Andrea Harrington joins The Hartford’s SmallBiz Ahead podcast

Apr 08, 2022

Andrea Harrington, a partner in Tax & Advisory Services at FML, was a guest on a recent episode of The Hartford’s SmallBiz Ahead podcast titled “Getting Your Finances In Order to Achieve Success.”

Andrea has more than 25 years of experience serving a variety of industries and clients at varying stages of business growth. Her clients include those in the service, health care, real estate, construction and development sectors.

She shared some of that wisdom during the podcast. Here are some highlights:

On Budgets and Capital

“The first thing that we always advise people to do is to make sure that they have a budget. You have to understand your cash needs, your inflows and your outflows, and you have to understand what’s going to support your business. And let’s say you’re all in, you’re entrepreneurial, you’re just starting out. You don’t have other sources of income. You need to understand how that business is also going to support your life. Can you pay your mortgage? Can you pay your kids’ tuitions?”

“You don’t want to put yourself in a position where you haven’t looked far enough down the road to when that capital raise needs to happen and you’re out of money. Because if you’re out of money, you’re out of business. So it’s just really critical from a daily basis at the beginning to really watch your cash burn to know that, OK, in six months I’m going to be out of money. So I need to start thinking about that now. We look really closely at that with clients.”

On Financial Statements

“A lender’s going to want to see financial statements. So if you’ve got a business that’s got some level of operation already, they’re going to want to see it. An internal may be OK. They may want something that’s on a CPA letterhead, depending on the amount of financing that you’re looking for or the type of financing that you’re looking for. But they’re going to want to see something that looks like a traditional balance sheet, income statement, cashflow. They want to know that you understand the numbers behind your business. And oftentimes if you’re starting out, and even in mature businesses, there’s a good possibility that you’ll need to put in a personal guarantee on the loan. That’s just the reality of it.”

On Structure

“Coming from the tax world, we look a lot at legal structure. A lot of companies don’t necessarily think about that, but you want to make sure you’re organized in a fashion that’s going to help you grow. Do you want to be an LLC, a Limited Liability Company, that is maybe easy to bring on investors? Do you want to select S Corporation for a different liability insulation? And there were restrictions with that. So we look a lot at the structure and the plan for the continued growth and ultimate exit strategy, because we really like to be involved with the business from its emergence to the ultimate end game. And sometimes that’s a hockey stick and sometimes that’s real, slow, steady growth.”

On State by State

“If you are organized in Delaware, which is a popular place to organize because it’s an easy state to organize and a lot of LLCs are set up there, but you are actually operating in Connecticut, you’re liable for Connecticut taxes. If you’re providing services to a customer in California, California [wants to know] is the benefit derived there, and they’re going to want a little piece of that apple as well. So you have to be aware of the fact that just where you are incorporated or organized doesn’t dictate your state tax compliance requirements or liabilities. It’s broader than that and it’s state by state.”

On Keeping Records

“You want to just make sure you’re keeping detailed records. Because you have to remember the burden of proof for any deduction is on the taxpayer. So if you walk into an IRS audit, which, hey, it happens, and you don’t have documentation or support for an expense that you’ve taken, even if it’s a perfectly legitimate expense, then you may not be able to take that deduction. And it’s unfortunate in those cases. So keep the records, keep the mileage logs. I know it’s a pain. There are apps that will help you do that when you’re traveling. It’s very important to keep record retention for seven, sometimes 10 years.”


“At FML, and what I really strive to do, we try not to be that one-stop, here’s-my-shoebox, once-a-year type of stop. We want to talk with you regularly, as you have questions on your business, and certainly quarterly, because if you are a business owner, you should be making quarterly payments. The IRS and the other taxing authorities want that money on a regular, even basis. And there are certain safe harbors that we can help you with as your business is growing so that it’s based on the prior year and not the growth year, perhaps. But it’s good to have a conversation with your accountant much more than once a year.”