Four types of financial experts & how they can help your small business

You got into business because you love what you do, not because you know how to manage your bookkeeping or analyze your finances. That’s why financial experts exist. They do all the mathematically heavy lifting so you can do what you do best: run and grow your business.

But unless you’re a financial expert yourself, it can be hard to know what kind of help you need. What’s the difference between an accountant and a bookkeeper anyway? When should you hire a CPA or CFF? And what do those acronyms even stand for?

Let’s break down the different types of financial experts you’ll encounter over the course of running your business—and when you should hire them.

1. Bookkeeper

Put simply, a bookkeeper upkeeps your books. That much is obvious. But what exactly do they do? Bookkeeping responsibilities vary depending on the size and needs of your business. But a bookkeeper’s main goal is to organize and maintain your business books.

 This means:

• Monitoring transactions and expenses
• Balancing business accounts
• Reconciling bank statements
• Correcting errors and making adjustments
• Reviewing and preparing payroll records
• Producing or paying invoices
• Preparing books for tax season

Imagine how much time you could save if those duties didn’t fall to you! Bookkeepers exist to free up time in your schedule to focus on the vision you have for your business. Working with a professional bookkeeper also minimizes the room for error, ensuring you have accurate financial data. And, come tax time, a bookkeeper can help you prep your books for accurate filing. In the event of an IRS audit, clean and accurate bookkeeping records are going to be your best friend.

When should you hire a bookkeeper?

There’s no specific milestone or checkpoint that indicates when you should hire a bookkeeper for your business. If the day-to-day management of your business books is taking up too much of your time—time that could be spent growing and optimizing your business—it’s a sign you might need some help.

Likewise, if you’re starting to feel like your books are a riddle wrapped in a mystery inside an enigma, a bookkeeper can help you sort them out. Most business owners don’t feel totally confident when it comes to the financial management of their business, bookkeepers are a great resource.

2. Accountant

While a bookkeeper maintains and updates your books, an accountant uses those books to assess your finances, provide financial insights, and diagnose the financial health of your business. An accountant can help you make financial decisions for your business, determine profitability, and look for opportunities to grow your bottom line. A bookkeeper handles the clerical side of bookkeeping, like data entry and monitoring, while an accountant analyzes those numbers.

In general, an accountant’s duties include:

• Overseeing a bookkeeper’s work
• Managing the bookkeeping process
• Generating and analyzing financial statements
• Creating financial forecasts
• Preparing tax returns

An accountant’s role typically requires a higher level of expertise and education. Accountants usually hold an accounting degree and are either accredited by the Accreditation Council of Accountancy and Taxation or are registered as a certified public accountant (CPA). CPAs must pass the CPA exam to use this highly regarded title.

When should you hire an accountant?

It’s not uncommon to work with both a bookkeeper and an accountant. Bookkeepers manage your financial records so accountants can provide expertise and advice. You can hire a bookkeeper anytime, but an accountant can’t do their job without a bookkeeper (or, at the very least, a solid bookkeeping process).

It might be time to hire an account if you’re already working with a bookkeeper and you’re ready for deeper financial insights and business growth. An accountant is a dedicated financial partner for your business. They want to help your business grow, and they’ll give you the tools and advice you need to do so.

3. Financial advisor

A bookkeeper manages your books and an accountant analyzes them, but a financial advisor looks beyond the books. A financial advisor takes both personal and business finances into account, whereas an accountant or bookkeeper isn’t interested in seeing your personal funds unless you accidentally make a business purchase on a personal card.

As always, duties vary by business needs. But in general, financial advisors help by:

• Building spending and saving strategies
• Providing financial recommendations
• Assessing business cash flow
• Analyzing profit and loss statements
• Researching and understanding market trends
• Investment and retirement planning
• Succession planning when the time comes

If you’re just starting out, a financial advisor can help you make the most of your venture capital as you transform it into a viable business. They can assess your business model and help you outline a plan for financial success. Beyond that, they can help you establish essential accounting and bookkeeping processes to pave the way for your future accountants and bookkeepers.

When should I hire a financial advisor?

A financial advisor is never required for running a business, but they can be a new entrepreneur’s best friend. Business owners just starting out can benefit from consulting with a financial advisor as they build a business plan, develop accounting processes, and set financial goals for their business. Beyond that, a financial advisor can help you with basic business setup like choosing a business structure, finding business insurance, or creating a retirement plan.

If you’re new to the business landscape and not quite sure how to navigate it, a financial advisor may be a good partner to invest in.

4. Tax professional

Taxes aren’t anyone’s idea of a good time, but small business taxes are even more complicated. Working with a bookkeeper or accountant to prepare your books for tax season is a great first step, a small business tax professional can take you the rest of the way.

A tax professional can be authorized by the IRS to represent you on all tax matters. It’s their job to stay up to date on ever-changing tax laws, rules, and regulations, so you don’t have to. These rules can change every year, and they have a big impact on how much you owe or get back in your refund. Additionally, tax professionals are experts at identifying ways to save money at tax time, and they can give you advice for reducing your tax liability in the future.

Anyone who prepares taxes for a fee can call themselves a tax professional, but not all tax preparers can represent you before the IRS. If your accountant is a CPA, they can prepare your tax return and represent you before the IRS. Likewise, enrolled agents (EAs) are tax professionals who have passed the special enrollment examination given by the IRS and can represent both individuals and businesses before the IRS.

When should you hire a tax professional?

You can certainly prepare and file taxes on your own, but you might be missing obvious small business tax credits and deductions or making mistakes that could result in a costly IRS audit.

If you’re feeling anxious about filing taxes for the first (or even 27th) time, a tax professional can ease your fears. If your taxes are complex, you have an outstanding debt with the IRS, or you’re worried you won’t make the filing deadline, investing in a tax professional is a responsible choice.

Finding the right financial expert for your business

Every business has different needs. You might not be ready for a full-time bookkeeper, but you could still use some help managing your books. You might not need an EA to help with taxes, but you could still use a bit of guidance. No matter what financial help you need, you have a few options:

1. Use automated software: If you’re not ready to invest in an actual human’s time to manage your books or analyze your finances, a bookkeeping and accounting software like QuickBooks Online can help. While this requires more of a DIY approach from you, it sure beats tracking your finances in a spreadsheet. Plus, when you’re ready to take the next step, it’ll be easy for a financial expert to take over where you left off.
2. Use a virtual service: These days, you can take a yoga class, start a business, and take a meeting—all without leaving your couch. Why not add accounting and bookkeeping services to that mix? Virtual financial services like QuickBooks Live Bookkeeping and TurboTax Live allow you to connect with a real financial expert online to get help when you need it.
3. Hire a contractor or remote expert: These experts aren’t in your office, but they’re dedicated to your business and available on a need-to-have basis. When working with a contracted or remote expert, communication is key.
4. Hire an in-house professional: As your business grows, you might decide you need an accountant or bookkeeper to handle your finances full-time. Or, at least part-time. Investing in a financial expert for your business means investing in your future.
5. Use the resources you already have: Remember, some of the experts you already work with might offer additional services that fit your growing needs. Your accountant might offer bookkeeping or tax preparation services—and they’ll likely offer those services at a lower rate when you “bundle.”
    

Ask these questions before you hire a financial expert

Once you’ve decided the level of financial expertise you need, make sure you do a little vetting of your own. It’s important to work with a financial expert who understands your business, knows your industry, and has your business’s best interests in mind.

Ask these questions to get the full picture:

•  What are your credentials? Anyone can call themselves a financial expert, make sure  you partner with someone who has proof.
•  Do you have experience in my industry? Businesses in every industry operate  differently, it can be  helpful to find someone with prior experience in yours.
•  What’s the scope of your services? Some financial professionals offer more limited services than others.
•  How do you price your services? Find out what’s included in their rates so you’re not  caught off guard.
•  Do you have references? Past or current clients can offer additional insight into the  expert’s services and experience.
•  What’s the backup plan if you’re unavailable? Business doesn’t stop just because  your financial expert does. A professional always has a backup plan.
•  How are my interests protected? Fiduciary financial advisors are legally obligated to  prioritize the client’s interests.

How to be a good partner to your financial expert

Working with a financial expert, whether a bookkeeper, accountant, advisor, or tax professional, is a two-way street. They can only do their jobs well if you do yours. For business owners, this means:

• Keeping your books clean and organized by consistently recording all transactions
• Keeping personal expenses and accounts completely separate from businesses expenses and accounts
• Keeping track of important dates and deadlines, like tax filing deadlines
• Communicating regularly—and meeting at least quarterly to stay on track
• Being honest about your purchases, expenses, bonuses, and any other financial events or records
• Automating bookkeeping and accounting processes so your financial expert doesn’t waste time sorting through a box of receipts or demystifying a spreadsheet

Manage and track expenses with Amazon Business + QuickBooks

Tracking expenses, categorizing transactions, and automating accounting processes is easy when you use QuickBooks Online. QuickBooks syncs with your accounts to automatically track and categorize income and expenses. And when you shop using your Amazon Business account, the Amazon Business Purchases app for QuickBooks is the smart and simple way to review and organize transactions.  See product descriptions, costs, and fee breakdowns for every transaction, then categorize and match with your bank transactions automatically.

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