As a small business owner, you probably already do quite a bit of accounting, and you know how hard that work can be. When it starts to become a bottleneck for your business, that’s when you begin to look for outside help – whether that means hiring someone to run your office or finding an accountant who can supplement your existing team, either way you’re left with a big choice. So how do you know when to get accounting help?
First, let’s talk about in-house hires.
Hiring an office manager
This might be one of your first hires as a small business. We see it a lot. This person typically wears a lot of hats. We’ll get more into that later, but think of an office manager as the quarterback of your back office tasks.
What does an office manager do?
Like we said, they do a lot. We can break this down into internal and external accounting, but the short version is that their job is to take administrative jobs off your plate. That can be invaluable for you as a small business owner who is experiencing meaningful growth for the first time. The organizing force a good office manager brings to a small business can be crucial. We absolutely love working with good office managers.
Internal Accounting: These tasks can include receiving bills, cutting checks, collecting invoices, and other various jobs. This is the boots-on-the-ground, everyday accounting help that doesn’t have as much to do with reporting or planning as it does with just the general day-to-day business of, well, running a business.
External Accounting: This is mostly about record keeping. In external accounting, they’ll take all the various numbers from your business and create a general ledger financial statement. While this could be helpful to you, here’s why you might want to look elsewhere for your external accounting tasks even if you want to hire an office manager.
General ledger financial statements aren’t useful to small businesses
A general ledger is an accounting record of all financial transactions in your business. This includes money leaving your business and money coming into your business. These transactions can occur across areas such as revenue, expenses, assets, and liabilities.
So what’s the problem? Ultimately, they give you TOO much information, especially if your office manager doesn’t know how to organize it correctly. We’ve seen monthly general ledger financial statements that go on for pages and pages.
Frankly, this doesn’t solve the problem of freeing up time for you. Instead of executing a plan based on a focused recording of the relevant numbers every month, you’re combing through lengthy financial statements. If there are any errors or discrepancies YOU are the one following up and double checking to make sure you’re in a good place.
How a CPA firm and an office manager work together
Like we said, we LOVE a good office manager. They’re usually QBO-adept, organized, and are able to execute plans. As a CPA firm, we routinely work with office managers, first onboarding them into our system, and then providing support and guidance as they execute your business’s plan.
That’s great for you, now you have someone fully dedicated to the internal side of your accounting business, and a team to help execute your business’s plan and higher level external accounting.
Is there a point when your business is too big for a CPA firm?
There are a few things that we don’t do much of as a CPA firm. One of the biggest of these is prepping companies to be acquired or go public. For that, you’ll ultimately want to hire a CFO. What is a CFO? Well the first thing to say is that 99% of small businesses will NOT need a CFO. Mostly they need someone who can give good advice when a situation arises – otherwise you're making an over-hire.
What does a CFO do?
CFOs operate in a strategic role for your business. They’ll come up with big picture ideas like creating an entire financial plan. They’ll also create relationships with your financing sources (banks, outside investors, etc). They’ll also have relationships with your major vendors. A company looking to hire a CFO is significantly growth-oriented. They want to be acquired, they want to go public. OR the business is so large, that they need so much heavy internal financial planning in that business dev role as a full-time job.
What CFOs aren’t good at.
CFOs are big picture people, so they make bad bookkeepers. They also make a LOT of money – usually around 200k a year. If you’re having them do accounting work, you’re overpaying them for it. Plus, they won’t be happy.
That’s why we’d recommend having SOMEONE take care of your internal accounting. So, then do you need a CPA? Well, we work with business owners all the time to create cohesive, meaningful growth plans. Interested in how that works? Schedule a call, tell us YOUR story, and let's talk about how we can help.