Episode #33 – Creating Your Accounting Dream Team

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Welcome back! Today I want to help you create your Accounting Dream Team. While many business owners I’ve spoken to over the years will moan about the cost of their accounting department, the truth is that an optimized accounting department saves a business money, provides indispensable financial insights, and minimizes compliance headaches for business owners. It's well worth the investment to build and retain a perfect accounting team.

Today I would like to talk about the differences between the key players in the accounting world and how they work in a law firm.

Bookkeeper

Let's start with the bookkeeper, an essential role focused on daily financial transactions. This is a position that is always looking at what happened financially in the business. The bookkeeper is responsible for tasks like queuing invoices for payment, processing payroll, tracking receipts, and maintaining ledgers. 

This position requires being meticulous with details, organized, and efficient with data entry. The bookkeeper provides the raw data that the accountant will then analyze. For my law firm owners, this position is most similar to the paralegal role in your firm - the bookkeeper supports the business by maintaining the firm's financial paperwork and records. 

For smaller firms, duties may also include billing clients, tracking accounts receivable, and preparing reports. The average salary range for a bookkeeper is $35,000 to $55,000. Larger firms may have multiple bookkeepers focused on specific tasks. An accurate and skilled bookkeeper is crucial for providing clean books and records. 

Accountant

Next we have the accountant, who takes the books prepared by the bookkeeper for further analysis including reconciling bank accounts. The accountant generates financial statements, monitors cash flow, analyzes profit and loss, and assesses the overall financial health of the firm. 

The accountant looks at historical trends and projections to advise on budgets and strategy. In a law firm, this position correlates with an associate attorney - leveraging the detailed work of others to provide insights and counsel to the Partners. Accounting skills like accrual basis, GAAP compliance, and financial modeling are key. The average base salary ranges from $50,000 to $80,000, plus bonuses.

Accounting Manager

For larger firms with several bookkeepers and accountants, an Accounting Manager would be the next position on the team. The Accounting Manager is the senior lead for the day-to-day accounting team and processes while also serving as an advisor to management on financial strategies and issues. 

The average salary range for an Accounting Manager is $80,000 - $120,000 based on experience and firm size. The Accounting Manager helps ensure the smooth financial operations of the firm between the partner/CFO leadership and the accountants, bookkeepers, and clerks handling the transactions and reporting. 

Controller

Now on to the Controller, who oversees day-to-day financial operations and works closely with firm leadership on strategy. The Controller prepares budgets, forecasts, implements controls, monitors revenue cycle and collections, manages software systems, and ensures compliance. This position advises the firm on major decisions like expansion, hiring, capital investments, marketing and IT spend. The Controller acts much like a Junior Partner, supporting COO and CFO-level executives. 

Controllers are often CPAs with 7-10 year’s experience. The average salary ranges from $80,000 to $150,000 with bonus potential. This is typically a senior management role at medium to large firms.

CFO

That takes us to the CFO, which would be comparable to a law firm Partner. The CFO oversees all financial aspects of the firm from high-level planning to daily operations. They lead decisions on financing, expansions, mergers & acquisitions, capital allocation, and profit distribution. The CFO also spearheads audits, partnership reporting, and tax filings. 

This position requires sharp analytical skills, leadership, and a mastery of financial management. Compensation averages $150,000 to over $300,000 plus bonuses. 

The CFO works closely with the Executive Committee and managing Partner.

Tax Expert

Finally, there is the tax expert, specialized in navigating tax requirements for the firm. From corporate filings, 1099s, franchise tax, and sales tax, the tax expert handles compliance. This role also prepares corporate and individual tax returns, advises the firm on tax planning, oversees tax filings, and can represent the firm in case of a tax agency audit or penalty dispute. 

The tax expert role correlates to a Partner focused on a niche specialty. The average salary ranges from $80,000 to $150,000.

Your Accounting Dream Team

Now that we’ve reviewed the key players, how would this look in your firm? In the accounting world, many bookkeepers are experienced enough to perform accountant-level duties while many Accounting Managers, Controllers and CFOs may roll up their sleeves to complete day-to-day tasks in addition to their higher-level duties and may be able to prepare tax returns too. 

The key to creating your Accounting Dream Team is to be honest and realistic with the expectations of each role in addition to the capabilities of each team member. While you may have a bookkeeper who can reconcile bank accounts and provide you with monthly financial reports, simply having two different people perform these duties each month will create safeguards for the firm’s money. 

Further, when it comes to specialty areas such as payroll and taxes, adding experts to your team for these specific areas will increase your firm’s ability to stay in compliance with ever-changing laws and regulations. It’s no different than when a personal injury attorney is asked by a client to represent them in divorce court or a bankruptcy attorney is asked to represent a client in a criminal matter. 

While the high-level request is the same, to represent a client in a legal matter, the processes may be different, the filings may be different, the research needed to get up to speed on the underlying law may be so time consuming that you wouldn’t be able to justify billing every hour to the client. In the end, it would be a huge time suck and most likely not a profitable matter for you.

Options? Larger firms may have the volume of work and funds to hire for these positions in-house. Alternatively, you can hire part of the team and outsource part of the team. For example, hire a bookkeeper for the day-to-day work but outsource payroll, taxes and the CFO position. Lastly, you can outsource the entire team. 

There is not a one-size-fits-all answer. It comes down to what your firm can afford, your needs on a daily, weekly, and monthly basis, and the level of help you need in your firm to achieve your goals.

Here are some considerations when looking to hiring vs outsourcing your accounting department:

1. Cost Savings - Outsourced accounting can significantly reduce costs compared to hiring an in-house team. No need to pay for salaries, benefits, payroll taxes, office space, software, etc.
   
2. Access to Top Talent - Accounting firms have extensive resources and expertise that a company may not be able to afford in-house. This provides elite skills.
   
3. Improved Efficiency - Outsourced teams focus solely on accounting with established processes and specialization. This can mean faster turnaround and scalability.
   
4. Better Technology - Accounting firms invest in and leverage cutting-edge tech like automation, AI, and cloud-based platforms.
   
5. Focus on Core Business - Free up firm resources and partner bandwidth to concentrate on revenue-generating activities rather than back-office functions.
   
6. Regulatory Expertise - Accounting firms have extensive experience navigating regulations, filing requirements, and compliance issues.
   
7. Objective Insights - As a third-party, an outsourced accounting provider can offer unbiased perspective and advice to management.
   
8. Business Growth Support - Easily scale accounting support as the company grows without added HR burdens.
   
9. Risk Reduction - Experienced accounting firms help minimize errors, fraud, and compliance violations.

While outsourcing your firm’s accounting department has many advantages, it also requires trusting an outside team and added coordination. The benefits often outweigh the cons for small to mid-sized companies without the scale for large internal departments.

Listener’s Question of the Week

It’s time for our listener’s question of the week! Paul asks, can I use Profit First to identify a good business to buy?

I love this question! And the answer is yes!!! Obtain access to their financial information and I highly recommend reviewing their tax filings for the last 2-3 years. Any spreadsheets or reports provided should match the tax filings except for non-deductible transactions such as charitable contributions which would be reported on the owner’s personal return and except for a few pandemic years, only 50% of meals and entertainment will be a tax deduction.

Then, do an Instant Assessment on the information. It will show you what needs to be “corrected” in the numbers to get their financial performance in line with your firm’s financial performance.  And, simply the less that needs to be corrected, the better the buy.  Good luck with your potential acquisition, Paul!

Do you have a question that you would like answered on a future episode of this podcast? Please send it to [email protected].  

Inspirational Quote

This week’s inspirational quote is from anonymous, “You are enough. You are good enough. You are smart enough. You are strong enough. You are beautiful enough. You are kind enough. You are brave enough. You are more than enough and you always will be.”

Final Thoughts

Final thoughts for today. Hopefully, today’s episode will help you to understand the depth and breadth of knowledge and skills that are needed for your accounting team. To start, every business needs the day-to-day person dedicated to capturing the financial history of your firm, but a different skill set is needed to interpret the firm’s historical transactions into meaningful insights that will be used to make key decisions that are future looking to propel your firm closer to your goals. And, for nuances such as payroll and taxes, experts who narrowly focus on these topics will pay for themselves as they keep you in the good graces of the tax authorities.

While Profit Scale Thrive has been dedicated to coaching and advisory services, I am excited to announce that we are expanding our core services to include full-service accounting and tax services.  I have been working to pull together a seasoned team of accounting professionals who can fill any or all of the financial needs in your firm.

This is an exciting update for me to share with you. Our mission at Profit Scale Thrive remains unchanged. Our focus is still to guide our clients to overflowing profits, scaled growth and thriving lives. I feel that this expansion of services is the next natural step to help our clients level-up their company.

If you are interested in learning how Profit Scale Thrive can fill in the missing pieces of your Accounting Dream Team, information can be found on our website at www.profitscalethrive.com/services or you can schedule a time to chat with me by answering a few questions at www.profitscalethrive.com/contact and a scheduling link to my calendar will be sent to you.

If you have any questions about today's episode please let me know. If you're watching on YouTube, you can comment below or send me an email to [email protected] and if you know someone who might need to hear this information please share this episode with them or if you're on YouTube, you can tag them below. 

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And before I go, remember profit is something you intentionally plan for in the beginning. It is not a potential bonus at the end of the year. 

Thanks, and have a great day.

Creating Your Accounting Dream Team for your business is not impossible. Let’s talk through the key players that make up this team, their responsibilities and options to create your Accounting Dream Team.

Be sure to stay until the end for an exciting announcement from Profit Scale Thrive!

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