Who is on Your Business Money Team?
July 26, 2022
by Eric Johnson

There can be a lot of confusion around who should be on your business money team and their roles (including your role as the business owner). But without a solid team, you may feel confused about your finances–which is never a good feeling.

No matter how long you’ve been in business, it’s time to pull together your team now or revisit the individuals who are supporting you.

Your “Accountant’s” Role

The term “accountant” is broad and is mostly misused by business professionals. For this article, we’ll limit it to the role of tracking your business’s finances and producing accurate financial statements with them. Think P&Ls, balance sheets, reconciliations, and all of that good stuff.

At a basic level, a bookkeeper will focus more strictly on recording your financial transactions. An “accountant,” however, can give you insight into your financials to help you make strategic decisions. Newer or smaller businesses may suffice with a bookkeeper initially but may have to hire an accountant as the business grows and becomes more complex.

Oftentimes, it’s not the best use of the owner’s time to keep the books. However, you still must understand how to read your financial statements and conduct your financial affairs in such a way that it’s easy for your accountant to track everything (i.e. no commingling of funds between personal and business accounts). Also, if you don’t understand your financial statements and don’t review them regularly, you may put yourself at risk of being stolen from. You want to find an accountant with the heart of a teacher, who will help you understand your financial statements.

Your Tax Pro’s Role

Business owners often think that all accountants prepare taxes. This is not true. Tax and accounting (bookkeeping) are two processes. The accounting needs to be complete before the taxes can be prepared. When seeking out a tax pro, find someone with the heart of a teacher (see a recurring theme there?) who will explain to you how to minimize your taxes and stay in compliance with the IRS and state. If you really want to save on taxes, you’ll meet with your tax pro on a quarterly basis, but definitely at the end of third quarter as you near year-end. Proactive tax planning is the best way to keep taxes low and to ensure there aren’t any surprises come tax time.

You can make your tax pro’s job easier by having accurate and complete P&Ls and balance sheets. Your accountant actually does the heavy lifting in this regard. Be sure to ask your tax pro about any tax savings opportunities or recent changes in tax law that might affect you (a great tax pro will tell you before you ask). Last, make sure you pay your quarterly estimated taxes to the IRS and the state.

NOTE: If your tax pro encourages you to spend off your profit to reduce taxes, seek a different tax pro.

Your Cash Flow Management Coach

We can’t talk about money teams and neglect to mention Profit First Professionals! While accounting tells you where your money came from and when (via financial reports), cash flow management directs where your money goes. We use the Profit First cash flow management system to help business owners become permanently profitable, pay themselves regularly, reserve for taxes, and know exactly how much they need to budget for their business’s expenses. A Profit First Professional can help you design a system that works for your business and your goals.

Contact a Profit First Professional Firm (that’s us!) to do an assessment of your finances and build out a customized cash flow strategy for you. If you contact us, we’ll give you step-by-step instructions.

Your Board of Directors Role

I know what you’re thinking: You’re a small business and you don’t have a board of directors. I get it. But I’ll bet that you really do, if you think about it.

Think about who you’re venting to about your business: your partner, a biz bestie or two, a mastermind group, your adult children, maybe even a parent or other family member. Some of these people might offer you feedback and guidance on your business. I know one business owner who calls up her dad every time she’s making a big business investment. Because he’s a former business owner, she feels like he has a good handle on the right questions to ask before putting down a deposit.

This “board of directors” has heard you talk about your business and has watched it grow and develop. They understand some of the inner-workings of your business without having to start from square one on the details. You trust them and they have a vested interest in whether or not the business succeeds.

Your Spouse’s Role

You read that right. Depending on your business’s structure, your spouse or significant other may be part of your team. That doesn’t mean that they have a seat at the table (though they might). But it does mean that how you pay yourself and how much you pay yourself will have a big impact on your home life.

Also consider the conversations you have with your partner about what’s happening at work, who you’re hiring, challenges you’ve been presented, and so on. For better or worse, your partner gets insight into your business, likely no one else does. So considering them as part of your working money and leadership team is important.

Last Thoughts

Accounting, taxes, and cash flow management are different disciplines, although closely related. There are some professionals who can do all three, but it’s probably best if you separate some of it out to protect yourself and your money. But all the members of your business money team should be in some type of communication with each other. Just make sure that they are familiar with your business, your industry, or goals, and have the heart of a teacher.