I’ve run in to a few business owners who are foggy about the different finance professionals who help businesses make money and grow. It’s not that surprising; unless you’ve owned a business or worked in accounting or business finance, why would you know about their roles?
However, these professionals are critical to the success of your business, so let’s take a look at each.
What Does a Bookkeeper Do?
Bookkeepers are business historians; they track what has already happened. They look at all the transactions that have occurred within a defined period and organize them. This activity provides the data needed to create basic accounting reports (e.g. income statements, balance sheets, cash flow statements).
- Provide business leaders with information that supports financial decision making.
- Deliver the information that a CPA needs to submit your tax return.
What Does a Controller Do?
Controllers are the Zen masters of business; they live firmly in the moment. They focus on the status of your business right now. They’re concerned with how much cash you have, who owes you money and which bills are due. They keep you on budget and manage the accounting and reporting. Controllers rely on bookkeepers to report on past periods so they can manage the current period.
What Does a CFO Do?
CFOs are business gurus who look to the future and show you the path. They play a strategic role in your business. They’re looking at the big picture and planning based on sales expectations and business goals.
For example, if you owned a retail shop and wanted to open more locations, a CFO would help determine how those new locations would need to perform to be successful. A CFO would also figure out how much money you’d need to establish those locations and work with investors or banks to arrange for financing.
“Companies first engage us when they want to get serious and proactive about managing the numbers side of the business. For some that means we work together to develop their initial financial model and operating projection, while for others it means combining traditional bookkeeping and tax services with the strategy and insight of a CFO partner.
“In all cases the consistent factor is that the client recognizes adding expertise to help with the numbers will mean operating their business more effectively and enable them better focus on their core mission.”
What Does a CPA Do?
CPAs are tax Sherpas; they carry all the knowledge about your business, your tax responsibility and how to manage your relationship with the IRS. This is no small feat since the tax code is long and complex. CPAs act as your guide and make sure you follow the rules without overpaying the IRS. If your business is audited, a CPA will help you prepare so that you can get through the audit quickly and without unnecessary penalties.
“After 23 years of experience, I’ve narrowed it down to three key needs: 1) clear communication about their tax liability, 2) my ability to think about and plan for their specific situation and 3) minimizing their taxes or maximizing their refund.
“During the year, I encourage my clients to contact me any time they have a question or just to keep me updated. What may seem to a client to be an insignificant matter could have meaningful tax consequences. By leaving the lines of communication open, we can plan rather than react.
“While I am preparing their returns, I spend a significant amount of time trying to minimize their taxes as much as I legally can. Data entry is a small part of my job; I get paid to think.
“When the tax returns are complete before we file, I give my clients the opportunity to go over returns and address any questions they have. Communicating, planning and thinking are very often the difference between owing money on April 15 and getting a refund. “
Each One Has a Role
You can see how each of these professionals can help your business. When you get a great team, they work together to maximize your profit so you can grow consistently and sustainably.