Are you planning to start a business? Then you have probably given at least a passing thought to the bookkeeping and accounting part and what the IRS will say and do to you if you do it wrong. Yep. If you do it wrong, you will have to do it right and may have to pay a fine, so do it right the first time!

Some business start-up consultants say "Use a CPA" while others say "Hire a bookkeeping firm." Others may recommend a computer package and still others say, "Buy one of those newsstand record-keeping books and do it yourself." Each of these has a place in business, and one of these methods of keeping records is best for you at the stage you are in.

From working with entrepreneurs of all sizes I find the largest single cause of business failure to be poor top-level management; and of all of the tasks of management, poor record-keeping causes some of the biggest challenges and often results in spectacular business failures. You have to know what is going on in your firm to make rational and appropriate decisions, and your accounting system is one place to find answers.

The confusion regarding system selection is understandable. The advice from friends is all good, so long as you keep in mind that the goal of record-keeping is to help you profitably run your business, not just serve as a reporting tool to the IRS.

Your main concern should be whether the system you select permits comparison of your business with other businesses in your industry. For example, if successful competitors spend an average of 11.6 percent of their income on advertising, this should be your goal as well. You may not reach this in year one, but it is a goal. You need the same comparisons for inventory, sales persons, back-office help, and everything else. Whether you use a newsstand record-keeping book, a computer package, an accounting firm, or a CPA, you must have the ability to compare your operations to others in your business. Here are four aids to help in your selection:

BUSINESS & INDUSTRY ASSOCIATIONS
Your business or industry association may have a sample business structure and chart of accounts which has worked for others. If you are not an association member, this alone may be a good reason to join. Most associations provide other valuable services such as collecting statistics, holding meetings, conducting seminars, and hosting industry workshops.

If you can't find your association, check the Encyclopedia of Associations, published by Gale Research Inc., Detroit. This excellent book of thousands of associations can be found in many libraries.

TRADE MAGAZINES
Look in your industry trade journals and magazines for the names of computer vendors and accounting firms specializing in your business. These firms have often been serving your industry for years and have developed comprehensive accounting packages which provide most or all of the comparisons you need. If none are listed, call the editorial desk of the magazine and ask for the names of companies who have advertised in the past year.

COMPETITORS
Try asking your current or future competitors about their accounting services. If the people in your immediate area don't want to talk with you, try those in neighboring cities or states. Even though many of these may have some in-house staff and probably have changed systems several times as they grew, they can certainly tell you the factors that went into their decision. You may find a common denominator of computers, software, or other services.

CPA FIRMS
CPAs have higher duties to you than just keeping records. One duty is to provide you with the financial tools to help manage your business profitably. A CPA familiar with your industry can set up your books, provide you with management reports, and aid you in your decision making. Many CPA firms will work with accountants, bookkeepers, computers, and newsstand record-keeping systems to help you keep the cost low.

KEY BUSINESS RATIOS
While you are in the library checking on other things ask to see the Dun & Bradstreet Key Business Ratios Book. This is where you can find the percentages we mentioned earlier as well as several ratios that will help you stay on track. (NOTE TO EDITORS: PLEASE INCLUDE THE FOLLOWING.)
Paul Tulenko, Ph.D. is a Small Business Success Consultant based in New Mexico. Additional tips and suggestions are available at www.tulenko.com or call (toll-free) 1-866-TULENKO.