If you are a small business owner, you know that bookkeeping is one of the most essential components of running a business. Having your accounts organized, ensuring that all entries are accurate, and deriving data from your books can help you improve your financial position and establish a competitive edge.
Once your business is off the ground and running—or, in many cases, well before its running—you will inevitably discover that bookkeeping and business accounting can be rather overwhelming. Making just one small mistake in your books can have a hazardous compounding effect that can ultimately harm the financial, strategic, and even legal standing of your business.
Because of this, the vast majority of small business owners will choose to hire some type of bookkeeper or accountant. Hiring an accountant can provide your firm with myriad benefits, including saved time, better data, precise financial planning, effective tax management, and more. Currently, there are more than one million accountants practicing in the United States alone.
If your business has decided that it’s the right time to hire some type of bookkeeper, the next thing you will need is to decide what type of bookkeeping service you plan on contracting. In this article, we will discuss some of the many types of accountants and bookkeepers that can potentially help your small business. By taking the time to understand the differences between these types of services, your business will be able to decide which one works best for you.
Outsourced Digital Accountant
Hiring an outsourced finance department can be extremely beneficial for businesses across many different industries. Rather than having to embrace the cost of hiring an accountant to work in-house, an outsourced digital accountant will work on an as-needed basis from a digital location.
Of course, while these firms do work remotely, that does not mean they are difficult to reach. The best-outsourced accounting firms will offer continuous support and will answer each of your accounting questions as they inevitably emerge. Digital accountants can perform a range of different functions including standard bookkeeping, asset valuation, project planning, payroll management, and more. If you are a new business looking to get your books organized, these types of accountants—whose services are scalable and customizable—are a great place to get started.
The Chief Financial Officer (CFO) of a business is the top executive for tracking financial activity and making financial decisions. Because CFOs have a pulse on a business’s financial situation at all times, they are very familiar with the ins and outs of various financial statements including the balance sheet, income statement, and statement of cash flow.
As the name suggests, a fractional CFO performs the basic functions of a CFO but works just a fraction of the time at a fraction of the cost. These services are perfect for smaller organizations that do not want to pay the heavy price of hiring a full CFO. They’ll help your firm with forecasting, investing, and financial modeling, which will put your business in a position to enhance its bottom line.
In accordance with The Companies Act, all public and state-owned companies are required to have their financial statements (derived from your books) audited and certified. Private companies are usually not required to complete an audit by law, however, it is strongly recommended.
An auditor will help ensure that all of your financial statements are accurate and that your business’ claimed assets, liabilities, and equity are evaluated correctly. Even if your business is a private entity, an audit will also be necessary for anyone hoping to secure financing or engage in any mergers and acquisitions. Auditing is great for business owners because having access to better data is key to making better financial choices. But, furthermore, auditing will help keep your business protected in the event it is among the unlucky few that is audited by the IRS.
A project accountant will perform most of the functions of a traditional (staff) accountant, but usually, these individuals are hired to help manage the finances attached to a specific project. These projects can come in many different forms including restructuring (transitioning from an LLC to a Corporation, for example), opening an additional location, hiring more employees, merging with another company, and many other endeavors.
Projects often create unique accounting challenges because so much of the numbers you are working with are speculative. For example, it is not uncommon for a $2 million to construction project running over and costing $3 million or even more. Having an adaptive accounting partner will make it easier to navigate these periods of financial uncertainty.
In light of the 2020 pandemic, a growing number of businesses have shifted their operations either partially or entirely online. Even before the pandemic, eCommerce was a growing trend and the census estimates that eCommerce now accounts for about 15 percent of all economic activity, up from about 5 percent just one decade ago.
Hiring an eCommerce accountant can help your business adapt to the unique challenges presented by this particular space, including setting up a digital storefront, tracking accounts payable and receivable, managing payment processing costs, paying taxes in the right jurisdiction, and more. If these challenges (among others) can be adequately accounted for, the eCommerce marketplace offers a tremendous range of opportunities.
Conclusion: Deciding which Accountant is Right for You
As you can see, there are many different types of bookkeeping and accounting services a small business owner might consider hiring. Hiring an accountant can offer a tremendous amount of value to your business and will make it much easier to meet your long-term financial goals.
To find the outsourced accounting firm that’s right for you, begin by looking inward and identifying your own business’ current needs and challenges. Take some time to interview multiple different accounting firms, learn about the value they can offer and how they plan on helping your business. By taking the time to just do a little bit of research upfront, you’ll be able to position yourself for long-term success.