Today, I’m chatting with a long-time friend of the podcast, Susanne Mariga to discuss some of the important financial tools for business owners. This is her second time on the show because she has incredible knowledge and lots of information to share. She is a CPA and fractional CFO. Her work is mostly with seven and eight-figure businesses to help them implement tax strategies and employs a Profit First strategy to scale their business to the next level.
Find the Right Accountant for Your Business
You can hire many types of accountants to help you with your business, but how do you know who the best option is? First, it’s essential to understand that different types of accountants exist. Some will just help you with your taxes and find deductions for you. The best accountants will meet with you regularly and help you strategize. They will get to know your business and align with your goals.
For example, suppose your goal is to improve employee retention and longevity because it saves your business money. In that case, your accountant should help you work on a plan and system where employees’ retirement options fully vest after two years to incentivize continued employment.
The right accountant for your business will help you be proactive instead of reactive with your financial decisions. They will help you develop a plan to increase your net worth over time. Small business owners have more flexibility in how taxes are addressed. You get to keep more of your money than if you were just an employee working for someone else. Your accountant should assist you with aligning your expenses and deductions to match what you enjoy and benefit from.
Accountant vs. Bookkeeper
Do you have a bookkeeper for your business and consider yourself covered? Bookkeepers create financial statements and organize receipts, transitions, and numbers. However, there are no degree requirements or strict compliance requirements to become a bookkeeper. That’s why working with an accountant, specifically, a CPA, is important.
Not all accountants are CPAs, but all CPAs are accountants. Why does the CPA matter? Only certain people can work on your taxes, file them, and assume responsibility on your behalf. If you hire a bookkeeper to prepare your taxes and there’s a mistake, that will fall on you. CPAs assume the responsibility, and you receive that insurance.
CPAs work really hard to pass the test and carry the license. There are continuing education requirements as well. Most will not risk their reputation by taking on too much or giving poor advice. You’ll find that they are more analytical and can help with strategy while being held accountable by the licensing board.
The Importance of Being a Profit-First Professional
Once you’ve got your accountant sorted out, remind yourself that accounting is historical. It’s looking backward at how you’ve done. Cash flow management looks at what’s coming down the pipe and is also critical for business owners. PFP has helped me in the past. There was a moment when things felt off with my accounts for two months, and the accounting reports didn’t show anything. It turned out that a client had not been paying.
Building financial systems that attack when things are off will protect you as a business owner. You should predict your expenses and determine if something is off your plan as statements come in. I always say that if you’re a business owner who can’t bring yourself to look at bank statements or credit cards, you have no business running a business.
Strong financial systems require you to course correct often. Keep asking yourself hard questions. Understand the good, better, and best projections and plan your spending based on that. You may have to cut ties with services you love, but it’s important to understand your ROI. Businesses run best if you’re always in your numbers.
Paying The Stupid Tax
Susanne uses the phrase “stupid tax” as a way to describe mistakes entrepreneurs make that cost them money and could have been avoided. There are so many examples of this, but we dive into a few that she has recently shared as quick videos.
Auto-Renewals
Contracts are often sent over digitally now and many people make the mistake of signing on the dotted line and moving on. What is frequently missed is auto-renewals. All of sudden, you’ll get hit with a huge charge after a year and you can’t get out of it because contractually you signed off that you were good with it. Even if you’re not using the product or service and were planning not to more forward.
The best thing to learn after paying this stupid tax is to put processes in place to stop renewals or verify the appropriate actions required to get out of a renewal before it’s too late.
Employees Without the Vision
It’s important to make sure your employees understand your vision and values. Susanne’s example was about a spa experience she had recently where she spent a couple hundred dollars purchasing services and at the end of the experience, she returned to the garage to get her car. There should have been a discounted price for the valet and the employee wouldn’t give it to her without a receipt and gave her a really hard time about it.
The experience made her way less likely to return which will cost the hotel money in the long run. Your employees should all be encouraged to think outside the box a bit and work on solutions to issues so they can remain aligned with your organization’s values and avoid alienating your customers.
Hiring People on Potential Alone
Potential sounds like a great word for an employee, but in reality, you need to hire someone that can deliver on their job quickly. If you hire someone that isn’t able to do work, you’ll end up paying so much more to fix the work to be correct. The example she gives is a bookkeeper that continued to send over financial statements showing negative cash. The banks would not allow this to be the reality, so it was clear that the bookkeeper was missing something pretty crucial.
Final Thoughts and Advice around Financial Tools for Business Owners
We’ve covered some differences between bookkeepers and accountants, plus pointed out some examples of Stupid Tax for you to avoid if you’re a business owner. Let’s wrap this up with a few pieces of advice from me and Susanne’s conversation. Starting with the simple advice I have given before – don’t get your business and financial advice from someone dancing on TikTok.
The economy is unpredictable, but we both believe that it’s pretty strong right now despite what the headlines say. You can thrive, but you should also remember that what was working in the past might not be working anymore. Don’t get stuck in a test cycle too long. And lastly, stop the stupid tax. Hire for what you need, don’t hire for the potential of a person, hire for their ability to deliver now.
Connect with Susanne on LinkedIn if you want to chat more and make sure that you’re using the Revenue Goal Calculator to help you make smart financial decisions looking forward.
