Financial reporting and internal controls for the entrepreneur


By Bryan Edwards, Manager of PS&Co.’s Accounting Solutions Group

Most small business owners start with a dream of independence that then turns into a vision of how to make money while meeting the needs of others. That need is met with a marketable product or set of skills that typically involves doing something the entrepreneur really enjoys. But along with the passion comes the reality of other things you have to do to ensure you are really doing as well as it seems you are doing. Financial reporting, clear accounting procedures, and internal controls are the keys to distinguishing between perceptions and reality.

If you have bank financing, your banker will require regular financial reporting; and even if you don’t, some basic accounting controls and procedures are necessary. You may hire someone (or several people) to work in your office to keep track of the paperwork while you sell and run your business. There are many good accounting packages out there you can purchase off the shelf at a relatively low cost (QuickBooks works well for many, if not most start-ups).  But simply buying an accounting package, hiring a couple of people, and hoping for the best never works out well.  A systematic approach to accounting, finance, and managing the money that begins even before you open the doors is necessary.

Doing so provides several benefits, namely:

  • Greater organization
  • A common purpose among all workers
  • Cost savings
  • Happier, more productive employees
  • Less risk of fraud and theft
  • Bankers who are more likely to extend additional credit
  • Clarity of results that isolates both problems and opportunities quickly

Internal controls are key. If you only have one employee in your office, be sure another employee works in at least a part-time capacity in the office so that the same person is not handling, reconciling, and accounting for cash, for instance. The person who makes a bank deposit should not prepare checks. Have someone who does not prepare checks or make the bank deposit reconcile the bank account. And the check preparer should not be the sole signer of checks unless it is you, the owner.  Having at least two sets of eyes on each accounting process (e.g., cash receipts and cash disbursements) greatly lessens the likelihood of theft. No employee should effectively authorize his or her own work, particularly when that work involves handling currency, making bank deposits, and preparing checks.  It is recommended that, initially, the entrepreneur take a very active role by signing checks personally and approving all wire transfers so that he or she can guard against any fictitious payees. While there is no perfect set of internal controls, there are a few simple precautions you can take that will lessen the likelihood of fraud and theft.

When contemplating a new business venture one of your first conversations should be with a CPA firm. Eventually you will need to deal with taxes, but even before then, the firm can recommend software, help you set up procedures, and even help you find a bookkeeper. A close working relationship with a CPA firm is typically money well spent. Hire someone you trust and with whom you feel you can communicate candidly about the ups and downs of running a business.

Finally, recognize that you must invest in your accounting and internal control environment. Trying to pinch pennies at the outset generally leads to more costs in the long run, not to mention squandered opportunities because you didn’t see something that clear, concise, and timely financial reporting would have otherwise revealed to you.

For more information on financial reporting or internal controls, please contact Bryan Edwards at (210) 828-6281.

PeopleFund and Capital One Bank team to provide financing for new Accion Texas corporate campus

Accion logo colorAccion Texas will soon begin construction on its new corporate campus in San Antonio at 2015 W. Martin Street.  The new campus consists of four buildings. The centerpiece is a 13,100-square-foot headquarters complemented by a 1,897-square-foot business incubator center, a 1,400-square-foot workshop and training building as well as a 1,000–square-foot café which will be used as a culinary learning center.

Accion Texas President and CEO Janie Barrera and volunteers have spearheaded the project and initial fundraising since a multi-million-dollar capital campaign was announced in June 2012.  The capital campaign was awarded a $1.3 million grant from the United States Economic Development Agency.  In addition, approximately $1.4 million in grants and gifts have been raised from other benefactors.

Although the capital campaign is doing very well, Accion is short of its goal needed to begin construction.  However, recognizing the community impact of the project and also the successful history of Accion, PeopleFund and Capital One Bank were able to complete a creative financing solution that closed on December 30, 2013 to allow Accion to immediately begin construction.

The financing included a $6.1 million New Market Tax Credit (NMTC) allocation from PeopleFund with a tax credit equity investment and leverage loan from Capital One Bank.  Capital One also provided a $3.5 million construction loan.

“With our rapid growth, we have run out of space. Now we have funding in place to promptly build the entire campus as a single project,” Barrera said. “We thank PeopleFund for awarding its NMTC to us and to Capital One for providing construction financing to allow us time to complete our capital campaign.  Now our goal will be to continue our capital campaign to raise the remaining funds.”

On Sept. 17, the three organizations committed to the project. According to PeopleFund President and CEO Gary Lindner, “We seek to place our NMTC credits in high impact non-profit community projects located in severely distressed census tracts. Accion Texas is a great organization and a perfect fit for a NMTC investment.”

Capital One Bank, led by its Austin Market President and Commercial Banking Executive, Mike Perrine, also played an essential and pivotal role in making this financial deal a reality. “New Market Tax Credits transactions represent an example of how federal resources and local know-how can work together to support revitalization of underserved areas,” said Perrine.  “Capital One Bank has partnered with Accion and PeopleFund on a number of their important community programs, and that makes this latest transaction even more special.”

Peoplefund is a 501(c)3 nonprofit organization. Established in 1994, it is a U.S. Treasury certified Community Development Financial Institution (CDFI) and SBA certified lender. PeopleFund provides business loans up to $250,000 to Texas businesses that lack access to traditional financing. It also provides clients business assistance and education. 89% of loans are to a target market of minority, women, and veteran business owners and those residing in low to moderate income census tracts. Over 50% of loans go to startup businesses and high social impact nonprofits. Through access to capital and education, PeopleFund creates economic opportunity and financial stability to build healthy small businesses.

Capital One
Capital One Financial Corporation ( is a financial holding company whose subsidiaries, which include Capital One, N.A., and Capital One Bank (USA), N.A., had $206.9 billion in deposits and $289.9 billion in total assets as of September 30, 2013. Headquartered in McLean, Virginia, Capital One offers a broad spectrum of financial products and services to consumers, small businesses and commercial clients through a variety of channels. Capital One, N.A. has more than 900 branch locations primarily in New York, New Jersey, Texas, Louisiana, Maryland, Virginia and the District of Columbia. A Fortune 500 company, Capital One trades on the New York Stock Exchange under the symbol “COF” and is included in the S&P 100 index.

Accion Texas
Established in 1994 in San Antonio as a nonprofit organization, Accion Texas Inc.’s financial and business-support services help entrepreneurs strengthen their businesses, stabilize and increase their incomes, create employment and contribute to the economic revitalization of their communities.  Accion has the nation’s largest microloan portfolio and is committed to providing capital to entrepreneurs who do not have access to loans from commercial sources. Since its inception, Accion Texas has disbursed 14,000 loans totaling more than $152 million and now operates in eight states – Alabama, Arkansas, Kentucky, Louisiana, Mississippi, Missouri, Tennessee and Texas.  For more information, visit or call 1-888-215-2373.

80/20 Foundation Funds Social Entrepreneurship at St. Mary’s University

rackspace_logo_08_07_20122Rackspace Hosting co-founder and chairman, Graham Weston’s 80/20 Foundation has announced a substantial grant to St. Mary’s University’s new Social Entrepreneurship Masters of Business Administration (MBA) program. The grant funds a 3 Day Startup weekend that fosters socially-responsible entrepreneurial progress in San Antonio.

hearSA_StMarys_Logo_BlueSt. Mary’s is among the first nationwide to create a specialized MBA program. The university implemented the program after it saw a need for more lab-experiential learning, thus adding value to the degree and graduating students who have real-world experience. St. Mary’s Dean of the Greehey School of Business Tanuja Singh, believes this program will have a larger impact on these students’ lives and on San Antonio.

“We want our students to do well by doing something good,” said Singh. “We are helping teach a generation of students who will pay attention to the double bottom line, which includes measurements on financial growth and positive social impact, creating ripple effects of better business practices and a more socially responsible business climate in San Antonio.”

The program will culminate each May with a required fast-paced boot camp weekend where the 4 to 5 student-led teams will take their idea to reality with the help of 3 Day Startup (3DS), an Austin-based non-profit organization focused on entrepreneurial education through experiential learning. This will be the first 3 Day Startup weekend at St. Mary’s University and the first exclusively focused on social entrepreneurialism.

According to 3DS CEO Cam Houser, who runs 3DS weekends all over the world, this program is unique because, where 3DS often works with students for just an intense 3 days, this time 3DS representatives will be visiting the campus often, helping the students throughout the semester.

“The 3DS program is imbedded into the curriculum,” said Houser. “St. Mary’s program is helping the whole entrepreneurial ecosystem.”

According to Houser, he has seen more socially-responsible startups in recent 3DS weekends, increasing from 10% of start-up ideas to 20% over this past year.

80/20’s founder, Graham Weston is focused on building San Antonio into the cloud capital of the world. He was drawn to the program due to the focus of creating a technological solution for social problems.

“Most MBA programs don’t create entrepreneurs and don’t put their students in motion,” said Lorenzo Gomez, III, executive director of 80/20 Foundation. “What 80/20 saw in St. Mary’s is that it’s ahead of the curve when it comes to specializing MBA programs. It put its students in motion and in a direction to positively impact the world.”

For information about 3 Day Startup, visit For information about St. Mary’s University, visit