For a dance studio to survive and thrive, having professional accounting help is crucial. Here’s how two owners have benefited from all that their accountants have brought to the table over the last two-plus decades.
When Becca Moore and Dani Rosenberg opened their Marietta, GA–based studio, Rhythm Dance Center, 27 years ago, they were both barely out of their teens. Their business acumen was virtually nonexistent, and it showed—a letter from the Internal Revenue Service inquiring after unpaid payroll taxes forced them to find an accountant willing to show them the ropes of small-business financials.
What an Accountant Brings to the Table
After nearly two decades with the same accountant, Moore and Rosenberg understand the importance—and evolving contributions—of an accounting professional as a business grows. Here’s how outside accounting advice has helped to bolster their growth into a studio of 1,100 students and to add an ancillary business in 2016—a studio marketing, branding and decor company called Confetti on the Dance Floor.
Getting past a tax crisis.
Like many small-business owners, Moore and Rosenberg opened their dance studio with plenty of passion and knowledge about their field but little business know-how. When they got a letter from the IRS telling them they owed back payroll taxes, they basically turned to each other and said, “What are payroll taxes?” They knew they needed professional help, so they scoured the Yellow Pages and simply called the accountant with the biggest ad. That accountant helped them arrange a payment plan with the IRS to pay their back taxes—and became an important part of why their business is thriving decades later.
Establishing professional business practices.
With the crisis behind them, Moore and Rosenberg began working with their accountant to adopt sound practices that would stabilize their business and put it on a path to long-term success. The accountant established a monthly in-person meeting between his assistant and the owners to calculate and pay that month’s payroll taxes. “She would go through what we paid employees that month,” says Rosenberg, “and then would calculate what the payroll tax would be and write out a deposit slip. I’d take that straight to the bank.” Their accountant also prepared monthly profit-and-loss statements for Rosenberg and Moore to review, as well as a year-end closeout of their books in preparation for filing taxes.
Besides technical expertise, chemistry is also important in choosing to work with an outside professional. It was important to Moore and Rosenberg that they not feel as if any part of their business operation were over their heads. “Our accountant never made us feel like we were stupid,” says Moore.
Big-picture business advice, like how to handle a recession.
Beyond regular accounting duties, when the recession hit in 2008, “[our accountant] saved our business,” says Moore. “Dani and I would’ve said, ‘We’ll just do fewer rhinestones.’ He said no, and gave them detailed guidance on how to cut back on expenses. “He told us, ‘these are the areas, according to your books, where you need to cut back.’”
Sophisticated financial data analysis to make wise decisions.
“According to your books.” Those were crucial words from their accountant at the time of the recession, and both women appreciate the detailed data analysis that their accounting firm’s software offers. “There’s so much data that they can collect about your business now and all sorts of reports that let you really dive into different aspects of it,” says Moore. “You can see exactly where you’re making a profit and where you’re not.” The studio’s accountant recently informed her and Rosenberg, for example, that they had the financial capacity to expand their studio, if they wanted to. It’s not an immediate plan, but it is something they might consider in the future.
The right partner for growth.
When Moore and Rosenberg’s studio began approaching an enrollment of 1,000 (they currently have 1,100 students), they—and their accountant—knew they needed a different kind of service. A bigger business translated to more revenue sources and bills, which in turn meant a heavier workload for their accountant—and the monthly fee they now pay reflects that. “We pay our accounting firm $3,000 a month, and we know that’s not the norm for a studio, but that’s a small percentage of our monthly income. Ten years ago, we could not have afforded this,” says Moore. “But we could not run our business without this firm. For Dani and me, accounting is not one of our special gifts.” Realizing where you as the business owner need to fill in knowledge gaps is a key trait of successful entrepreneurs.
As the company has grown, Moore and Rosenberg have added professional staff internally as well, passing on nearly all accounting-related communication and duties to others. However, Moore and Rosenberg are still the only ones with knowledge of financial returns and year-end financial information. “We have an HR manager who manages our payroll in-house,” says Moore. “Once she figures out the payroll, it goes to our accountant, who takes care of direct deposit, our W2 employees, our 1099s.”
“Honestly, our HR manager communicates more with our accountant than I do,” says Rosenberg. “Now that everything is online, I can send our American Express statements to our accountant,” says Rosenberg. “They have the information for our bank accounts.” Moore and Rosenberg attend in-person meetings with their accounting firm maybe three to four times per year, on average, to stay in touch with what’s happening with their revenues and expenses and broach bigger-picture issues, like expanding their studio size.
Next step: perhaps it’s time for an industry-specific firm.
Though they’re happy with their current accountant, Moore and Rosenberg have recently been considering an industry-specific firm. “Now that our accounting is so much more complex, since we have multiple businesses, we’re looking into a firm that specializes in the arts,” says Moore. “We have so many rules in our industry, and so many different tiers of payroll—rehearsal rates, choreography rates, teaching rates. The majority of our staff are hourly employees, but it’s not as simple as, ‘You make $25 an hour.’ If you barter with someone, for example, you still have to 1099 them.” They’ve heard horror stories of studio owners who got hit with big fines because they didn’t charge sales tax on their recital programs, but should have since it’s standard practice to sell advertisements within these programs. “An industry-based professional accountant would help keep us out of trouble,” says Moore.
Rachel Rizzuto reports on studio business for Dance Teacher and is a second-year MFA student at the University of Illinois at Urbana-Champaign.