As a business law firm, we are often asked to recommend a CPA. The term “CPA” has a very specific technical meaning (Certified Public Accountant), but this question is usually posed by a business owner who needs a range of accounting services, some of which he or she may not yet be familiar. Here is my usual response:
There are three categories for accounting and finance needs that all companies require at some point:
1. Bookkeeping services: Setting up and managing Quickbooks or other accounting software, preparing monthly P&L/balance sheets and other reports, bill-paying if desired, and the like. Setting up finance and accounting systems properly from day one will save a company time and money repairing costly errors which occur in the future. Research has shown a direct correlation between strong financial reporting and higher valuation multiples.
2. Tax return preparation and filing services; tax compliance/auditing and tax reduction strategies: Tax preparation and filing services are critical for ensuring a company is staying in compliance with local, state, and federal tax authorities. Many CPA firms which are focused on tax preparation and filing don’t provide bookkeeping services.
3. Outsourced Chief Financial Officer (“CFO”) services: I recommend developing a relationship with an outsourced CFO sooner than later because you will need their assistance and analysis on many of the big picture finance-related decisions you need to make for your company. Using an outsourced CFO in the early stages of a company can help assure future success by ensuring the day-to-day operators understand the current financial picture of the Company and also understand where the company is positioned for the future Company based on the financial models which an outsourced CFO can produce.
I also emphasize that business owners should not try to save a buck by going lean on professional services. Companies that engage in “DIY accounting” will pay for it later in the form of late fees, penalties, audits triggered by errors, inability to get optimal financing terms, rejections from prospective investors or buyers, and costly clean-up services.
At Hunter Business Law, we work closely with our accounting professional counterparts to help clients build on a healthy foundation. Let us help you put your dream team together.
This Blog was written by Hunter Business Law’s Founding Partner, Sheryl Hunter, Esq.
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