Introduction
If you’re a woman entrepreneur reading this, chances are you do not consider yourself a financial professional for your business. Even though you started your business to create more freedom, you may quickly realize that you’re not making the progress or real impact you desire without being on top of your money.
The problem I typically see with clients is that they aren’t sure WHICH financial professional(s) to hire or when. And while some titles are standardized, many have considerable nuance (or mean different things online as in more traditional brick-and-mortar and offline businesses, like CFO roles). NOT having a financial professional is costing you a lot of money. As a former Financial Advisor (wanna check? You can see my Previously Registered status with FINRA here), I know the nuance of the most common finance pros, so I wrote you this guide. Remember, this is financial education but not financial advice.
The Role of a Bookkeeper
Bookkeeping: The Foundation of Financial Clarity
If there’s one ally you can’t afford to skip, it’s a bookkeeper. Seriously, they are the FIRST financial hire you should make, regardless of your business’ size (Fun fact: I started Day 1 with a bookkeeper, and I think you should too!) They do more than just manage your day-to-day finances—they ensure your business decisions are based on solid ground. With their meticulous tracking and management, you’ll always know the financial health of your business, giving you the peace of mind to focus on bigger things.
By maintaining detailed financial records, bookkeepers help businesses keep a clear and accurate financial history, which is crucial for monitoring financial health, planning budgets, and preparing for tax filings.
- Payroll Processing: In many organizations, bookkeepers also handle payroll processing, ensuring that employees are paid accurately and on time.
- Detailed Record Keeping: Bookkeepers track all financial transactions, including sales, purchases, payments, and receipts. This involves entering data into accounting software, ensuring each transaction is logged with the correct date, amount, and category. You need this level of detail for accurate financial reporting and analysis.
- Financial Reconciliation: Regular checks are a must. Your bookkeeper ensures that what’s in your books matches what’s in your bank, identifying any mismatches early to keep your financial house in order.
- Managing Payables and Receivables: Bookkeepers may manage accounts payable (money owed by the business to suppliers) and accounts receivable (money owed to the business by customers).
- Preparing Financial Statements: Bookkeepers prepare key financial statements such as the balance sheet, income statement, and cash flow statement. These documents are critical for assessing the business’s financial performance so you can make informed decisions.
When to Hire a Bookkeeper:
You’re starting a new business: For your taxes to be filed correctly, for you to know where your money is going, and how much you’re spending in each category, having up-to-date books is MANDATORY. This is a non-negotiable investment in your business’s success. Charge enough for your services to be able to afford a good bookkeeper.
What You Can Expect to Pay Bookkeeping costs can vary based on the volume of transactions, the complexity of the business, and the number of checking and credit card accounts. Generally, services can range from $300 to $750 per month for small to medium-sized businesses. Expect to pay a larger fee upfront if you need bookkeeping cleanup (that’s what it’s called when your books haven’t been done for the past months or years). No shame; it’s worth the investment.
The Role of Accountants and CPAs
When selecting a professional to manage your taxes, particularly for business owners with revenues exceeding $100,000 and contemplating S-Corp or C-Corp classifications, I recommend hiring a Certified Public Accountant (CPA) or an Enrolled Agent (EA). Both are credentialed professionals authorized to represent clients before the IRS, providing crucial support for tax-related matters.
CPAs are licensed professionals who specialize in various financial services, including tax planning. Their rigorous training ensures they adhere to the highest standards of ethical and professional conduct.
Here’s when you should consider hiring a CPA:
- Initial Business Structure Decision: A CPA can help you make the right decision about the tax benefits and implications of S-Corp versus C-Corp classification, helping to establish your business on the right tax footing from the start.
- Annual Tax Filing: Corporations are subject to stringent filing requirements. A CPA ensures that your filings are accurate and timely, helping to avoid penalties and maximize tax benefits.
- Ongoing Compliance and Planning: Tax laws evolve frequently, and a CPA can provide ongoing strategies to ensure you benefit from all available deductions and credits while remaining compliant.
- Audit Representation: In the event of an IRS audit, a CPA can represent your business, offering expertise essential for navigating the audit process effectively.
Cost Review: Basic tax services for smaller businesses might start around $2,000 annually, but given the complexity of corporate taxation, expect higher fees for comprehensive tax strategy and compliance management. A GREAT tax strategist will save you the taxes you pay for their fee.
DO NOT TRY TO FIND THE CHEAPER OPTION HERE.
The Role of Financial Advisors
Traditional financial advisors work on the personal side of your finances and manage your equities portfolio (think stocks, bonds, ETFs, mutual funds, etc). They help you understand, manage, and grow your investments to meet specific financial goals and usually get a commission for doing so (Paying around 1% of your total portfolio per year is standard)
For someone to call themselves a financial advisor, they must hold securities licenses (Series 7 is the most common, but they may also have others), which allow them to provide investment advice and manage your wealth portfolio. Beware: Many quasi-financial professionals and some insurance agents may represent themselves as FAs. Before you engage, check them out here on BrokerCheck.
it’s essential to navigate the world of financial advising with a clear understanding of how these professionals operate and the potential barriers you might face. Because many FAs at big financial services firms only receive commissions, Most will require you to have a substantial minimum investment—often $250,000 or more—before they’ll manage your portfolio, making it difficult for many first-time investors, particularly women from Black and Brown communities, who historically may not have access to such amounts. Also, the level of personal attention and explanation regarding investment choices can vary.
Many clients report only receiving a yearly check-in, which can leave you in the dark about the strategic decisions being made with your money. It’s important to discuss their communication styles, how they choose investments, and how they plan to involve you in decision-making. This will ensure that you find an advisor who is qualified and aligned with your need for transparency and regular engagement.
When to Hire an FA:
- You have a significant equity portfolio (or large amount of cash you want to invest) and you want to be hands off and let someone else manage your investments.
- You’re looking for a long-term partnership and have a long time horizon for investments to grow (5+ years)
- You’re okay with paying a small percentage of your portfolio each year (1% is standard, but expect up to 1.5% on smaller balances and sometimes lower than 1% on large balances or lower-risk products like fixed or index annuities).
The Role of Financial Planners
Certified Financial Planners (CFPs) are licensed professionals who offer holistic financial planning services. They integrate various aspects of financial health, including investments, insurance, retirement, and tax strategies, into a comprehensive financial plan. Certified Financial Planners (CFPs) have met rigorous qualifications and adhere to strict ethical standards to provide comprehensive financial planning services. They are equipped to handle all aspects of financial planning, including investments, retirement planning, insurance, tax strategies, and estate planning. CFPs are invaluable for those seeking holistic financial advice to ensure all financial decisions are well-coordinated and aligned with long-term goals.
- Comprehensive Financial Planning: CFPs develop detailed plans that cover every aspect of your financial life, ensuring that all your financial goals are addressed from multiple angles.
- Retirement Planning: They provide expert guidance on how to save for retirement, how much you’ll need, and the best investment strategies to fund your retirement years.
- Risk Management and Insurance Planning: CFPs assess your insurance needs to ensure proper coverage, protecting you and your assets against unforeseen events.
- Estate and Tax Planning: They help structure your estate and financial affairs to minimize tax liabilities and ensure your legacy is managed according to your wishes.
Hiring a CFP is particularly beneficial when:
- You need a comprehensive evaluation of your financial situation from a professional who can integrate various financial disciplines.
- You are looking for guidance on long-term financial planning, including saving for major expenses like college tuition or a new home.
- You want a tailored strategy that not only seeks to grow your assets but also protects them.
- You need coordinated advice that includes your tax situation, investment choices, and future estate considerations.
CFPs typically charge for their services in several ways, including flat fees for a financial plan, hourly rates for consulting, or ongoing fees based on a percentage of assets under management. These fee structures ensure that the advice you receive is unbiased and focused on your best interests, rather than driven by commissions.
The Role of Money Coaches and Financial Therapists
Money coaches and financial therapists provide essential guidance for managing personal finances and addressing the emotional aspects of money management. While they both aim to improve financial well-being, they focus on different aspects of your financial health.
- Practical Financial Guidance: Money coaches help clients develop and stick to budgets, reduce debt, and set achievable financial goals. They offer hands-on advice and support to improve financial literacy and help individuals make informed financial decisions.
- Emotional and Psychological Support: Financial therapists delve deeper into the psychological factors influencing financial behavior. They address issues like financial anxiety, money conflicts in relationships, and unhealthy spending habits, which can be barriers to financial security.
Hiring a money coach or financial therapist is particularly beneficial when:
- You struggle with maintaining a budget or have difficulty managing your spending.
- You feel overwhelmed by financial decisions or experience anxiety when dealing with money.
- You need to break free from negative money habits that are impacting your financial health.
- You seek to improve your relationship with money and need strategies to handle financial stress more effectively.
Money Coaches:
- Budgeting and Debt Management: They work with you to create realistic budgets and practical strategies to reduce debt.
- Saving Strategies: Money coaches also help you plan for future savings goals and provide techniques for gradually growing your wealth.
Financial Therapists:
- Behavioral Change: Financial therapists provide tools and techniques to change harmful financial behaviors and develop healthier money management skills.
- Emotional Support: They offer a supportive environment to discuss financial fears and develop a positive mindset towards money management.
Cost:
- Money Coaches: Typically charge hourly rates, ranging from $100 to $300 per hour. Some may offer package deals based on sessions.
- Financial Therapists: Similar to money coaches, they charge hourly or per session, and rates can vary based on their credentials and the complexity of the issues addressed.
Money coaches and financial therapists address both practical financial skills and the emotional aspects of financial management. They are pivotal in transforming your approach to personal finance.
- Primary Responsibilities:
- Coaching on budgeting, saving, and debt management (Money Coaches)
- Addressing emotional and psychological aspects of money (Financial Therapists)
- When to Hire: If you struggle with financial discipline or the emotional burdens of money management.
- Cost: Generally ranges from $100 to $300 per hour.
Fractional CFO
Stepping up from a solid foundation laid by bookkeepers and CPAs, a Fractional CFO is your strategic partner in navigating the complexities of growth and financial forecasting. If your busines’ top-line revenue is over $1M per year, this role is critical. There may be circumstances where a business with lots of complexity or offers may choose to partner with a Fractional CFO at lower revenue levels, say $500,000 per year.
A Fractional CFO does more than manage your finances—they forecast and strategize for your future. Wondering if you can afford to hire a new coach next quarter? Or how much you should allocate to payroll costs annually? Maybe you’re debating the timing of your marketing spend, especially considering the fluctuating costs of ads throughout the year. A Fractional CFO uses detailed financial analysis and market trends to provide answers to these questions with clarity and confidence.
They help you:
- Plan for Growth: They create detailed financial models that predict future revenue streams and expenses, helping you identify when and where to invest in expanding your team or your operations.
- Manage Cash Flow: They ensure you have a clear picture of your financial health, not just for today but projected throughout the year. This way, you can make informed decisions about spending and saving, avoiding cash crunches that can cripple growth.
- Strategic Spending: With their finger on the pulse of market conditions and advertising costs, they advise when to increase your marketing efforts to maximize ROI and when to conserve resources for more opportune times.
Hiring a Fractional CFO is a highly personalized decision based on whether you need forecasting and strategic advisory services. Also, this is not a regulated title, so you must carefully vet who you hire. In my opinion, any CFO should be an actively licensed accountant, preferably a CPA. Be wary of consultant-type persons with no accounting experience moonlighting at CFOs. Pricing varies WIDELY as some firms will also take over your bookkeeping, tax strategy, tax preparation in addition to the
Introducing the Wealth Coach
As a wealth coach, I focus on helping clients identify their financial goals, overcome psychological barriers to wealth, and implement strategies to build and maintain wealth. Note: This is not a regulated term, so there will be significant variations between practitioners. Make sure you ask any coach what their specialty is and how they help you create and maintain wealth.
- Primary Responsibilities:
- Helping you identify and embody your wealth identity (i.e. the BEING you need to become in order to hold onto large sums of money and multiply it)
- Overcoming money mindset blocks
- Strategic financial planning for long-term wealth accumulation
- When to Hire: If you seek a holistic approach to financial planning and need help navigating both the strategic and behavioral aspects of finance.
About Natalie Bullen: From Financial Advisor to Wealth Coach My transition from a licensed financial advisor to a wealth coach has allowed me to focus fully on educating and empowering clients in their financial journeys. With a deep understanding of the financial industry and a commitment to ethical guidance, I help clients navigate their paths to financial independence with confidence and clarity.
Key Findings
- Different financial professionals provide specialized services tailored to various aspects of financial management.
- The cost and scope of services vary, making it important to choose the right professional based on your specific financial needs and goals.
- Understanding when and why to engage each type of financial professional can significantly enhance your financial strategy and success.