Investing in a virtual CFO is a wise choice for your small business. Virtual CFOs provide valuable strategic financial advice such as optimal capitalization for your business. They also take care of managing time-consuming tasks such as bookkeeping and tax compliance. They assist in automating accounting processes, allowing you to focus on business growth.
Here are compelling reasons to contract virtual CFO services:
Management of Bookkeeping and Records
According to Aleksey Krylov, a lead consultant for Tialma, a Fractional CFO Consulting Firm, virtual CFOs save you precious time by managing the team that records and classifies day-to-day financial transactions. They also set up and oversee the systems, policies and procedures that enable proper recording of financial transactions. They enforce financial controls that enable safeguarding of the financial assets of the organization.
They offer insights into automation solutions for more efficient accounting processes. Additionally, they are instrumental in creating budgets and forecasts that set attainable financial goals, providing a solid foundation for strategic planning, ultimately reducing tax liabilities and enhancing cash flow and profitability. Their responsibilities encompass managing financial transactions, balancing the books, and preparing essential financial statements.
A virtual CFO is responsible for establishing and maintaining financial policies and procedures that ensure accurate and consistent financial reporting. These policies outline how financial data is recorded, verified, and reported. A CFO oversees the collection and analysis of financial data. They work closely with finance teams to ensure the accuracy and completeness of financial information. Lastly, a Virtual CFO is responsible for preparing financial statements, including the income statement, balance sheet, and cash flow statement. These statements provide a snapshot of the company’s financial health and performance.
A virtual CFO is responsible for selecting, implementing and maintaining specific accounting and financial management software systems. Depending on the organization’s needs, these may include QuickBooks, Xero, Sage Intacct, NetSuite or even enterprise level ERP systems such as Oracle or SAP enterprise resource planning systems. For startups, QuickBooks and Xero are popular choices, but there are other options available. The selection depends on factors like cost, features, scalability, and user-friendliness.
The virtual CFO oversees the implementation of the selected software. This involves setting up user accounts, configuring the chart of accounts, and customizing the software to align with the organization’s specific needs.
The virtual CFO is responsible for tax planning, which involves devising strategies to optimize the organization’s tax liability while staying within the bounds of tax laws, whether it is on the state or federal level. This includes identifying tax credits, deductions, and incentives that the organization can take advantage of.
Proper record-keeping is essential for tax compliance. The virtual CFO ensures that the organization maintains accurate and organized financial records, which are critical for preparing tax returns, supporting deductions, and providing documentation in case of an audit.
The virtual CFO oversees the preparation and filing of all tax returns, including income tax, sales tax, payroll tax, and any other taxes relevant to the organization. They ensure that these returns are accurate, complete, and submitted on time.
While the virtual CFO typically delegates the day-to-day payroll processing tasks to the HR or finance department, they maintain oversight to ensure that payroll is processed accurately, and employees are paid on time. This includes verifying the accuracy of salary calculations, bonuses, and deductions. The virtual CFO ensures that the organization complies with all federal, state, and local tax regulations related to payroll. This includes withholding and remitting income taxes, Social Security and Medicare taxes, and any other required payroll taxes.
Virtual CFOs work closely with the executive team to align the budget with the organization’s strategic goals and objectives. They ensure that financial resources are allocated to initiatives that support the company’s mission.
Budgeting is crucial for tracking expenses and preparing for the future. Virtual CFOs play a key role in analyzing costs and revenue estimation. They offer expert guidance in projecting future expenses, income, and profits, ensuring the realism of these projections. Employing a virtual CFO not only saves you time and helps prevent costly financial errors in the short term but also positions your business for long-term growth.
If you’re seeking to offload back-office tasks and concentrate on business development, hiring a virtual CFO represents a valuable investment for your business.