Small business owners often struggle with the decision to hire a financial manager. Can the business afford the overhead? Will the business have enough work to keep the individual busy for 40 hours a week? Before deciding for or against hiring, let’s consider the key roles of a CFO and how he or she can help grow your business.
Manage the Math
Financial officers are the chief numbers officers. These defenders of the ledger are the ones who watch the cash flow, pay employees, and keep a vigilant eye on sales. Without someone assigned solely to financial concens, it becomes very easy to let things slide. Payments are late, collections are lagging and the business is barely keeping itself afloat. Adding controller-level functionality to your business can help align your finances and see gaps more clearly. For the first time, and accountant may provide you with current balance sheets, income statements and a full array of detailed reports all illuminating your business’ successes and areas for improvement. Now don’t panic! All that data is useful and transformative in the hands of a skilled accountant. Inexperienced business owners sometimes hide from the accounting side of their business afraid of what the numbers will tell them. Remember that knowing the facts puts you in a position of strength and decision making.
Regardless of your business’ size, there are countless tax and payroll laws that need to be followed. As the business grows and changes there are even more rules that come into play. Most recently, the ACA has added multiple layers of healthcare accounting for flexible-hour employees. Employers must now track an employee’s hours over a specific look back period to determine his or her eligibility for company offered healthcare coverage in the coming plan year. Business tax implications increase exponentially if your business crosses specific thresholds or makes the big decision to take the company public. Sarbanes-Oxley (SOX) rules and regulations passed in 2001 put much stricter requirements on businesses big and small regarding how they report their finances, the relationship between their accountant and the business and what public accountants can and cannot do for their clients. SOX draws a definitive line in the sand between the accounting processes and the business’ operations. Even for small business, some of the requirements still apply particularly with regard to how much control management has over the money in the business and how it is accounted for. If audits are required, SOX also requires that one accountant perform the audit and another accountant be responsible for day to day financial operations and business accounting.
It’s hard to plan for the future without knowing the facts today. A business accountant or financial professional can help provide a current snapshot of the business, along with future projections and options for future business growth opportunities. Financial analysis using ratios can generate a predictive model including indicators of problems. Typically ratio analysis provides a comparative snapshot of your business from one point in time to another. The top ratio tools include: Income Profitability, Liquidity, Working Capital, Bankruptcy, Long-Term Analysis, Coverage, and Leverage. These tools can povide useful data and company to compny comparisons within your business’ specific industry. Heck, if you bring on the additional accounting help either by creatinng a position or using an outsourced small business accountant, he or she will be able to do a cost analysis of the position and how much savings can be generated by having the expertise in the office right next door or just a phone call away.
PASBA member accountants bring the collective resources of a nationwide network of Certified Public Accountants, Public Accountants, Enrolled Agents and other practitioners available to answer your tax and financial questions and streamline your business accounting, bookkeeping, and payroll operations.
To find a trusted accountant in your area, visit www.SmallBizAccountants.com.
Please be advised that, based on current IRS rules and standards, any advice contained herein is not intended to be used, nor can it be used, for the avoidance of any tax penalty that the IRS may assess related to this matter. Any information contained in this article, whether viewed or subsequently printed, cannot be relied upon as qualified tax and accounting advice. Any information contained in this article does not fall under the guidelines of IRS Circular 230.