SoHo issues for small firm CPAs: big company techniques for handling small company growing pains.

Executive Roundtable:

How long has your organization been serving CPAs and small businesses, particularly those working in the small office/home office (SOHO) environment?

(CINDY BATES, MICROSOFT) Small businesses and the CPA community are a top priority for Microsoft[R] and we are committed to delivering solutions to meet the unique needs of these segments. We've served small businesses and CPAs almost since our inception 30 years ago. We've done extensive research, including hiring numerous social scientists and anthropologists in an effort to understand how small business customers work so that we can design products and services to better meet their needs.

(WALTER TUREK, PAYCHEX) Since Paychex was founded in 1971, the company has been focused on serving CPAs and small businesses. Because a small business owner's CPA often functions as his or her CFO, Paychex has always believed that partnering with CPAs is valuable to all parties. CPAs offer value-added services to their clients, and Paychex handles payroll and human resource services, which allows CPAs to focus on more income-producing functions and on serving as a consultant to their small business clients.

What key trends are you seeing today in the SOHO environment?

(TUREK) At Paychex, we are seeing dynamic growth in the number of new business openings--with a significant number of them in the category of five or fewer employees. As one would suspect, a number of them are in the small office/home office environment. The entrepreneurial spirit in American business lends itself to encouraging individuals to pursue employment in this environment.

(BATES) I think of this period of time as the small business technology revolution. What we're seeing today is akin to the productivity increases that resulted from the Industrial Revolution. The solutions that, a decade ago, were only available to the largest companies for millions of dollars are now available to small businesses for very affordable prices. And they're available with easy-to-use interfaces, bringing powerful control of information to small business owners. The power of a simple server, centralized data and tools to access that data is available today and small business owners can act on it intelligently.

How are SOHO businesses working differently today than they used to?

(BATES) The digital work style is really becoming mainstream in the United States and the imperative for businesses, both large and small, is to be able to use information in better ways. Software is stepping up to the challenge, but it needs to be simple, particularly for small businesses. A small business isn't likely to have an IT person on staff. To be most productive, a small business does not want a patchwork of different pieces of software that don't integrate simply and seamlessly.

(TUREK) The scope of issues that comes with running a small business today is broad--ranging from payroll to retirement planning to tax risks--and necessitates that CPAs be broadly knowledgeable. In the role of trusted adviser, CPAs are optimally positioned to help their clients.

Why do you think CPAs are optimally positioned today to help clients with small business issues?

(BATES) We all recognize the important role that CPAs play as key business partners and trusted advisers to small businesses. Their unique role makes them in many cases the ideal person to support their clients across many areas of their business. CPAs' role today has expanded to go beyond accounting and tax advice, and now includes business consulting aspects, such as strategic planning, technology recommendations and in some cases, personal financial planning.

(TUREK) The CPA is the trusted adviser to Small Business America. Yet, as the business of doing business grows more complex, the role of the CPA as adviser to the small businessperson gains in complexity as well. Small business owners have to know they can depend on their trusted adviser to provide accurate and up-to-date information, so that the business owners, in turn, can make the best, most informed decisions for themselves.

Why is now such an important time for you with respect to the SOHO environment?

(TUREK) One word comes to mind: growth. At Paychex, we have seen significant growth in the SOHO demographic--not just growth in the business itself, but growth in the scope of a business's needs. As the role of the CPA becomes more and more one of CFO, the CPA must have the tools and resources he needs to help his clients engineer and manage their growth and cash flow.

(BATES) There is a significant challenge to small businesses that see technology as a burden rather than a tool for growth. Our research shows that small businesses that embrace technology are growing on average 12% a year versus small businesses overall that are growing at about half that rate.

Our reader surveys indicate that time management, equipment breakdowns, IT security and lack of support staff are top concerns for SOHO businesses. What are the main challenges you are seeing in the SOHO environment?

(BATES) In addition to those you mentioned, Microsoft research shows that small business needs and priorities include improving overall productivity and utilizing technology to cut costs. Through our products such as Office Small Business Accounting, Small Business Server, CRM and of course the Microsoft[R] Office System and Windows[R] operating system, we provide small businesses with the ability to integrate their business processes, better collaborate with employees and customers, gain insight from their data and enhance security.

(TUREK) An important challenge for business owners in the SOHO environment is strategic and tactical planning: Where is the business going to be in the future? By serving our CPA partners with the best possible services, they in turn can assist their clients with things ranging from the budget process to managing growth to developing an exit strategy when the need arises.

Looking three to five years ahead, what additional services do you expect to be offering CPAs and their small/ mid-size clients?

(TUREK) At Paychex, we will continue to look for ways to assist small businesses and CPAs in navigating the relationship between employers and employees. The services that we believe will be of great interest to them include identifying ways to plan for retirement--for clients and their employees; providing education about labor laws; and maintaining compliance required for the time and accurate filing of payroll and taxes.

(BATES) CPAs tell us they want their small business clients to have products that are easy to use and have increased security. They've also told us we need to provide CPAs with the tools and support to help them better serve their clients. So recently we launched the Microsoft Professional Accountants' Network (MPAN) which offers 27 hours of online CPE training on Microsoft[R] Office Small Business Accounting and we expect in the near term to offer certification.

Can you share an example of how your solutions have helped a small office/home office enterprise?

(TUREK) Sure. After Julia had her first child, she realized that the best professional path for her to take was to leave the marketing/ communications job she had with a local printing company and strike out on her own. So, she started her own public relations operation, working out of her home. Julia quickly learned that her skills in writing and developing publicity campaigns didn't leave her time to make sure she understood and met her tax obligations as a business owner. After consulting with her CPA, she signed on with Paychex to take care of her payroll needs--freeing her to focus on building her client base.

(BATES) Konrad and Phyllis Haskins built Teddy Bears BBQ, an award-winning business marketing barbeque products and related services such as catering and cooking classes. Behind the scenes, however, they struggled with basic business tasks because of poor integration between their accounting application and their Microsoft[R] Office programs. To solve the problem, the company replaced the accounting application with Microsoft[R] Office Small Business Accounting 2006 and Microsoft[R] Office Outlook[R] 2003 with Business Contact Manager Update to integrate critical business and customer information, As a result, they have reduced the time spent on important business tasks by more than 80 hours a month, freeing up time to build stronger customer relationships and even better sales. Here's what Konrad shared with us recently: "We used these tools to identify our very best customers. We created 25 gift certificates for those customers, and within a week of sending them out, we garnered $25,000 in new business."

If JofA readers would like more SOHO case studies, they can visit us on the Web at www.microsoft.com/office/accounting/prodinfo/casestudies.mspx

Going SOHO: The Challenges of Staying Connected

by Rick Telberg for AICPA Custom Media Solutions

Do you take work home with you? If so, you're not alone. About half of all CPAs work in a home office or work full-time in a small office. Marketers call it the SOHO--small office, home office--trend. Accountants see it either as freeing, burdensome or, sometimes, both. Still, working at home, from a remote location or in a small office is a growing reality for the profession. It poses all sorts of new challenges and strategies to work successfully for employer and employee, practitioner and client, But it also brings benefits, according to CPAs surveyed by the AICPA's CPA Insider[TM] E-newsletter staff on the growing SOHO trend. More than a third (34%) of CPAs reported toiling at least 20 hour per week in a home office/small office with 27% working exclusively in a SOHO office. Themes of pioneer spirit and self-determination were apparent in the positive survey feedback we received from CPAs who are working primarily from home. The most often-named benefits of 'going SOHO' included convenience, flex-time, cost control and fewer interruptions. Underlying these benefits was the challenge of self-discipline:

--Keeping current with all your responsibilities is essential.

--It's harder to maintain that professional attitude and ambiance from home, but necessary if you are going to be professional.

--You need to stay focused. Discipline is key. (See Table 1.)

Staying Connected is a Personal Responsibility

Just over half (51%) of CPAs identified "isolation from peers" as the most challenging issue in working SOHO. It is "more difficult when it comes to communication, building alliances, trust and camaraderie," according to one respondent. The answer to this challenge, according to another SOHO-based CPA was "Be sure to maintain your professional contacts; go out to lunch with colleagues and attend professional meetings/conferences to maintain contact."

Our research revealed that 84% of CPAs expect the work-from-home trend to be more prevalent in the years to come. With the trend seemingly headed this way, we asked, "What advice would colleagues give about working at home?"

Smart management of time and self and work/life balance were keys:

--Set up a good home office.

--Keep work and home separate.

--Don't mix business with pleasure or family affairs.

--Make your work hours known to others.

--I would encourage more employers to offer this option, particularly to women who have much to offer the accounting field but need to balance work with home. (See Table 2.)

Essential to Your Success: The Right Tech Setup

A close second to combating isolation among challenges faced by CPAs working SOHO, is ensuring the right technology setup. It boils down to this: CPAs need help in getting the most out of their current systems and integrating one system with another. When it comes to integration, Ralph Mooney, CPA, of Mooney & Thomas in Aurora, Ill., says his firm suffers "a real productivity drain" from working with multiple databases. "Whether the issue is porting client data between applications or making a change of address only once, we could really gain with effective integration," he says.

Joe Eckelkamp, CPA, head of a St. Louis firm, longs for technology that will let him share information between QuickBooks, Microsoft Outlook and his tax prep software, among several other applications. Joseph A. Bongiovanni, CPA and chief technology officer of super regional J.H. Cohn in Roseland, N.J., wants the same capability for his firm's many more applications in order to get real time information to all management levels.

The field of vendors developing software for accountants has dwindled to a handful from almost 100 in the past 20 years, but CPAs in public practice and business and industry are still clamoring for the same thing they asked for in the 1980s--integration between the many products and of all the data that they handle. (See Table 3.)

Make It Simple--But Make It Better

Fast forward to the 21st century, when a different breed of vendor is rolling out new paperless office technologies. Practitioners are panting for paperless, but many feel they lack the internal resources to begin moving to electronic everything.

For Anthony M. Moschella, a business and industry CPA in Maitland, Fla., his technology wish list features "combining multiple products with multiple codes into one cohesive graphical user interface." Another business and industry CPA, who asked not to be named, longs for "seamless technology without the extra time it takes to maintain it."

Not surprisingly, when asked about the technology solution they were most interested in, a notable majority of CPAs answered 'the paperless office'. Paperless was cited by 69% of CPAs from all fields combined--including 80% of those in public practice. Integration ranked second, cited by 52% overall.

Judy Lynn Scott, CPA, a small firm practitioner in Houston notes that combining data integration with a paperless office adds up to "increased efficiency and productivity." Indeed, going paperless is creating just as big an accounting buzz as integration. Beyond just eliminating clutter and the need for filing cabinets, many practitioners feel that paperless operations will be the best way to ensure quality client service. But some fret they don't have the resources needed. "I am interested in learning how to do a paperless audit without having the focus shift from the actual audit procedures to the scanning in and linking of documents," says Tim Van Cleve, a senior member of a firm in Knoxville, Tenn.

Among the many other CPAs longing for technology and the technical assistance to speed their access to client files, Steven Scribner, CPA, of Olean, N.Y., says he's tired of "the time wasted trying to find information stored in a paper file somewhere." Adds Andrew Pfau, CPA, head of a small firm in Jericho, N.Y., "While I would love the benefits of being mostly digital, I don't have the staff available to spend most of their time scanning, storing and returning client records."

Pfau sees paperless as "an absolute must" for larger firms with the resources available for conversion. "The real benefit is not the savings in paper and storage, but in the ability to service customers faster and more effectively and the ability to be extremely mobile while having total access to all files," he says.

"Serving customers." Isn't that what it's all about? (See Table 4 for a profile of CPAs working SOHO.)

About the Study

This AICPA Custom Media Solutions report was undertaken to analyze what is top of mind regarding the SOHO trend among AICPA members in public practice, industry and the government, academic and non-profit arenas. Nearly 3,000 members responded to a flight of online surveys conducted by the Bay Street Group LLC in conjunction with the AICPA's CPA Insider[TM] weekly E-mail newsletters in October of 2005. Some 1,554 respondents completed their surveys. Their responses represented a cross-section of the AICPA membership. Respondents were invited to provide additional comments and were assured of confidentiality. No advertisers or sponsors contributed to the survey questions, deployment mechanism or tabulation process. Respondents received no premium or other incentive to complete the surveys, other than the opportunity to receive advance copies of the summary results prior to being published.

This report was prepared expressly for the Journal of Accountancy by AICPA Custom Media Solutions, which is solely responsible for its content. Copyright 2005 AICPA. All rights reserved, except where otherwise noted.

Making Flextime Work by Linda Bergen

Excerpted with permission from the Journal of Accountancy September 2005

Susan Coffey and Arleen Thomas, the first women to be promoted to senior vice-president at the AICPA, both make use of flexible work arrangements (FWA). With two young children each, Coffey and Thomas have used the AICPA's telecommuting program and work two days a week from their home offices.

Using FWA saves Coffey about two-and-a-half hours and Thomas about one hour of commuting time each day--time they can spend on AICPA work or family activities. Coffey is vice-president of member quality & state regulation, a group that has 50 people and covers professional ethics, peer review, audit quality centers and state regulation and legislation. Thomas was promoted to senior vice-president in 2005, heading the member competency and development group whose 243 people are responsible for developing professional standards and member guidance and organizing the CPA exams, conferences and training programs.

Coffey says the FWA program helps her manage her time and focus on work. With a separate office area set up at home and telecommunications access to in-office facilities, she says she is more productive working at home and also has achieved a work/life balance that allows her to work in the school library and attend school events.

Thomas coordinates with her husband on work and travel schedules. She has dinner with her three- and five-year-olds every day and plays with them until 8:30 p.m., when she goes to her home office to work again. Thomas says she is fortunate never to have missed a school event.

Barry Melancon, president and CEO of the AICPA, believes in retaining talented people and helping them achieve work/life balance. His belief is: Balance everything so you can be good at anything. The AICPA measures success on output, not input, and FWA fits in with this philosophy.

Linda Bergen, CPA, is Vice President, Corporate Accounting Policy at Citigroup, New York. How to "excel" at options valuation:

Edited by Hank Berkowitz and Gordon MacPherson Designed by Sima Miladinov and Lisa DeBellis For reprints of sponsorship information contact [e-mail] or 201-938-3538 COMING IN JANUARY 2006: Financial Advisory Opportunities for CPAs

Table 1

Most Challenging Aspects of Working SoHO
% of surveyed CPAs who agree

Isolation from peers         51%

Meeting clients/colleagues   42%
n a professional setting

Lack of admin/               41%
support personnel

Time management              34%

Lack of collaboration        32%

Source: Bay Street Group, LLC 2005

Note: Table made from bar graph.

Table 2

Secrets to working/supervising successfully outside a large office
% of surveyed CPAs who agree

The right attitude        75%
/self discipline

The right attitude        63%
technology setup

Good communications       55%
with co-workers/clients

A quiet, dedicated        51%
work space

Experience and            45%
maturity

Source: Bay Street Group, LLC 2005

Note: Table made from bar graph.

Table 3

Most Likely Purchases/Investments for SOHO CPAs
% of surveyed CPAs who agree (includes multiple responses)

Tax Software                        50%
Accounting Software                 39%
Notebook/Laptop PC                  37%
Professional Liability Insurance    34%
Flat Panel LCD Monitor              27%
Combo printer/copier scanner        27%
Better Internet Connection          21%
Wireless/WiFi Network               21%
Advertising/Marketing Activities    20%
On Call IT/Computer Expert          20%

Source: Bay Street Group, LLC 2005

Note: Table made from bar graph.

Table 4

Profile of CPAs Working in a SOHO Environment
(at least 20 hrs per week)

Sector of
the profession

Public accounting CPAs         71%
Business & Industry CPAs       19%
Govt./Academic/NFP              5%
Other                           5%

Size of
organization

10 employees or less           59%
11-100 employees               28%
Over 100 employees             13%

Decision
influence

Senior Management              63%
Senior Staff                   19%
Mid- or Junior Staff           18%

Source: Bay Street Group, LLC 2005

Note: Table made from bar graph.