants for more than 25 years, his practice focuses on small and medium size businesses and their owners in the areas of taxation, accounting and bookkeeping, and advisory services. He is a Fort Smith native and a graduate of the University of Arkansas at Fayetteville.