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How a Finance Team Can Help Your Small Business

Accountants and bookkeepers can boost your success

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Most entrepreneurs tackle the start-up phase of launching their small business with a scrappy, wear-many-hats, get-it-done-at-all-costs mentality. Figuratively speaking, they have to build the plane and fly it at the same time or otherwise risk getting stuck in analysis paralysis.

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But if you don’t pay enough attention to the basics of your company’s finances, how can you sustain the growth that comes from your hard-earned success? After all, one key to survival is containing costs while keeping your finger on the pulse of revenue and expenses.

Zoe Bogan, founder and CEO of ZB Agency, asserts in a recent AARP webinar that “every entrepreneur needs a trusted money team” as they transition from solo-preneur to business leader. Hiring a reliable bookkeeper and accountant can mean the difference between increasing revenue and leaving money on the table. Yet research shows that only 26 percent of small-business owners consult regularly with an accountant or a bookkeeper.

Understanding the difference between accounting and bookkeeping — and the value of both — can help you make smarter strategic decisions and maintain a better view of the financial health of your small business.

Meet your money team

Even after studying books and taking courses in entrepreneurship, small-business owners should continue to seek ways to improve their approach to their company’s finances. There’s always something to learn, even if you choose to outsource many of the financial responsibilities of your operation.

Consider the differences among the key functions of your financial team.

Chief financial officer: The CFO is responsible for tracking cash flow, financial planning and understanding the company’s financial strengths and weaknesses. This top executive can propose corrective actions and help you think strategically about the direction and profitability of your business. There are also fractional CFOs, who work with businesses on a part-time or contractual basis.  Nancy Jacobson, a fractional CFO who was the winner of AARP’s 2020 Make Your Move contest, says these CFOs are becoming critical for start-ups and small businesses.

A small-business enthusiast and certified financial accountant, Jacobson believes that many small ventures fail because their owners don’t know how to make sense of their budgeting and cash-flow scenarios. Many need help tracking their finances but aren’t bringing in enough revenue yet to justify a monthly retainer. That’s why Jacobson launched Xtended Financial Resources, a fractional CFO service for small businesses that need affordable financial guidance.

Accountant: Your accountant is responsible for compiling financial statements, managing tax preparation and overseeing audits. Accountants can be an expensive investment, sometimes four times the hourly rate of a bookkeeper. But think of them as team members who play the long game. They should not record and maintain the daily transactions of your business. Develop a system in which you check in with your accountant quarterly, and keep the conversation focused on the big-picture financial concerns.

Bookkeeper: A bookkeeper is responsible for recording financial transactions and ensuring the accuracy of your journals and ledgers. They can calculate government remittances and create internal financial statements. It’s important that you understand how to keep accurate records of your day-to-day transactions, but be mindful of when it may be more efficient to hire a bookkeeper. When your business reaches the point that personally maintaining your financial books detracts from time you could spend growing your enterprise, you should outsource this task.

Why having a finance team matters

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Do you review your monthly bank statements? What about separating your business and personal bank accounts? Securing a money team does not relieve you entirely of the responsibilities of practicing effective, good financial habits as an entrepreneur. Nor is it wise to combine the roles of your money team for the sake of cost and time savings. As your business grows and you generate enough revenue to affordably hire a bookkeeper and accountant, consider the value of each role.

The value of an accountant: Amanda Gascoigne, a 20-year small-business veteran and accredited accountant, explains that “accountants do not merely just jump into your software, press a button and produce your … financial statements and tax returns.”

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While more expensive than a bookkeeper, an accountant helps manage compliance, infuses critical thinking into the external factors that affect your tax liabilities and makes connections with, say, trusted human resource advisers and lawyers. In short, a good accountant possesses the uniquely human skills that cannot be automated through standard accounting software.

The value of a bookkeeper: Bookkeeping is a means to track all transactions within your business, but it’s more than simple note taking. Imagine you want to gauge why you don’t have higher profits despite a lucrative sales period. Your latest financial statement may indicate that you’ve spent a fortune on postage and office supplies. As a result, you may decide to purchase in bulk to bring down your unit costs or take advantage of supplier discounts and limit orders to twice a year. Accurate bookkeeping improves your budgeting and cash-flow management. But, of course, it takes time to compile and analyze these records. Hiring a bookkeeper can be an efficient way to stay on top of these essential duties.

Unlocking new business opportunities

Sometimes small financial habits can work together to build the larger framework of a financially healthy company. And healthy finances can position small-business owners to immediately take advantage of:

Grants: Accurate books save time in the application processes for upcoming grants, especially those with tight deadlines.

Tax credits and deductions: Your accountant may be able to identify credits and deductions that could help your business, such as the employee-retention credit.

Venture capital investments: Well-maintained cash flow, profit and loss, and income statements may encourage venture capitalists to invest in your business more confidently because of its financial transparency.

Government contracts: You may be able to gain access to federal, state and local government contracts if your business can provide the clear financial records that are a requirement of the vetting process. 

Small-business certifications: Widen your access to new opportunities and grow your business with the guidance of organizations and agencies that help small businesses that can prove they meet certain requirements (for example, those that are owned by racial minorities or women).

Bank loans: Unlock lines of credit, small-business loans and more with well-maintained financial records and a solid business-banking relationship.

Building a financially sound, scalable enterprise takes time and patience. But as your business grows, an investment in upgrading your finance team can save money over the long term and possibly give you access to previously unattainable opportunities.

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If you’re interested in learning more about outsourcing financial responsibilities to certified professionals, download AARP’s accounting and bookkeeping tip sheets or visit the AARP Small Business Resource Center for the 50-plus for additional resources on financial practices.

Ashley Powdar is employer content lead for AARP's Financial Resilience team. She works with participants in the organization’s Employer Pledge Program to promote the value of a multigenerational workforce. She also assists with and reports on issues that affect small-business owners.

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