It’s time to send 1099s and financial statements to my Accountant’s office for tax filings. But it takes more than a good Tax Accountant* to build a business. As your business grows, there is a logical graduation of increased assistance and expertise you need to manage your growing pile of moolah.
Elementary School: Begin with an Accountant to help set up financial records that will make tax filing easy at year-end and provide important management info year-round. Your Accountant will help you prepare for and file taxes, too. Often it’s the owner who does the bookkeeping, and I rather like the idea that as owner, you learn how daily transactions flow into your financial statements, and ultimately, your wealth accumulation. (You can also choose to learn about financial statements through a course like Business Edge, which I teach at Missouri Bank with banking guru (and fun camping buddy), Julie Nelson Meers.)
Middle School: When you’re truly not a numbers person (and you know who you are), or when your time is better spent earning than counting your money, hire a Bookkeeper. This may be a part- or full-time person to handle the payables, receivables, and other financial clerical tasks. Sometimes it works well to add a full-time Office Manager who does the bookkeeping among other tasks, such as personnel papers, insurance, and well, office management.
High School: Hire a Management Accountant to help you mine information from your financial records. Sometimes your Tax Accountant is also good at helping you interpret your numbers, but more often, one Accountant is great at the tax game, and another at management. Meet at least twice a year; quarterly is better at first, or meet even more often when you have lots of change happening in your business. And don’t be afraid to get your Accountants together for holistic conversations.
Bachelor’s Degree: By now you will be accumulating some cash, so you’ll need a Financial Advisor. Choose one who works with business owners and understands the quandary about where to accumulate wealth – either in the business, personally, or some combination that depends on your operational needs, growth plans, and exit strategy. I also prefer Advisors who are fee-based compared to those that are compensated by selling financial products.
Note: Many businesses do not graduate beyond a Bachelor’s degree level of financial assistance.
Grad School: A full-time Controller will supervise all your accounting functions, coordinate purchasing, supervise the Bookkeeper, and consult with your Tax and Management Accountants. Hire one when your company has lots of moving parts or otherwise requires a financial professional on top of it all while you’re busy running the rest of the company.
PhD: Hire a Chief Financial Officer (CFO) to supervise all matters financial, from accounting to funding. Your CFO will also provide strategic advice through the financial lens, and as an officer of your company, be a top-level resource with a high degree of accountability and responsibility. If you’re building your business with Other People’s Money, this role is essential, even if part-time initially, to assure competent reporting for investors.
Homework: Think about your company’s position and what level of financial support you need now. Hire accordingly. I have several of these professionals in my client portfolio, and most will work with you wherever you live. I am confident about referring my clients. They can’t buy my respect; they’ve earned it even after I’ve seen behind the curtain.
*I’ve included definitions of each respective financial occupation as a refresher for us all. Sometimes it’s good to remind ourselves of each occupation’s exact job description!