What are the different account positions and how to hire for them?
When running your business, one of the scariest things for some entrepreneurs is the thought of mismanaging finances and in such a way that it leads to the dreaded tax audit. So, you try to do the best you can in the early years because you’re probably broke, and the list of services you need to hire for keeps going up. And what tends to take a back seat is accounting. So, I thought it might be helpful to lay out some of the conventional accounting roles, when you might think that it is worth hiring for these roles, and what you can expect to pay. After all, if you knew better, you’d do better, so here are some things you need to know.
They do just as the title says, keep the books. And by books, I mean the ones held in the cloud that maintain all incoming funds and outgoing expenses for your business. These transactions can be anything from bill payments to account reconciliations. But be careful not to assume that a bookkeeper can do more than keep the books. They are traditionally not qualified to manage tax returns or financial reporting. There is no formal education required to be a bookkeeper. They can simply declare that, with some experiences, they are qualified to match deposits to invoices, correctly categorize expenses, manage the chart of accounts, and enter and pay bills. If you are using software like Quickbooks or Xero, you may opt to select a bookkeeper with a pro advisor certification. Having worked for Intuit myself in the past, I assure you that the pro-advisor exam is a qualifier to use the software at an intermediate level, and that is all. It is not a bookkeeping exam; it does not cover the level of detail and knowledge needed to be a proficient complete bookkeeper. That ability comes with experience and education.
When to hire: You need a bookkeeper early. As soon as you get a business bank account. You should consult with a bookkeeper at least once even if you plan to self manage for best practices and how to properly use the software you have subscribed to. Setting up properly will prevent you from spending money on clean up at the end of the year. Doing so might save you a few hundred dollars and hours of headache and stress.
Price tag: I have seen bookkeepers charge anywhere from $15–65/hr depending on experience level and services provided.
Most people think that a bookkeeper and an accountant are the same thing, and they are not. The term accountant is used generally to describe anyone in the profession but can also be used to express a specific level of skill. Accountants or Staff Accountants tend to be more experienced than bookkeepers. Usually, accountants have an undergraduate degree in accounting. They probably have worked for a company in such a capacity and can perform journal entries and prepare books for tax return filing. More experienced than a bookkeeper but not a certified CPA.
When to hire: You need a staff accountant once your business has been up and running, and you are starting to build out your team, generally hired after a CFO to assist in some of the regular accounting tasks so that the CFO can focus more on financial reporting, forecasting, and budgeting.
Price tag: Accountants charge $125-$400 or more an hour, depending on the type of work, the size of the firm and its location.
Certified Public Accountants or CPA
This position is held by people who have taken and passed all four parts of the Uniform CPA Exam required to obtain certification. Meaning they understand in detail the theory around regulated accounting rules. This person has an undergraduate degree, that is probably in accounting or finance. After passing the exam, this person will have also worked in public accounting to some degree at least 150 hours, as required to obtain licensure. Additionally, if they received their CPA within the last few years, they will have taken an ethics course. It is essential to understand that if you are hiring a CPA, they are going to come at CPA prices. I often warn people who ask if a different firms’ fees are acceptable. To which I respond, obtaining this certification comes at a cost and is held in high regard, including the hours spent studying, you are not just paying someone to fill out a form for you. You are paying a CPA for their knowledge, their expertise, finding areas where you can save money, reviewing financials for errors, understanding how to prepare audit-ready financials, and defending prepared tax returns in the instance of an audit. While you might be able to pay someone else a lot less money to file a tax return, you may end up paying quite a bit in the long run.
When to hire: You should hire a CPA at tax time to file your returns — also, quarterly to review and prepare financial documents if needed. You should hire one, especially if you are not comfortable self-filing your returns. And definitely hire a CPA if you have complicated tax issues like depreciable assets, accrual accounting, and manufacturing businesses dealing in raw materials, work in process, and finished goods.
Price tag: I have seen CPAs charge $800 for simple small returns up to $2500 for more complicated returns and up — additional fees for audit management, and other financial review and preparation.
A Chief Financial Officer is an interesting role. What started as once a coveted executive position at a major corporation has seen a metamorphosis into an outsourced hire as needed role. While CFOs do not come with certification requirements outside of a typical degree, they do have extensive experience of at least 5+ years in leading a financial team. Outsourced CFOs are becoming more and more popular as the world shifts toward more startups with lean staff as traditional legacy corporations die off. It might be worth hiring at least once a quarter, specifically if you are accrual basis accounting and need to make sure that you are compliant with outside stakeholders. It can even be helpful to have an as-needed CFO for financial guidance when making major business decisions. They are exceptionally skilled in reading and interpreting financial statements.
When to hire: When your income starts to pick up and if you have assets that you need help with managing, or need someone to review the work of a bookkeeper or other accountant.
Price tag: The average CFO salary is about $65/hour.
As you can see, pricing is all over the place in this field, and it is easy to be lured by a lower price tag. If you expect a lot for a little money, this might not be the place to cut corners, as it may cost you much more down the line. Also, beware of people offering full services for a very small fee. They either do not know what they are worth or they are not worth much. I hope this is helpful.