Magazine for the professional limousine, charter and tour industry.
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LIMOUSINE, CHARTER & TOUR JANUARY 2017 35 important is the quality of the people working on your account, and a sea- soned and local tax firm will more likely provide a better service. Finally, it should be noted outsourc- ing of professional services does not end your responsibilities. When using mul- tiple resources at different entities, com- munication becomes more important and something you may need to coordinate to get the full benefits of the services you buy. Unless you are skilled at conduct- ing these relationships individually, you would be well advised to get these par- ties to communicate with each other and with you. Regular meetings should oc- cur to ensure all parties are on the same page. While each seeks to protect your best interests, your financial reports and plans require communication and coor- dination to ensure correct implementa- tion and continued viability. Do I Need A CFO? In many ways, coordinating all the piec- es of accounting and reporting is the job of a CFO. While many businesses con- sider themselves too small to afford a CFO, they are the ones who most need the CFO's expertise. Rather than a pure accounting responsibility, the CFO acts more as a conductor and coordinator of the professional services around the business. The CFO speaks the various languages, understands how to transform business strategy into economic prin- ciples, and always seeks to optimize the business. Don't underestimate what this set of skills can add to your operation. In a fractional environment using part-time, on-demand services, the CFO has the responsibility as the last line of defense. The beauty of modern services is this can be achieved without perma- nently hiring. By using a strategy of coordinated outsourced accounting ser- vices, the CFO, the accounting manager, and the staff and senior accountants all can be a part of your team. And they use the most current systems armed with the most current laws and regula- tions specifically tasked with properly accounting for your business. Hiring this expertise in-house is impossible for most operators, but with fractional ser- vices, the costs may equal a good sal- ary. But you get a team with multiple areas of expertise to properly and le- gally document your business' financial performance. For nearly every livery operator, outsourcing is the way to go to lower cost and improve your report- ing compliance. — Anne@LCTmag.com ods can be used. So how should account- ing work in your business? Balancing Your Accounting Needs If you already have accounting capabili- ties in-house, you likely do it on your own as long as there is more than a sin- gle person. If you do not have enough or the right type of in-house resources, then the best solution is outsourcing. In today's accounting services mar- ket, outsourced services are common. A team of accountants from different back- grounds and specialties provides frac- tional resources on a budget and with services agreed upon. The most mun- dane responsibilities of balancing mer- chant statements and recording bank and credit card transactions are completed by the staff accountant. A senior accountant then checks and reconciles them. Recon- ciliations are reviewed, and an account- ing manager creates the analysis. If ap- propriate, a CFO meets with the owner once a month to discuss the effects of the prior month, how they differed from the budget, resulting consequences, and what the operator should do about it. This team approach typically ranges from $2,000 to $6,000 per month de- pending on the services provided. Still, they are less than the cost of a single em- ployee and provide the insurance of de- greed and certified accountants perform- ing the duties in a safe and secure way. In these arrangements, the team can use an accounting system already in place, or they can assist in putting up a new system. Most often, simple systems such as QuickBooks are adequate. Li- censes are annual, so you can pay as you go, and most accounting services know how to use the system. Reports will be tailored to meet the business' needs, thereby creating other benefits: • Payroll can be run through QuickBooks. If you already have a payroll service, you might find insourcing the payroll function, in the hands of professional accountants, could lower the price and speed up the processing of payroll. • Annual report requirements can be supported. If you use a single re- source, the time requirements and legal risk associated with end-of-year reporting (like 1099s), tax prepara- tion, partnership, and corporate fil- ings, create unnecessary business risk. Accounting service firms provide this relief as well. Taxing Solutions Clearly, using a variety of resources is better than using a single one. Similarly, using separate tax and accounting ser- vices is better than working with a single firm. While that may seem inefficient, the practice allows you to work with special- ists, each with a different set of eyes all intended to protect your interests. The accounting firm creates a set of financial statements the tax firm optimizes. Knowl- edge of how to create the financials is different than the knowledge of how to optimize its tax treatment — two sepa- rate firms are better. Remember a bigger firm is not neces- sarily better. Often what you get from the "Big 4" international accounting firms are high prices and newly-hired college graduates. The premium paid for that prestigious signature on financial docu- ments is, most likely, not necessary for small- to medium-sized business. Instead, choose a local or regional tax firm. Iden- tify what firm to use by getting referrals from your accounting firm, your business banker, or from the local chamber. Work- ing with local firms brings added benefits such as lower costs, deeper interest, lo- cal knowledge, and referrals unavailable when working with the big firms. Most PHOTO/ILLUSTRATION: PIXABAY.COM