Depending on the size and nature of a business, managing the company’s financial operations can look like many different things. For some, the accounting function is fulfilled solely by internal staff members, and for others, financial operations may be spread between internal and external personnel.
Whether employees or outside consultants, bookkeepers, CFOs and CPAs are major contributors to an organization’s accounting and financial operations, and regardless of size or industry, just about every business requires the services of one or all of these professionals at some point during its life cycle.
So how are each of these roles different from one another?
In very general terms, bookkeepers help with the day-to-day “nuts and bolts” aspect of accounting, while CFOs are more concerned with identifying and leveraging the financial intelligence that can be derived from various reports and KPIs (key performance indicators). CPAs typically assist with things like compliance, audits, tax planning and tax return preparation.
Although they fulfill very different functions within an organization, they also must work together to achieve a company’s long-term financial goals. (In some cases, one professional might even fulfill more than one of these roles.)
What Does a Bookkeeper Do?
Bookkeepers are responsible for recording each and every business transaction that runs through the organization and for keeping that data current in an accounting software program.
They must track things like income, expenses, payables and receivables, and they are responsible for reconciling accounts and closing the books each month.
Bookkeepers are the front-line gatekeepers of financial data, meaning they are generally the first to process all in-flowing transactions like bills, invoices and credit card charges. If a bookkeeper isn’t meticulous about processing and recording transactions correctly at the outset, the reports and KPIs that inform effective strategic decision making will be inaccurate.
In the past, many small businesses employed a bookkeeper in-house, but more and more companies are turning to outsourced solutions, which can be more efficient and are a better leverage of company resources.
What Does a CFO Do?
The chief financial officer (CFO) must understand an organization’s current state of affairs as well as be able to project an organization’s long-term financial picture. As a core competence, a CFO must have strong analytical skills that allow them to interpret reports and identify strengths as well as opportunities for improvement.
Using data collected and categorized by the bookkeeper, a CFO uses tools like financial modeling and financial scenario analysis to determine best outcomes for achieving both short- and long-term goals. A CFO also can help a company determine when and how to scale and is typically the chief investor relations contact. They provide crucial strategic advice, like whether to stay the course or pivot quickly.
Many small businesses that do not yet require a full-time CFO could benefit greatly from an outsourced, fractional CFO who can provide them with invaluable financial expertise and strategic advice as they grow.
What Does a CPA Do?
A certified public accountant (CPA) provides high-level tax-related expertise. They are subject to continuing professional education and experience requirements to maintain their standing with a state licensing board.
A CPA uses data within the accounting file (typically maintained by the bookkeeper) to prepare federal and state tax returns and ensure the organization is legally compliant and audit ready.
A CPA also can help small businesses tax plan to ensure they receive maximum legally allowed deductions. Many business owners meet with their CPA semi-annually or even quarterly to discuss estimated tax payments and determine a plan that maximizes their position when it comes to year-end tax preparation.
Putting It All Together
Whether a family-owned or a Fortune 500 company, businesses rely on the expertise of bookkeepers, CFOs and CPAs. The great news for small businesses—especially those concerned about adding headcount—is that they don’t necessarily have to hire a full-time CFO or bookkeeper. Many companies are finding outsourced solutions are a great fit for their current level of need. And in fact, some outsourced solutions offer tax planning services in addition to bookkeeping and fractional CFO services, and can provide a seamless answer for all your financial functions.
Steiner Business Solutions offers a comprehensive solution to your financial and accounting needs. We invite you to visit us here to connect with our experienced professionals and learn how we can help you achieve your short- and long-term business goals.