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How Much "Accounting" do you need?

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Every business, from a Fortune 500 Company to a one-person consulting practice, needs to account for their revenues, expenses, asset, liabilities, and equity in a systematic manner.  Who needs this “accounting”?

  • Business Owners – to have an accurate understanding of their company’s financial results and “health”
  • Lenders – to determine the ability of the business to repay a potential loan
  • The IRS (and other taxing authorities) – to calculate the proper amount of tax to assess

If every business needs to have accounting services, how much “Accounting” does a business need?  Ask any CPA this question and they will give you the default CPA answer – “it all depends…”

Huh?   Depends on what – How much I want to pay the CPA?  How much money I have?  Actually, the answer here is “yes”, to these and many other factors.  Examples of these factors are how many transactions my business does in a year, how many employees there are, how many inventory items are available, what industry is the company in, and many more…

At Berry Talbot Royer, we have identified four levels of accounting services that can performed by the company or an outside accounting firm.  These four levels are:


  • Bookkeeping – Many people think of this as “keeping a checkbook”. It is that, plus the recording of invoices to customers, bills from vendors, cash receipts and deposits, cash and check payments, credit card charges, and payroll processing.  This is the extent of accounting that most self-employed individuals need.  Some business can survive with just bookkeeping, but they are not accurately reflecting all of their business activities.
  • Staff Accounting – A business will often place a help wanted ad for a “full-charge bookkeeper”, when they really need a staff accountant. What is the difference?  Besides have all of the bookkeeping functions performed, a staff accountant can accrue revenue and expenses that are not yet ready for entry as bills or invoices.  They can also perform more complex calculations, like a percentage of completion for a contractor, work in process for an architect, and cost variances for a manufacturer.  The Staff Accountant really does “bookkeeping +…”
  • Controller – When all of the bookkeeping and staff accounting have been done, the results of this work is compiled into financial statements and other operating reports, analyzed, and reviewed by management. A controller can not only create the basic financial statements (balance sheet, profit and loss), but can also analyze these statements to ensure that they “make sense”.  The controller will also produce the reports necessary for management (e.g. cash flow forecast, sales per employee, etc.).  Management can review these results and use the reports to more effectively run the business.
  • Chief Financial Officer (CFO) – Isn’t this only for big, publicly traded companies? Well, that would be true if only big companies needed to strategically plan for the future.  However, even local companies need to compile and analyze information that will help a company grow.  Examples of this type of information are return on investment (ROI), cash management options, forecasts and projections, and other “big picture” tasks.  The CFO ensures that all of a company’s financial needs and results are accurately and consistently reported.

Your company may need one, two, or more of these types of accounting services, regardless of your company size.  If you do not want to hire a full-time employee for any of these needs, let Berry Talbot Royer do these for you on a part-time basis.  With our experience and expertise, we can help you get all of the “Accounting” that your company needs.

 

Topics: Tax Tips, Tax Planning, Accounting