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Save Money on Legal and Accounting Fees with this One Super Simple Trick

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As a practicing lawyer, I get to see how the sausage is made.  Like anything else, when you’re around something all the time you begin to take it for granted.  I think that’s why I really struggled to come up with a quick answer when an entrepreneur I recently met asked me for strategies to keep her legal and accounting fees low.

It’s difficult to pick out low-cost providers from a website or word of mouth.  One person’s “cheap” is another’s “outrageous,” and the old adage that “you get what you pay for” usually rings true.

Assuming that we’re dealing with a pool of similarly priced, well-intentioned, and non-socially awkward professionals, how can an entrepreneur get quality service while saving as much money as possible?

After much thought, here is my answer: BE ORGANIZED.

Whether your Startup is being charged on an hourly basis or flat-fee, realize that your attorney or CPA is sizing up the amount of time it will take him or her to do your work.  In other words, Abraham Lincoln’s famous quote that a “…a lawyer’s time and advice are his stock in trade,” still applies even if you’re getting the latest ultra-modern billing arrangement.

Since time is a key component in the calculation of what your startup will pay for legal or tax advice, realize that the best way to decrease your cost is to decrease the time that the attorney or CPA will spend on your matter.  A portion of the time that will be spent is sunk, of course.  But, there is a variable component that is derived directly from how long the lawyer or CPA will need to spend rooting around to find or compile the information necessary to do your work.

To reduce the time this will take, consider the following:

For your Lawyer: (1) Keep your organizational paperwork together including paperwork filed with the Secretary of State for the state where your entity was organized and anything you signed in connection with filing your entity paperwork; and (2) Create separate files for each contract, and keep amendments, extensions, correspondence, and statements of work clipped to the contract to which each document relates.

For your CPA: (1) Don’t use QuickBooks unless you know what you’re doing; (2) If you keep an Excel spreadsheet with all of your expenses and receipts, try to keep everything categorized and provide a brief description of each line item; (3) provide copies of organizational paperwork including shareholder or operating agreements for the CPA’s file; and (4) give your CPA access to your QuickBooks files (if you keep them) or your credit card or bank records.

It sounds simple, but eliminating the amount of time that your attorney or CPA needs to spend combing through your information will put dollars back into your startup.

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About the Author

Clint Costa is an attorney and CPA with the Chicago law firm of Harrison & Held, LLP, working with startups, entrepreneurs, and privately held companies on all manner of official-sounding legal and tax matters. Reach Clint at ccosta@harrisonheld.com or (312) 803-7104.

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