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by Stephen Parezo

Karl Herba

June 21, 2006—Karl Herba stood at the crossroads of his career in the late 1980s when he had to decide whether he wanted to remain with the company he was with or strike out on his own as a franchisee. He chose to become a franchisee and has never looked back.

Now a Fiducial franchisee in Chittenango, a suburb of Syracuse, in Upstate New York, Herba originally started out as a pre-med student but found that “wasn’t much fun.” Instead he earned an economics degree from Columbia University and eventually went into public accounting.

Herba was working as a store manager for Firestone when the opportunity arose to become a franchisee. One of the things that impressed him about his former employer was their system of internal controls.

Starting out Herba took on a number of service station clients and over the years he’s seen that industry go through its share of changes. With many of these clients having added convenience stores to their operation to stay competitive, he noted that the last year has been a real challenge for the owners coping with escalating gas prices.

“Service station owners have to realize that they no longer own a gas station that sells food,” said Herba. “Now you are a food store that sells gasoline. Gas cannot be your primary profit producer.”

Over the years Herba has seen the accounting industry expand to concentrate on providing tax services. Though the main area of his business remains write-up work, his intention is to make it no more than one half of his total billings. The other half would consist of tax work which is in response to the way the market has evolved.

“The needs of business owners have changed and so my needs have changed,” he said.

Being a good tax consultant

Herba’s operation has gone from doing taxes strictly on referrals to advertising and hiring two part-time tax preparers to come into the office during tax season.

“The tax expertise is truly the most important thing one needs now,” he said. “Before you could be a business consultant but if you’re going to be a consultant these days you have to be a good tax consultant.”

There’s so much emphasis on doing taxes because many small business owners do not have an internal bookkeeper. That’s why they’re depending on him and his staff to do payroll, sales tax and write-up work to make sure they are doing the right things for their pension plans and structuring their business entity so they have the lowest tax burden possible.

An Enrolled Agent, he was honored as the National Association of Tax Professionals (NATP) 2005 Tax Professional of the Year for going above and beyond in service to the community and profession. As an Enrolled Agent, Herba can represent his clients before the Internal Revenue Service.

“If you’re going to be a factor you better be an Enrolled Agent considering the legislation that’s coming down,” he said. “It gives you creditability with taxing agencies in how they deal with you.”

The one area where Herba finds small business owners probably need the most help with is their internal controls which includes recordkeeping and recognizing the need for keeping accurate records.

Telling it like it is

Serving on the New York State Gasoline Retailers Board, Herba says this gives him an instant rapport when making cold calls on potential service station clients.

“I can just walk in the door and they know who I am,” he said. “I have the credibility because of my long-time association with the service station operators.”

Perhaps the toughest obstacle his clients face is spending enough time trying to improve their business since running the business consumes most of their energies. Herba looks for ways to help them turn a profit in a tight market.

A straight shooter, Herba tells it like it is to clients when they ask him about a proposition they’ve been considering such as the gas station owner who wanted to buy a muffler franchise.

“He was going to spend $25,000 but I told him it’s not a good deal,” he said. “It was just a waste of money because he could never make enough to justify the expense.”

The client heeded his advice and did not make a costly mistake. From that day forward the client never makes any big decisions without calling Herba first. The client eventually converted his station into a convenience store and built a carwash on the corner across the street, all with Herba’s blessing, and it’s become a successful enterprise.

“Over the years the client would say, ‘you’ve always done the right thing by me,’ ” he said.

Stephen Parezo is the Media Manager for Fiducial.

Whatever your small business needs, your Fiducial tax and financial professional can analyze your situation and recommend an appropriate action plan. To locate a Fiducial office nearest you on fiducial.com, see the Zip Code Locator located in the upper right hand corner of the page. Do you have a particular topic that we should be writing about that can help your business? Please send your suggestions to: stephen.parezo@fiducial.com.

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