What Kind of Financial Consultant Do I Need for My Business?

Jun 22, 2022

So how is a business to decide what level of accounting services they need?

No surprise, it starts with assessing your business and its financial needs. So how do you do that, and what questions should you be asking yourself?

Here are some helpful questions you can start thinking about.

To start with, does your company require bookkeeping services, payroll services, sales tax filing, income tax strategizing? 

You may need an accountant with knowledge in your industry OR a CPA with customized tax strategies.

Do you have Federal Loan compliance requirements, such as SBA EIDL Loans that require periodic certified financial statements? Are you looking to retain your employees by offering health insurance benefits, or retirement matching? Is your cashflow constantly lacking but you show increasing profits? By identifying and listing your requirements, you create an accounting package that meets your needs regardless of what it may be called.

If this sounds like you, you may need a CPA due to specialized certification requirements with federal guidelines (SBA, IRS, Mortgage Loans. Sally Mae, etc.). With the additional services you may have to upgrade to controllership or VCFO Services to remain compliant.

But be sure to keep an open mind.

Our clients will often say they need a service but not another. But in reality, one is not possible without the other. For example, client wants to make periodic estimated tax payments or add retirement benefits, however, does not think they need cash flow forecasting. Without an understanding of your financial statements, and related liquidity, a true determination of how much money you really have to meet your goals, is not possible.

Another common misunderstanding is tax strategizing. 

There are various tax credits and incentives that put money back in business owners’ pockets for hiring within certain demographics or investing in new technology. For clients expanding online or allowing remote workers in different states, tax strategizing is no longer limited to just Federal Income Taxes. Many states are taxing you simply for having an employee in their state, or selling in their state, or even attending a tradeshow. Knowing a client’s customer locations, employee residency, and online activities has become paramount to filing annual taxes. 

We no longer live in a world of meeting once a year with your CPA. Should a state figure out your company ever had “economic nexus” at any given point in time, they can go back and tax you for the entire period including penalties and interest. And I promise you, some states are worse than the IRS. These factors can no longer be determined in one sitting. Periodic review of your financials and location-based revenue recognition is becoming a necessity.

Fractional CFO or Back-office Accountant?

By keeping an open mind, speaking with a financial professional—whether it is your CPA, a Fractional CFO, or financial consultant—you will determine what services are necessary to meet your requirements. Once you figure out your baseline, consider the packages offered. Some CPAs may bundle the accounting services and call it “transactional accounting” services.” Whereas others may include advisory services such as cash flow forecasting, budgeting & KPIs as add-ons to their basic business services or “controllership” functions. 

When you start including more sophisticated analysis such as business loan application preparation and compliance, annual retirement testing, resource planning, etc., you are essentially looking at CFO services. 

These are however, general, subjective guidelines. Each accounting firm will have their own unique packages, naming conventions, and levels of services included.

Ultimately, it is up to you what level of financial support you need. Have the conversations, decide what you need, compare it to the services offered by the financial entity you’re talking to, budget suitably, and outsource accordingly. 

You’ll tame the tiger soon enough. 

Oh, one last thing before you go!

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Happy reading!