Small-business advice: Finding investors

Dear Karen: I’m looking for venture capital funding for a distressed real estate business. Any suggestions?

Answer: Prepare a detailed business plan that shows realistic financial projections. The plan should chart an attractive return for your investors within five years.

Venture capitalists typically invest in innovative start-up companies that could someday go public or be acquired by a large corporation.

“If you wanted to start a business that developed software programs for distressed real estate companies, that would be more appropriate for venture capital,” said Emily Mendell, vice president of strategic affairs for the National Venture Capital Assn. “You may be better off taking investments from friends and family or angel investors whose criteria are broader.”

Bookkeepers, tax preparers, CPAs are not the same

Dear Karen: What’s the difference between a bookkeeper, a tax preparer and a CPA?

Answer: A CPA is a certified public accountant licensed by the California Board of Accountancy. A licensed CPA must pass an examination, fulfill educational and work requirements and take continuing education.

A bookkeeper typically records transactions and pays bills for small businesses. “These individuals may be very capable, although they are unlicensed,” said Gregg R. Wind, of Wind & Stern CPA in Marina Del Rey.

A tax preparer is anyone who prepares tax returns for a fee. A tax preparer does not have to be a CPA or an enrolled agent, a tax specialist who passes an exam that allows him or her to represent clients before the Internal Revenue Service, Wind said.

Small-business questions? E-mail Karen at smallbiz@latimes.com.