You’ve probably been told that you need the services of a financial advisor for a business. This is because, quite simply, accountants and bookkeepers tend to be more expensive than financial planners or financial strategists who deal with cashflow, profit margins, balance sheets and quarterly profits. The reality is that most small businesses do need advice from an advisor, but just what kind of advice? There are several different perspectives that an advisor can take on a given business in order to provide the necessary direction to keep it successful.
A financial advisor for a business can provide a full range of advice on investing, business planning, investing in assets (both tangible and intangible), business finance and investing in inventory. He can also help business owners manage their personal finances and give them advice on how to plan for success. Most entrepreneurs think of a financial advisor as providing them with their money management needs. While this is a critical function, not all of these needs must be met by one person.
In fact, most successful business owners have several different accountants working for them. Bookkeepers and auditors are merely part of the team that manages their financial information. There are many different aspects of running a company that accountants and bookkeepers are responsible for, such as paying taxes, issuing payrolls and balancing cash transactions. Some accountants work solely on contracts while others are generalists who can handle all facets of bookkeeping, accounting and financial advisor jobs. Either way, both kinds of accountants work as a team with the primary goal being a financial success for the company.
Many business owners will also have CPA’s working for them, which means that they have an account executive for a specific line of business who handles all their personal needs. This can include insurance, mortgages, retirement plans and investment portfolios. Again, the role of these individuals varies greatly depending on the particular needs of the business owner. In some cases, CPA’s may also be general advisors who provide advice on investing and corporate matters. This is a more specialized role than the CPA, and it would be wise to consult with your attorney and accountant to determine the most appropriate professional to fill the role.
The CPAs, or certified public accountants, are typically independent contractors. They are paid to perform specific accounting and financial reporting duties, and will not be involved in the day-to-day operations of the business. Certified public accountants (CPAs) are knowledgeable in tax law as well as accounting practices and are highly trained to meet the complex requirements of CPA’s exam questions.
Another type of financial advisor for a business is the Certified Fraud Examiner (CFE). The CFE’s primary responsibility is to conduct investigations of fraudulent activity on behalf of a client. Some of their duties include reviewing financial statements, tax records, billing records, procurement bids and other documents, and assisting the client in responding to questions about transactions that do not pass the standard accounting controls. A CFE is not an accountant, and is not employed to conduct meetings or provide legal or tax advice.
Tax accountants hold a professional designation of either a Certified Public Accountant (CPA) or an Enrolled Agent (EA). A CPA is licensed through the IRS to provide tax advice and assistance to individuals, small businesses and large corporations with general tax issues. An EA is licensed through the IRS to offer financial statements and audit support to small businesses and individuals under the direction of a licensed tax practitioner. These two professional qualifications ensure that a CPA or EA has the knowledge required to successfully perform their job, and that they can provide the level of accounting support required for the task. A CPA must meet a high-level of educational requirement to qualify for this position and must successfully complete an approved internship program to earn their first CPA license. If you have a high-level accounting background, you may wish to consider becoming an EA.
There are many benefits to hiring an accountant who is also a financial advisor. Because these advisors typically specialize in one area of accounting, such as tax planning and/or business financing, they are better able to help you understand your individual tax situation. Also, because accountants generally have more years of experience in finance than most other degree holders, they are more likely to be familiar with the complex internal processes associated with the preparation of your accounting software product, as well as the accounting reporting guidelines utilized by your business.