You Say Accountant, I Say Controller

You say tomato, I say tomāto. You say accountant, I say controller. Unlike tomato and tomāto, the terms accountant, controller, and chief financial officer (CFO) do have significant differences.

We could go into great detail on what makes them different (oh wait, we did). Instead, here’s a basic breakdown of the difference between the three:

  • An accountant is responsible for entering day-to-day transactions and performing basic accounting functions. These could include entering bills and invoices, running payroll, paying sales tax, etc.
  • A controller is responsible for the accuracy of the financial statements, preparing budgets, calculating financial ratios, etc.
  • A CFO is responsible for a forward looking perspective. They are involved in strategic planning and providing improvement recommendations based on the financial ratios provided by the controller.

Each of these positions relies on the other to get the information they need and to make your accounting and financial processes run more smoothly. Each has a distinct purpose and each is important for the financial health of your business.

Now we know what you’re thinking … there are THREE positions. Yep. But that doesn’t mean they’re three people. Technically, one person could perform all three positions. Often times in small businesses, this is exactly what happens.

The first position you will need is an accountant. Do not take this position lightly. One of the greatest needs of business is the need for good financials. Hire someone who has the knowledge and experience to do a good job, like someone who has experience working with your type of business, or has a strong financial background. If you hire the right person with the right experience, they can also serve as your controller. A CFO is needed when you begin to use your financials as a management tool.

Yet at a certain point, you need to begin to think about expanding your financial department and separating the roles. Knowing when to separate depends on your business. Consider who will be looking at your financials and the purpose for those financials.

So what if you’re just not ready for all three positions? Or, what if you are, but financially you’re not ready to hire all three. After all, recent research shows that a CFO can cost over $125,000.

Look into outsourcing it! A trusted business advisor or accounting firm can help you outsource any number of functions, from the day-to-day functions all the way to the CFO level. Not sure how to find the right advisor to help? Here are six questions you can start with.

By outsourcing these positions, you can free your time to work on your business. Plus, you’ll have a trained professional who can help you understand the importance of your finances and why they matter.

Accounting Tasks for Small Business Owners

Being a small business owner can be tough. You have a lot on your plate to handle, and sometimes it can seem downright overwhelming. From keeping up with the competition to making sure your employees are satisfied, being a small business owner always keeps you busy.

In the midst of all this, it’s important to ensure you’re not neglecting parts of your business. One area is (you guessed it) your accounting and finance functions. These functions often sound daunting and somewhat scary (don’t worry – we can help!), but they are too important to be forgotten.

We’re not saying you need to drop everything and pay attention to your accounting and your accounting only, but there are some simple tasks every small business owner should stick to in order to keep the business finances operating smoothly (and help make your accountant’s job a little easier).

  • Stay away from the back burner – When you’re busy and have a million thoughts running through your head, it’s easy to look at something and think, “I’ll take care of it later”. When it comes to invoicing, send the invoice right away. Better yet, add a process to automate invoices being sent right away. This will get the bill to the client quicker, which can in turn lead to you getting paid quicker, and who doesn’t want that? This reduces the risk of you forgetting to send it altogether, and can lead to improved customer satisfaction by being on the ball. When you receive this payment, deposit/cash/spend it right away, rather than letting it sit around and risk it getting lost or even stolen. Another option is to consider receiving electronic payments.
  • Keep your eyes open – Running a business means you have a lot of financial statements to deal with (think balance sheet, income statements, etc.). Likely you have an accountant who is helping you maintain these records and keeping track of what is going on with your financials (and if you don’t, let us know!). But, you should still be doing some monitoring yourself. No one knows your business as well as you do, so you should be able to notice if something seems off. Start by reviewing your cash flows weekly. Your cash flow can tell you the money that is coming and going from your business during the week, and this can give you a good picture of where you’re standing. Occasionally viewing other financial statements allows for more eyes to be on the lookout for any issues and red flags that may arise.
  • Track your taxes – We know that taxes aren’t everyone’s favorite topic, but they are really important. As nice as it would be to only worry about taxes during tax season, that’s not the case. Taxes should be monitored and kept up throughout the entire year, whether it be filling out forms, making tax payments or just keeping note of what you may need to change when you file your year-end taxes. Being alert and aware of what’s going on with your taxes can lead to less surprises come tax season.
  • Keep in touch –While looking over your financials and taxes, remember to keep your business advisor or accountant in the loop. Not only will it make their job a little easier, they’ll also be able to provide helpful feedback and answers so you can make smart, informed business decisions.

Running a business can be a challenge, and not monitoring your financials can make it more difficult than it really needs to be. By keeping up with these simple tasks, you can put you and your business in a better position and get back to working on what really matters – the success of your business.

Prepping for Audit & Tax Work

It’s that time of year again – and no, we aren’t talking about the Super Bowl or Valentine’s Day. It’s time to starting thinking about your taxes and audits! Your awesome, talented and completely humble (or maybe not) CPAs know their stuff when it comes to taxes and audits.

However, there are some things you can do in your business to help prepare for your audit and tax work and (hopefully) take some of the headache away regarding these fun projects.

  1. Have your management or ownership team review all financial information before you submit it to your CPA. You might catch a mistake that needs to be fixed.
  1. Understand your balance sheet! If you’re recording your financials on the accrual basis (here’s your reminder), your balances should fluctuate. Some common balance sheet blunders we see include:
  • Prepaid asset issues. For example, did you prepay your insurance and still have some coverage in to the next year? You would then need to set that amount up as an asset, and reduce your expenses for the year.
  • Accrued liability issues. These are really anything you owe at year-end. You would still have to pay these, even if you stopped doing business on the last day of the year. For these, think of accrued PTO to your employees, sales tax collected, etc.
  1. Take a look at the tax organizer list or list prepared by client that your accountant or auditor has sent you, and make sure all items are good to go. It doesn’t hurt to have this reviewed by someone else, too. In fact, once this information is ready to go, your CPA will likely accept it early.
  1. Designate an employee in your company who will be the main contact with your CPA. This is usually someone who is responsible for most of the financials, or someone who has strong project management skills. If you’re the business owner and feel like this doesn’t quite describe you, have no fear – it doesn’t need to be you. Your time might be needed somewhere else in the business. Your accountant or bookkeeper would be a great contact, as they work with your finances daily. As a side note, if you choose to outsource your accounting services, that person could serve as your CPA’s main contact. This will help you have more time to work on your business, not in it.
  1. When it comes to your audit, know when your auditors plan to either work at your site or work on your information. If they will be on-site, make sure you have a space (and maybe a treat or two – rumor has it CPAs like treats) with enough room for them. Make sure your main contact and others who may have answers are around. The assistance of these people can ultimately improve the turnaround time on your audit and tax return. Let’s be real, it feels good to get that over with.

Some other pointers to consider…

  • Consider all the changes to your business that happened throughout the year: growth, new customers, etc. Are all the effects of those changes reflected in your financials?
  • Did you have any ownership changes? Even if you’re not quite sure how to put this on paper, bringing them to your CPA’s attention is always a good choice.
  • Did you add any long term assets (think building additions, vehicles, equipment, etc.)? If so, there are some details your CPA will want to know to make sure you’ve capitalized it correctly and are capturing the correct depreciation (hopefully some accelerated depreciation, too).

Ultimately, keep in mind that all of us CPAs are hired by you, to help you. Your success is our main goal. If we’re hard to understand, or using too much confusing number nerd talk, let us know. We want you to understand what’s happening in your business. Your CPA can be a valuable ally on your pursuit of growth and success for your business.

Something to Brighten Your Tax Day

NOTICE: Taxes are due today!

Hey, wait…isn’t tax day April 15th? Come on numbers nerds, get with the program.

Well, in most cases, you would be correct. Normally the most awesome day of the year is April 15. But this year is special. Why? Because this year Emancipation Day was observed on April 15th by the District of Columbia and therefore tax day was moved to April 18th.

That means you were given a few extra days to file your tax return or extension (you still have to pay though). But who needs the extra days right? You’re already on top of it, we’re sure.

In honor of tax day, we thought we could take a break from the normal content and spread some laughter with some of our favorite tax humor. Enjoy!

The hardest thing in the world to understand is the income tax. – Albert Einstein

How do you tell an introverted accountant from an extroverted one?

An introverted accountant stares at their shoes, an extroverted one stares at yours

What’s the difference between an accountant and a lawyer? The accountant knows he’s boring.

Woman goes to the doctor and finds out she has 6 months to live. Her doctor advises that she marry an accountant.

Woman: Why marry an accountant? Will that make me live longer?

Doctor: Well… no, but it sure will seem longer!

Why was the accountant so excited on the weekend? Because he gets to wear casual clothes to work.

The Best of 2015

As we conquer the first full week of 2016, let’s pause to take a look back one last time at 2015. We launched the Possibilities blog in the fall and have had great feedback so far. Here are our five most popular blogs from 2015:

  1. The Roles of an Accountant – whether you think accounting is boring or not, it’s an important practice that matters to your business. Learn more about the different roles of an accountant here.
  2. No, I Don’t Work for the IRS – Just because someone’s an auditor doesn’t mean they work for the IRS. In fact, sometimes an audit can be a very good thing. Learn why.
  3. Business Planning 101 – don’t head off on your next business venture without the necessary navigation system in place. Learn more about business planning and why it matters.
  4. 5 Things You Didn’t Know Your CPA Could Do – Your CPA is a person of many talents. Some do taxes, others not so much. Find out five areas you may not have known your CPA can assist you with.
  5. Key Takeaways from #FargoConnect – Congratulations all. One of the most popular blogs of 2015 wasn’t even about accounting. Check out what our team learned during the annual #FargoConnect social media conference.

It seems 2015 was the year of changing the mindset on what an accountant actually does/can do for you, how to map out your road to success and a little social sprinkled in (which is good for this marketing gal’s heart).

As we embark on a new year, we want to ensure you have the information you need to make sound business decisions. We want you to imagine what’s possible and arm you with the knowledge and resources to move your organization forward. So in case you hadn’t heard it enough, here’s one more plug. If you have a question, ASK. We’re more than happy to answer any question you may have about the financial side of your business and why it matters. So send us those blog ideas and questions and we’ll get writing.

Let’s make 2016 your best year yet!

Best of 2015 blogs (1)

Finding the Right Accountant

It’s the holiday season and your kids are pouring through catalogs, searching online and making extensive Christmas lists (okay, admit it, we’re describing you). We take care to make lists, check them twice and ensure people know exactly what we might be “surprised” to find underneath the Christmas tree.

All this work for one time a year. What if you put the same effort into finding someone to help your business grow and succeed? Someone who not only understood your books but could help you project, forecast and make sure all the boxes were checked. That person is your accountant (come on, would you expect anything less from us?).

Too often, small businesses adopt the DIY model until the finances become too complicated, or too much of a mess, before they call someone in. Finding the right accountant for your organization early (whether it be someone on your staff or hiring an outside firm)  is a gift that will give continually to your organization.

But how do you know what to look for? Similar to the search for the perfect gift, research is key. Here are things you should be sure to put on your accountant wish list:

They know their stuff. We’re talking degree(s) obtained, GPA, certifications (CPA, CMA), continuing education, accounting software experience/background and more. Further, make sure to take a long look at their resume, as it’s truly your first impression. Do they have proven accounting experience? How long have they stayed in previous positions? What were their job responsibilities at each position?  Basically, you’re looking to ensure they have the background and framework to help you and your organization.

Tip: Ask them to explain in their own words their skill set and experiences from past positions. Raise the red flag if they just start reciting their resume.

You understand what the heck they’re talking about. You’ve taken the first step and reviewed their experience and education. They know their stuff. But the question is, can they help you understand it as well, beyond all the jargon? According to Forbes, “the mark of a really-great-to-work-with CPA is an ability to translate esoteric ideas and terms into something that you can truly understand and work with. You want someone who will go beyond doing a job for you – you want to be able to use them as a resource to expand your knowledge of how to run your business.”

Tip: Have more than one person interview them. Have a separate interview within different departments to see how well they communicate across departments or individuals. Here’s a few questions to ask:

  • Explain a time when your month-end close process didn’t go well, what did you do to fix the problem?
  • What processes have you put in place to strengthen the accounting department and why?
  • How do you handle the tight deadlines within an accounting department?

 

It’s not all about THEM. Yes, you’re looking for an accountant for your organization, so you want to make sure they’re qualified. But remember, it’s not all about them. It’s about YOU too. A good accountant should be able to discuss your business and be willing to learn more about what you do. Sure, they need to know the numbers, but they also should be a genuine partner who can give feedback and advice across various areas of your business.

Tip: Ask some general questions about starting or running a small business. A good accountant should be able to talk about industry trends and answer basic small business accounting questions.

They’re not the best thing since sliced bread.

A truly good CPA will be skilled, but will also know where their shortcomings are. According to Forbes, “Look for someone who openly discusses what they’re good at and what their flaws are – and hopefully how the rest of their team compliments and compensates for them.”

Make sure your accountant not only knows their stuff, but is backed by a team that also knows their stuff. Learn more not only about your accountant, but about the team that will be working alongside them. It’s highly likely you’ll be working more with their staff on day-to-day operations and preparation then with the CPA. So you should probably make sure you all get along.

Don’t take their word for it.

Remember, an interview is a person’s opportunity to show their best self. But they should also be able to back it up. Background checks are incredibly important, as they allow you to verify what a person has told you. Background checks can verify education degrees and graduation dates, credentials and if they’re still active, and employment. Further, calling professional references will give you a clearer picture of the person or firm you’re looking to hire.

Yes, this will take time. However, it will take more time if you hire the wrong accountant/firm and then have to replace them and onboard someone else. Spend the time upfront to ensure you get the right accountant early on.

Seem like a whole lot of work? You can always hire a placement service firm (like us) to do the hard work for you.

Hiring the Right Accounting Firm

Personal Use of Vehicle

We interrupt your day to bring you another article on taxes. In case you hadn’t guessed it, year-end is HUGE for tax planning (here are a few reasons why you need to be year-end prepping). There a number of criteria and factors that go into tax planning.

Personal Use of VehicleToday’s topic is personal use of vehicles. All employers who furnish vehicles to employees  are required to add the personal use value of the vehicle to their employee’s W-2. It’s important to understand this as it will affect not only your tax situation, but your employees’ individual tax liability.

Seem complicated? Don’t worry, we have a handy packet to help. Download our Personal Use of Auto packet to learn more. Here’s a sneak peek of what it includes:

  • Notice for employers who wish to have employer-provided vehicles available for personal commuting and minimal personal use (think lunch stop or personal errands on a business trip).
  • An alternate notice if you would rather have your employer-provided vehicles uses specifically for business only.
  • Employee notice, summarizing your position on employee-provided vehicles and responsibility for documentation (read: this is where you stand on use of vehicles and this is what you expect).
  • Explanations of various methods available to figure out personal use value of employer-provided vehicles.
  • A statement from employee to the employer regarding use of employer-provided vehicle (read: your employee understands your policy and signs this statement)
  • Worksheet (don’t you miss those from school) to calculate employee’s taxable income from employer provided vehicle.

There are several things to consider when prepping for tax season and vehicles are just one of them. Don’t feel overwhelmed. We’re always here to help if you need us.