Finances and Taxes

How to Choose the Right Financial Pro for Your Business [Infographic]

Andi Smiles Small business financial consultant 

There comes a point in every small business owner’s journey when you look at your money and think, “What is even happening?” That’s also the point when you realize it’s time to hire someone who knows more than you.

The issue is, you’re probably clueless about WHO to actually hire.

While hiring a financial team can feel intimidating, it’s also one of the smartest things you can do as a business owner. Knowing your finances are legit removes a tremendous burden and prepares you to focus on more strategic decision making.

When hiring someone to help with your finances, it’s important to first understand WHAT you need help with and then WHO can help you. It’s helpful to think of these as roles in your business rather than individuals. Not all bookkeepers, accountants, tax preparers, and financial planners are alike. In fact, you may find people who can do it all. Or you may need to hire several professionals to fulfill multiple roles.

Now, let’s get into it. 


4 types of financial pros you can hire for your business

1. A CPA

A CPA (Certified Public Accountant), often called just an accountant, is one of the most versatile professionals in the financial world. All CPAs have to pass an accountancy exam and complete a number of requirements to become licensed.

I repeat—a legit CPA is licensed. Often people use the word “accountant” as a misnomer for all financial professionals or all CPAs. If you’re considering hiring a CPA, be sure they are indeed a CPA and have a current license.

Most CPAs will give you their license number, which you can check with your state’s Board of Accountancy to verify if their license is active and in good standing.

CPAs specialize in a wide range of things, from taxes to estate planning to forensic accounting to venture capital. Before hiring one, check to see if they have experience with small businesses and specifically, businesses in your industry.

What small business CPAs can help you with:

  • Advise you on the legal structure of your business.
  • Advise you on the financial structure of your business.
  • Financial statement audits.
  • Develop a tax strategy for your business.
  • Prepare and file your business taxes, and in many cases, your personal taxes.
  • Financial recordkeeping (in some cases, not all accountants will do this).
  • Review and monitor your financial data and make suggestions based on your data.
  • Prepare financial reports, metrics, and projections.
  • Advise you on a business growth strategy, cash flow management, debt management, and budgets.
  • Process payroll.

When to call a CPA:

  • When you’re first starting out and need help choosing a legal structure
  • At tax time! Or anytime during the year if you’re looking for strategic tax advice.
  • When you’ve got a sticky financial situation
  • Anytime you’re about to make a big financial move in your business, such as taking out a business loan, bringing on another partner, working with investors, or making a drastic change to your business model.

2. A tax preparer

A tax preparer is an enrolled agent, or a financial professional licensed by the IRS to file taxes on behalf of others. They represent their clients in an audit and in some cases, tax court too.

To be clear—an enrolled agent isn’t a CPA. They don’t take an accountancy exam and fulfill the licensing requirements of a CPA. Rather, enrolled agents pass a federal licensing exam certifying them to file taxes on others’ behalf.

While CPAs have a wide breadth of knowledge when it comes to finances (including taxes), a tax preparer’s skill set is zeroed in on taxes.

What tax preparers can help you with:

  • Prepare your business and personal taxes.
  • Develop a tax strategy for your business.
  • Answer your tax questions.
  • Represent you in an audit.
  • Represent you before the IRS.

When to call a tax preparer:

  • At tax time, if you need tax advice, or if your tax situation is changing
  • If you receive a notice from the IRS about your taxes
  • If you’re audited by the IRS

Do I need a CPA and a tax preparer?

Nope. You either hire a CPA or a tax preparer.

CPAs can be expensive and many small business owners might not be able to afford to keep one on retainer. Even having a CPA file your taxes once a year will usually cost more than hiring an enrolled agent.

Tax preparers are perfect for those who have a fairly simple business model and don’t need ongoing financial advice. If you’re on a tight budget, hiring a tax preparer ensures that you get yearly oversight of your finances and that your taxes are filed correctly.

3. A bookkeeper

Bookkeepers are the people who process your financial data. While you may interact with your accountant or tax preparer a handful of times a year, your bookkeeper is the pillar of your financial team. You will interact with them on a daily, weekly, or monthly basis, depending on the size of your business.

Bookkeepers analyze the information from your receipts, bank statements, credit card statements, and any other financial institutions you use and enter that data into your accounting program. They ensure that your books are up to date and accurate.

What bookkeepers can help you with

  • Set up your accounting software (cloud-based and desktop).
  • Enter your financial data into a software program.
  • Reconcile your accounts every month.
  • Design your invoicing, accounts receivable, and accounts payable systems.
  • Manage accounts payables and communicate with vendors.
  • Manage accounts receivables and communicate with customers.
  • Prepare financial reports, metrics, projections, and analysis.
  • Process payroll.

When to call a bookkeeper

  • To set up your financial record keeping software and processes. This includes streamlining your systems so they aren’t a mess!
  • For daily, weekly, and monthly support with your financial operations
  • To clean up messy bookkeeping files that have long been neglected
  • To catch up your financial recordkeeping if you’ve fallen behind

Can one bookkeeper really do it all?

That depends on your business and how much of your day to day financial operations you plan to outsource. Some small businesses only work with their bookkeeper on a monthly basis, while others hire a full-time bookkeeper or even a bookkeeping team.  

4. A financial planner

Financial planners focus on helping you plan your financial future and manage your personal finances. Many business owners get confused about the roles of a financial planner vs. an accountant and are surprised when their accountants don’t offer personal financial advice.

What a financial planner can help you with:

  • Manage your investments and advise you on an investment strategy.
  • Manage your debt.
  • Personal finance strategy and budgeting.
  • Retirement planning.
  • Insurance planning (health, long-term care, life insurance, disability, etc.).
  • Estate planning.
  • Develop long-term strategies based on your financial goals.
  • Overall wealth management.

When to call a financial planner:

  • If your personal finances are a hot mess and you need support managing your money.
  • When you have long-term financial goals and need to develop a strategic plan (i.e. buying a home, retirement, saving for your children’s college, etc.).
  • To help you select the best insurance options for you and your family.
  • For investment advice and planning.

Do you need a financial planner and a CPA?

It depends on the size of your business and your needs. When you’re first starting out, it’s wise to work with a CPA to ensure that your financial and tax strategy are on point. As you build more personal wealth, you may need to hire a financial planner to help you manage that wealth.

It’s not uncommon to find a CPA who is also a financial planner and vice versa. If you can find one of these magical creatures in the wild, snag them, and you’ll be getting the best of both worlds.

Where to start

Do your own books

Before you start your search for a financial team, try doing your own books for a few months. You’ll learn how accounting works in your business, which will enable you to have more informed discussions with the people you hire.

Create a wishlist

Then, outline all the roles and duties you are looking to fill. Start with the financial tasks you’re currently performing and then move on to your wish list.

If you’ve ever thought, “Wouldn’t it be so great if someone could tell me X, Y, and Z,” put that on your wishlist!

As you interview financial professionals, ask them about the roles on your list. It’s okay if they can’t do it all, but check in before you assume it’s outside of their expertise. You may be pleasantly surprised by what folks can do.

Seriously vet the financial pro you hire

And, of course, never hire anyone who makes you feel bad or shameful about your money. Whoever you hire is going to be all up in your money business. Be sure you trust that person to see the good, the bad, and the ugly—and the awesome—when it comes to your hard-earned money.

Find your perfect financial pro with Gusto’s Partner Directory. Learn more here.

Andi Smiles
Andi Smiles Andi is a small business financial consultant and coach who teaches business owners to take control of their finances. She’s helped hundreds of self-employed folx organize and understand their business finances, while also uncovering their emotional relationship with money.
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