Financial Advisor vs Accountant

Tips to Decide Which is Best For Your Business.

At what stage of your business do you decide which is best for your business? I’ve helped many startups build their business and believe it or not this is nowhere in their business plan for success, some don’t even know the difference.

Let’s go back to a time when I suggested to a client that she needed to see an accountant or bookkeeper, to keep a record of the monthly business financial affairs. To my surprise, their response was, ” I don’t want anyone to tell me how to spend my money.” That’s when I realized that there is a terminology barrier to some that needed to be touched upon in order for my clients to truly become successful. Advisory and accountants are extremely important and it’s imperative to know the difference.

What exactly is an accountant or bookkeepers role in your business…

21aadf6a-fda8-451c-9185-11bfaaddc366I’m just going, to be frank with you, not everyone has the know how to manage their personal or business finances. I know we all think we have our own system of managing but when it comes to your business finances it’s best to leave it to the professionals to do it themselves or to educate yourself on the three basic financial reports: 1) income statements 2) balance sheet 3) cash flow statements.
The first question I ask clients when coaching them or consulting them is, “how much did your business make last month after operating expenses?” You know what the answer is….. Ahh, I think I made.Well, that answer isn’t good enough for me because as a business owner you shouldn’t think, you should know! As my mentor once told me, “If you ever get too busy to check your financials you don’t need to be in business anymore.”
Why is bookkeeping so important to startups:

  • Proper records keeping is required by law in case of audits
  • Bookkeeping keeps track of any information or documents needed to fulfill annual tax obligations to help the account help you to save money on your tax return and eliminate penalties.
  • It can give you a better knowledge of your monthly financial analysis & cash flow management.
  • Reporting to investors is easy
  • Proper records of your balance sheet and profit & loss allow you to know if the company is on the right track financially
  • The reports will help for your business to grow from startup phase to the mature stage of business.

Remember, it is important to outline the details of bookkeeping before the launch of your business because later may be too late. Bookkeeping can literally be your road to success and literally save you thousands of dollars or it can be your road to bankruptcy if not initiated from start.

Know The Difference

Your accountant’s goals are to reduce your tax liability and your financial planners’ goal is to increase your income. A financial planners main interest is to help plan your budget, savings, or investment strategy for wealth.  A good financial planner will understand their client’s financial needs and determine the best investments to help you reach your financial goals or help you to create a budget to eliminate debt and prepare for long-term financial planning such as retirements or school savings.
Do you need both? Well, my advice would be yes. Some accounts work as both and I would suggest that you find one that does both because he/she will understand your position financially. But if you decide to hire two separate, they must work together to understand your end goals. Please do not hire a seasonal tax preparation for your business filing needs, I’ve seen this scene one too many times. They are not properly trained to understand the needs of a business filing and far too many business owners end up in audits or owing when they should not have. Do your research, ask friends, or contact a CPA to properly protect your legacy.

But please file your taxes and keep accurate bookkeeping monthly!

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