You probably don’t think about hiring a CPA (Certified Public Accountant) until you get a letter from the IRS or need help with bookkeeping.
Perceptions of ‘number crunchers’ persist, when the reality is of innovative business advisors. CPAs possess an arsenal of knowledge in law, finance and real-world business experience to help you manage and scale your business. Instead of hiring a full-time CFO, a CPA can handle those responsibilities on-demand.
A good accountant should:
1. Keep accurate records for investors and banks.
2. Track financial health of the business.
3. Set up and manage budgets.
4. Keep track of expenses.
5. Forecast future revenue.
6. Determine when to adjust operations or personnel.
Commonly regarded as one of the oldest professions in the world, accountants have become experts at analyzing books and producing financial reports. For many years, the only assets that were valued and measured were tangible and financial assets. Today over 80% of market value is in non-tangible assets.
Keeping a record of your financial details is important to the livelihood of your business and a good accountant will set up proper procedures to help you accurately track them.
Not only will keeping accurate records make it easy to file taxes and secure funding but they will also give you insight into the day to day health of your business, allowing you to make better decisions for the future.
CPA can also set up KPI metrics to track your progress. Examples:
Cost of Acquisition — how do users find you and at what cost?
Activation — do users have a great first experience?
Retention — do users come back?
Referral — do users tell others?
According to a study undertaken by the Small Business Administration, 28 percent of companies go bankrupt due to problems with the financial structure of the company. Many of these problems could be avoided by having a CPA incorporate and structure your business. They can help you with the initial set up of QuickBooks/Xero (or any other appropriate tool for your specific business needs).
In order to obtain the CPA certification accountants go through rigorous training and testing. Many start in public or large accounting firms and work with tens if not hundreds companies throughout their careers. Engaging with so many unique companies, they gain experience working with all different types of business models, plans, pivots, successes and failures. CPAs have the capability to critique your business model, examine your strategy, and help you explore new pivots.
Historical and projected financial information is, by default, viewed with skepticism by investors. Having a CPA involved at least as an advisor will establish credibility and ultimately increase your chances of raising capital. They will also help you run lean and set up budgets that you can stick to.
CPAs themselves need to be more involved in the startup community and start taking over CFO responsibilities on-demand. This is the role that the CPA reputation has earned and startups need it utilize this expertise instead of hiring full-time CFOs.
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I believe CPAs are underutilized by startups and small businesses. Over the last 8 months, I curated a network of licensed CPAs who specialize in startups and are available on-demand. If you need help with taxes, payroll, or bookkeeping, visit www.countup.io and connect with your personal CPA in minutes.