Accounting for Hollywood

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NEW YORK ( TheStreet) -- John Finn loves accounting so much that he co-wrote a song about it for his band, Pispoure, in which he plays bass guitar when not busy with his main gig: running a small accounting firm and software company for the television and film industry.

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The Accounting Song plays nonstop on the homepage of JFA, an accounting firm that has managed the books for films such as Garden State, Lost in Translation and Super Size Me.

"I always wanted to be an accountant; I was fast, and I could do multiple things at the same time," says Finn, chief executive officer of the New York company as well as of IndiePay , which makes payroll software for the TV and film industry. Combined, the companies have 23 employees.

Finn began his career at the big-four firm KPMG, where he stayed for almost three years before deciding in 1995 that he wasn't made for a cutthroat corporate gig that involved more travel and schmoozing than it did accounting.

Finn's brother introduced him to the film industry via the classified ads in the back of The Hollywood Reporter, an entertainment industry trade magazine. Finn quit KPMG, moved to New York and began sending out resumes blindly. He soon landed his first job, working for a $500,000-budget film called Sleeping Together, not only managing the books but also driving the equipment truck. He was one of the few people on set who knew how to drive stick shift. "I was wide-eyed, very naive, but gung-ho and willing to do anything," Finn says.

While he began his solo career with only three years of accounting experience under his belt -- none of it in film accounting -- inexperience turned out not to be an issue in the industry. "What I found out was that most of my peers were not trained as accountants," he says. "They were failed screenwriters who really wanted to be in the business. I had a leg up on them because accounting was second nature to me. If you polled the accountants in the business, I would say that nearly half don't have accounting degrees."

After landing several accounting gigs with Miramax Films, a subsidiary of Disney ( DIS), Finn founded JFA, and hired a staff, in 1998. "I was afraid not to take a job," he says. "I thought if I had a company, we could cover for each other."

Finn says film accounting differs from most fields in that the small-budget projects are often harder to handle than the big ones. "It's interesting to work on a $2 million movie and a $50 million movie," he says. "The people on the $2 million movie are inexperienced. The paperwork's a mess, and you have to chase everyone down. It makes it almost easier to do the $50 million project in that regard, even though it's a bigger movie."

IndiePay, the payroll software company he formed in 2005, was borne out of necessity, as many clients were using 1950s-era technology for their bookkeeping, Finn says. "We get carbon-copy payroll that's done by hand," he says. "It's really archaic."

IndiePay has an office upstate in Delhi, N.Y., which keeps costs down compared with Manhattan and provides work to a hard-hit part of the country. "I outsource to Delhi, N.Y., instead of Delhi, India," Finn says. "My retired high school math teacher runs the office. That's enabled us to keep our costs down. There's a big labor pool, but there's not a lot of work out there."

The Manhattan office of JFA is another story. "One of the hardest challenges I face is employee retention and management," he says, explaining that the nature of the business is such that all things financial are very transparent, which means it's easy for his employees to do some quick math and realize they might be able to make more money if they try their hand at freelancing, as Finn did back in 1995.

There's still plenty of room to grow. While Finn declines to share financial details publicly, he says IndiePay has averaged only about 1% of the potential volume of film industry payroll work since its inception. He's expecting to increase that number; there's a great deal of potential business in the wake of the abrupt downfall in 2008 of Axium International, a competitor. The exit left a lot of Axium clients hanging, but created marketing challenges for JFA, he says. Potential clients demand assurances that what happened to Axium won't happen to JFA.

Finn is happy to settle for a relatively small piece of the payroll revenue, as he wants to maintain the entrepreneurial spirit that made him leave KPMG in the first place.

"I didn't really enjoy working with the bigger studios because they were really corporate and very restrictive," he says. "My personality rejects the big stuff. To me, I feel like I'm serving the independent world better."

His financial advice for small businesses: Treat loans like nest eggs.

"You should get credit when you're doing well, not when you really need it," he says.

-- Reported by Carmen Nobel in Boston.

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