Do the words “budget planning” make you groan? For many people, it’s on par with being stuck on a cross-country flight next to a screaming baby. Or calling [insert company you hate most here]’s customer service line. 

It doesn’t have to be that way. Budget planning is not all about limitations. In fact, budget planning can be freeing! As John Maxwell said, “A budget is telling your money where to go instead of wondering where it went.” 

You control your budget. Your budget does not control you.

Budget planning is undoubtedly a key component of your small business’s financial success. Therefore in this article, we’ll discuss the importance and benefits of small business budget planning.


1 | Clear Goals and Strategies to Plan Your Budget

Planning a budget for your business provides you with an opportunity to plan strategically for the year ahead. The first step in budget planning is identifying your financial goals. What do you want to achieve? 

Here are a few common small business financial goals, with links to get you started on some of these right now:

Goals should be SMART: Specific, Measurable, Achievable, Realistic, and Timely. An example of a SMART goal is: “Grow net operating profit by 10%, to $250,000 by the end of the year”

Next, consider how exactly you’re going to achieve your goals. For example, if you want to increase revenue, what specifically do you need to do to make it happen? 

  • Do you need to hire more salespeople?  (Use our new hire cost calculator!)
  • Spend more on research and development to launch a new product? 
  • Engage a marketing agency to increase brand awareness?

As you work through this process, don’t lose sight of any constraints on your resources. Most businesses do not have unlimited cash to spend. Therefore, you should allocate resources to the initiatives that are most impactful to your business. Prioritize your spending to get the most bang for your buck! GET HELP WITH YOUR BUDGET


2 | A Path to Greater Profit

Effective budget planning details anticipated income and expenses by month. It charts your path to greater profit. How?

Well, your budget should include detailed information about revenue by product and service. It should break down spending by account categories, such as professional services, software, and employee compensation. Need a budget template to get started?  Download Momentum CFO’s budget template for free!

In addition, it’s a good idea to document supporting details for those account categories as needed. Your budget may include additional schedules that show compensation costs by employee, or the components of spending specific marketing initiatives. 

That way, when you refer to your budget, you’re not just looking at one big number, trying to remember how you came up with it. Instead, you’ll be able to review the details of your spending.

Net profit (your “bottom line”) essentially equals revenue minus the cost of goods sold and all other expenses. After you’ve completed your budget planning, you’ll have a custom-made plan to achieve your profit goals. 


3 | A Way to Measure Financial Performance

Another benefit of budget planning is that it gives you a way to measure your small business’s financial performance. Businesses become and stay profitable with careful financial management. Therefore, analyzing variances between your actual financial results and your budget (a process known as “variance analysis”) keeps you on track to achieve your financial goals.

Review variances between the two sets of numbers each month so you can identify where you may be getting off track from your budget. For example, if you find that sales are $50,000 lower than you expected in the first quarter, you’ll need to cut expenses by the same amount to achieve the profit goal you set. Don’t put off this important task. If you procrastinate, by the time you’ve identified a problem, it may be too late to solve it.

Don’t have the time or inclination to do complete variance analysis yourself? As part of our CFO Services, Momentum CFO can analyze your financial results each month. We will deliver them to you in easy-to-understand financial dashboards. All of your critical financial information will be at your fingertips! 

In addition, we can provide you with analysis and customized financial recommendations that don’t take a degree in finance to understand.  


4 | Confidence About Financial Decisions

Budget planning gives you greater confidence about making financial decisions. Here’s why:

  • You have already set your goals and developed strategies to achieve them
  • You’ve determined how much you’re going to spend 
  • You know what you’re going to spend it on 

By planning out your budget for the year, it takes a lot of the guesswork out of how to manage your business’s finances. That makes it much easier to decide whether you should sign that contract, make a big purchase, or hire a new employee! 

Ideally, you should share your budget plan with your leadership team. You and your staff should be on the same page, working towards the same goals. Stick to your plan as much as possible and you’ll be on your way to a great year!


Budget Planning: The Bottom Line

As Dale Carnegie said, “An hour of planning can save you ten hours of doing.”  Take the time now to plan for the next year.By doing so, it will help you set the strategic financial direction of your business and provide a path to greater profitability. Budget planning provides a way to measure financial performance, course correct as needed, and feel confident about your financial decisions.  

Need help? You don’t have to tackle budgeting on your own.  Download our budget template to get started today! Then, let Momentum CFO do the heavy lifting for you.  Schedule a free consultation to learn how we can help you plan for financial success in the year to come!

Business owners who are operating mid-sized businesses without a CFO might feel that they don’t need this crucial role. Or, in many cases the idea of bringing in a C-Suite stakeholder who would require either a hefty salary or equity is unappealing.  At Momentum CFO we’d like to take a moment to outline some of the benefits of choosing to work with an outsourced CFO.  

We know that growing a company is a complex balance of many factors: Many entrepreneurial CEO/ Founders shoulder multiple roles of not only CEO but also COO and CFO.  As companies grow, however, bringing in a fractional CFO with years of experience can make the difference in how quickly and efficiently your business can scale. 

For businesses that are in growth mode, a solid financial strategy is essential to prepare for the next phase of business growth while continuing to be profitable in the present. A fractional CFO is part of the C-Suite decision-making team and can help guide your business to profitability and long-term stability. 

Some of the aspects of finance and accounting that a fractional CFO provides are: 

Expertise:

An outsourced CFO will be highly skilled with years of professional experience. Their expertise will bring an invaluable new perspective to your business. They can review company performance and provide a detailed analysis and plan to address any existing financial issues. 

Strategic planning: 

Outsourced CFOs can analyze your business’s financial picture and provide high-level strategic guidance that will optimize revenue growth.

Exit strategy: 

If your business is planning for an exit, an outsourced CFO can help you package your business’s finances attractively and prepare all the necessary documents to get the best possible sale price.

Transparency in reporting: 

Many business owners don’t have the clarity they need to grow their business because they either don’t receive or can’t interpret their financial reports on a regular basis. Fractional CFOs help interpret the company’s information and work with their management team to create a strategy that succeeds. 

Meaningful insight: 

Are you using the insights you receive from your financial reports to affect the day-to-day decisions you make as a business owner? Momentum CFO believes that all reports should be timely, accurate, and provide meaningful information on which to base decisions. Some business owners receive extensive reporting, and their financial understanding is deep enough to know what the reports say about profitability, productivity, and cash flow. However, even with this level of understanding, often the CEO does not change strategies based on the numbers in their reports. 

A fractional CFO will look at the reporting and not only interpret the data into practical insights, but also suggest strategic changes that the business can implement to improve operations and increase profitability.

Benefits of working with a fractional CFO include: 

Reduction of overhead costs. Costs associated with hiring full-time high-level employees can be high. With outsourcing, companies only pay for the actual services being rendered. Business owners are able to eliminate costly benefits packages, payroll costs, paid time off, retirement, vacation, sick days, and workers’ compensation. When you hire a fractional CFO, you can save up to 40% of the monthly costs associated with hiring a highly skilled employee.

Having the best numbers in play. When you choose to outsource, you can access a higher caliber of employees with more years of experience than you would otherwise be able to afford. When it comes to outsourced accounting, having accurate numbers not only gives you insight into where your company stands in the present but allows you to forecast where your organization is headed.

Save time so you can focus on running your business. When you bring on a fractional CFO, you get leadership focused on a specific deliverable.  This frees up time for your business’ stakeholders to manage other pressing issues around business operations. By delegating responsibilities, you are able to direct your focus toward the growth of your business.

Detecting and preventing fraud. Hiring an outside team of accounting professionals can help to detect discrepancies in your books. Outside CFOs and Controllers can also implement the proper protective procedures to protect your business from potential threats in the future. This can help save your business thousands of dollars. The majority of fraud in accounting comes from lax controls in middle management. 

From the visionary role of the CEO to the operational granularity of the COO to the technical insights of a CTO to the strategic financial acumen of a CFO, the C-suite is important to growth-oriented mid-sized companies. Momentum CFO’s clients have seen, hands-on, the difference that CFO insights make in a company’s ability to pivot, manage growth and prepare for exit. A fractional CFO is the ideal stepping stone for many mid-sized businesses who need the insights a CFO can provide but are not ready to commit to a full-time C-Suite stakeholder.  

Every business owner wants their business to be profitable. 

There are many factors that lead to a profitable business, including employee productivity. Naturally, when your employees are more productive your profit margins will increase. Productivity and profitability are two sides of the same coin.  Without productivity, there can be no profitability.  What are controllable factors that influence productivity and positively impact profitability?

Defining Productivity and Profitability 

Productivity is defined as the relationship between output and input needed to create a product. Meanwhile, profitability is determined by how much money is left over after a product is produced and all expenses have been paid.

·                Productivity is the best way to measure efficiency. A truly productive team maximizes their output with less effort. Productivity is often confused with effort, while they are related, they are not the same. 

·                Profitability is a measurement of income compared to expenses. As it relates to productivity, profitability can be measured in part by observing the ratio between what you are paying your employees in relation to the amount of work they generate. 

Profitability and productivity work in a symbiotic relationship. As you work to run a successful business, these two factors are essential to your success. 

Practical steps to increase productivity can include:

·        Training Programs: Begin with training programs and initiatives to improve operations within your business. As a business owner, you must ensure your employees are equipped to perform their job to the best of their ability. Often this means leadership training for middle management.  Great managers are the key to profitability. 

·        Practice, Practice, Practice: Once your employees have been adequately trained ensure they continue to practice their new skills. The more your employees practice these skill sets, the more second-nature they will become. Once they become second-nature, your employees will be able to perform their tasks faster and more efficiently. Think about ways to encourage the habits you want to foster. 

·        Encourage constructive feedback: Implementing training programs and leading a team can be challenging. The best way to improve your programs and leadership is to allow your employees to provide feedback. What’s working? What’s not? Where can you improve? Ensure the feedback system gives your employees a sense of safety and that it comes without repercussions. Being heard and being loved are almost indistinguishable for most of us.  So give a little love and let your employees be heard. 

·        Implement follow-up activities: Training and education will not be effectively retained if you do not give your employees the opportunity to continue to use their new skills. As you continue educating your workforce, offer opportunities for them to train newer managers, invite their expertise into the company-wide conversation and remember to reward, reward reward.  

Once you have implemented proper productivity training programs for your employees, you can begin to focus on profitability. How can your employees advance your business’ profitability goals? When your employees feel as though they’re contributing to the greater success of the organization they will work harder to see profits increase. 

Profitability is what keeps your business running. When you inspire your workforce to be more productive, it is all but inevitable that you will see an increase in profit margins.

If you are heading for a merger, acquisition or exit, it’s important to have your finances in order.

Today we are talking about the 8 components of creating a business plan. Starting a business is both exciting and challenging. You can design your own career, be your own boss, and pursue your passion. But, according to the Small Business Administration, only two-thirds of businesses survive at least two years. About half survive at least five years.

Want to know the secret to start off on the right foot?  It’s a killer business plan. You need to define your strategy and tactics for establishing a business with a strong financial foundation.

Are you feeling unsure or overwhelmed about how to get started? Don’t worry. Momentum CFO can help. Let’s start by learning the 8 essential components of a killer business plan. 

1 | Executive Summary

The Executive Summary is the first section of your business plan. It’s a concise and compelling summary of all the other  sections of your plan. It’s the first content section of your business plan, but it should be the last thing you write. Make it short and sweet. Give the reader the big picture of what your business is all about.

2 | Business Description and Mission

Second, describe your business and its mission. Why are you starting the business? When will you launch it? What is your mission? Your vision? Describe your business goals. Make sure your goals are SMART: specific, measurable, achievable, realistic, and time bound.

Provide this information, along with facts about where your business is located, how it’s organized as a legal entity, and your contact information.

3 | Products and Services

Third, the Products and Services section is where you describe the products and/or services you’ll sell. What is their purpose? Why are they unique? How will you price them? 

New business owners often initially set their prices by “gut feel”.  They don’t do the research and analysis required to ensure that their pricing is profitable. Pricing analysis is complex. But, it’s also crucial to the success of your business. Engage an experienced CFO to develop a profitable pricing framework.

4 | Market Research and Competitive Analysis

Fourth, use the Market Research section to describe a problem or need exists in your industry and how your business addresses it. What are the key attributes of your ideal customer? Be specific. The more specific you are, the easier it will be to design a targeted marketing and sales strategy.

Analyze your main competitors. How long have they been in business? What is their market share? What advantages do they have over your business and vice versa?

5 | Marketing and Sales Strategy

Fifth, the Marketing and Sales Strategy section details your plan for acquiring new customers. New business owners are often overly optimistic about how many customers they can bring on in their first year. That’s why is vital to develop a comprehensive sales and marketing strategy.

In this section, describe your overall marketing strategy. Explain the specific tactics you’ll use to drive brand awareness and sales.  How will you reach your target customers? What advertising and promotion channels will you use? Will you develop an awesome website? Ensure it’s optimized for search? Run social media marketing campaigns? Use print or online ads? 

Think about this carefully. You need enough customers to have a viable business.

6 | Organization and Management

The Organization and Management section is up next. Provide information about yourself and your leadership team here. Lenders and investors want to be assured that leadership is competent.

Describe your education and experience. What are your notable achievements? Are you a member of relevant professional organizations? What makes you suited to run this business? Highlight your accomplishments. Next, do the same for other key leaders in your organization.

7 | Financials

The Financials section is an extremely important part of your business plan. How will you fund your business? 

Some business owners “bootstrap”, putting their own money into the business. Others seek funds from friends and family. Business owners with larger capital requirements may seek angel or private equity investment. Still others will apply for small business or personal loans.

Developing a business plan for your small business

Are you seeking capital from outside sources? Know that lenders and investors will scrutinize the Financials section. It helps them decide whether to lend to you or invest in your business. Include schedules such as a profit and loss projection and a cash flow projection.

There are several important parts of the Financials section. Don’t have a financial background? Engage a CFO to help. It’s important to get this section right. You can’t run a profitable business without a detailed financial plan.

8 | Finishing Touches: Table of Contents and Appendix

The final subject in our 8 components of a business plan: include a Table of Contents at the beginning of your business plan. Add an Appendix section at the end. Next, include important supporting documents. These may include your financial projections, business licenses, the resumes of you and your leadership team, etc.

Final Thoughts

In conclusion, starting a new business is exciting! It takes careful planning to do it well. Momentum CFO’s startup planning and implementation services put you on the path to achieving long-term success. 

Our Smart Start Strategy service includes a tailor-made road map for successfully starting your business. It covers:

  • Smart Start checklist of crucial startup tasks
  • One-on-one financial strategy sessions 
  • A comprehensive written business plan 
  • Financial projections for your first year in business
  • Recommendations for financing your business

Ready to get started? Book a free consultation today!BOOK YOUR CONSULTATION


Be sure to check out our other resources for small business: https://momentumcfo.com/cfo-resources/embed/#?secret=DrIUkEHE8W

A Much Loved Holiday Tradition Continues In San Diego.

How the Need for Arts Education and Solid Non-Profit Financial Management is Carrying the San Diego Civic Youth Ballet Through the Pandemic

The coronavirus pandemic has presented major challenges for non-profit organizations in San Diego this holiday season.  Like most non-profits, the San Diego Civic Youth Ballet generates a bulk of its operating expenses from in-person events.  

However, due to current COVID-19 regulations, these critical fundraising events are not possible.  But through our ongoing partnership, we have given the ballet financial strength to weather this economic storm. As a result, they’ll be able to host their annual performance of The Nutcracker for all to view this holiday season!

The Nutcracker: Non-profit financial management
Clara in this year’s Nutcracker Project 2020.

Non-Profit Financial Management: Why December is so Important

Why is December such an important month for nonprofits? Well, 31% of annual giving occurs in December. And 12% of all giving happens in the last 3 days of the year.  However, this year there has been a lack of traditional fundraising events in place, which could prove disastrous for some organizations. 

As a member of the ballet’s Board of Directors, I worked with Molly Terbovich-Ridenhour to secure over half a million dollars in PPP and Economic Injury Disaster loans for the ballet. These funds will enable us to continue to provide high-quality, affordable ballet education while they develop new strategies to restore income to pre-pandemic levels. 

Scenario planning and forecasting are incredibly important steps in non-profit financial management during uncertain economic times. During the annual budgeting process for the ballet, we created best, likely, and worst-case financial scenarios. This ensures the ballet is prepared for various levels of income loss.READ MORE ABOUT OUR BOARD OF DIRECTOR’S WORK

The Nutcracker: Non-Profit Financial Management
Fellow members of the Board of Directors at the San Diego Civic Youth Ballet.

A lot has changed since the San Diego Civic Youth Ballet opened its doors in Balboa Park at the end of World War II. But during turbulent times, the strength, beauty, and grace of ballet, as well as the vital importance of arts education, has never wavered.  

“I began dancing with the San Diego Civic Youth Ballet in 1964 when I was six years old and loved it immediately,” said Sara Goldman, SDCYB alum, “I was a tall, lanky kid who was teased unmercifully, however, when I started dancing, I felt free.  It brings me great joy to know there are many generations to come who will discover their own love of art through the ballet just like I did.”

The Nutcracker: Non-Profit Financial Management

Identifying New Revenue Streams

One of the ways I am working with the ballet’s staff and board to keep revenue flowing is through upholding the ballet’s holiday tradition, a performance of The Nutcracker. SDCYB’s dancers have been rehearsing for weeks via Zoom in preparation for this year’s virtual ‘Nutcracker Project 2020!’ 

While not open to a public audience, the 30-minute performance of The Nutcracker will feature the following:

  • The iconic Tchaikovsky score
  • Performed by two separate casts
  • Professionally filmed and available for viewing online from the safety of your home!

Tickets to the Nutcracker Project 2020 are on sale now for $5. The performance will be available for viewing between December 19th to January 1st.  

For the first time in the San Diego Civic Youth Ballet’s 75-year history, their version of this classic ballet and cherished story will be available for all to enjoy this Christmas!

Why the Focus on Non-Profit Financial Management

I often find silver linings in difficult financial situations. And as someone who has been in ballet class since the age of 4, it feels good to give back to something I’m passionate about. 

I am currently open to other Board of Directors positions for both non-profit and for-profit organizations. Here are a few ways I can help: 

  • increase your profit
  • improve your cash flow
  • help you make better financial decisions

If you’re interested in any of Momentum’s CFO’s services get in touch and let’s make a difference together.

Financial management for small businesses can seem like a daunting, scary endeavor. However, if you hide from it, your finances will haunt you for years to come. 

Therefore, today we’ll explore 6 signs of scary finances that small business owners might face. With Halloween just around the corner, we want to turn your financial planning into a sweet treat!


1 | No Cash Reserves

financial planning small business

Nothing scares small business owners more than concerns about running out of cash. Will you have enough cash to pay your employees and bills during a frightening financial time? The hardest lesson many small business owners learned during the COVID-19 pandemic is the importance of having cash reserves for an emergency.

To build a strong financial management plan for your small business, you must incorporate saving enough to cover at least three months’ worth of operating expenses. Keep in mind, it may take time to build your reserves. Therefore, set aside a little each month. You can also explore a line of credit as an alternate source of funds. Do not procrastinate. The best time to apply for a line of credit is when you don’t need it.


2 | Insufficient Insurance Coverage for Your Small Business

It’s scary to think about the financial risks you are taking by starting your own business or scaling up a small business. Therefore, insurance policies are meant to protect what you’re working so hard to build. They hedge the risk of financial loss.

In addition, common business insurance policies include general liability, professional liability, property insurance, and workers’ compensation.

Make a practice of reviewing your insurance policies each year. If your business has changed significantly, your coverage might not be sufficient anymore. Need help reviewing your finances and determining what type of insurance policy is best? Let Momentum CFO help you review your policy options to ensure that you don’t experience financial hardship in the event of a loss.  Let’s chat!


financial planning small businesses

3 | Highly-Aged Accounts Receivable

Are your customers tricking you by not paying your invoices on time? If you offer your customers payment terms of 30 days, 45 days, or even longer, keep an eye on whether they’re paying you by the due date. 

Are a large percentage of your accounts receivable over 60 days past due? If so, follow up with those customers ASAP. The longer an invoice goes unpaid, the lower your chances of collecting. Plus, late customer payments put you in the scary situation of potentially not having enough cash to pay for your own expenses. 


4 | Signing Loan Agreements without Reading the Fine Print

Ready to sign that loan agreement for your small business?  Be sure to read it thoroughly to avoid frightening financial surprises. Are there hidden fees somewhere in the fine print? Penalties for early payoff? What is the APR on the loan?

In addition, the lender may present you with what seems like an affordable monthly payment. But, be sure to do the math. Do you have sufficient cash flow to afford that payment for an extended period of time?

We get it. These documents can be tricky. Need help?  Engage Momentum CFO to review your loan document, and create a cash forecast that accounts for all your expenses, including debt payments.


5 | Too Much Debt

financial planning for small business

Excessive debt can make you feel buried alive.  How do you know if you have too much debt? Ask your CFO to calculate your debt to equity ratio. Debt to equity ratios indicates how leveraged your business is.

What is a good debt to equity ratio? They vary widely by industry. Industries such as manufacturing are more capital-intensive than others. However, a good rule of thumb is a debt to equity ratio of between 1 and 1.5. Ratios over 2 signal that you may have trouble repaying your debts if the business were to decline. Don’t have a CFO in place yet to help?  Check out our services to see if they are a good fit for your small business!


6 | No Internal Financial Controls

Internal financial controls are designed to prevent fraud and ensure the accuracy of financial processes. A key element of financial controls is the segregation of duties. Segregation of duties involves giving multiple people responsibility for the separate parts of a financial task. 

Let’s use check-writing as an example. There should be at least two people involved. One person should write the check and another person should sign it. If only one person is responsible for this task, he or she could, in theory, write checks to whomever they choose. The inappropriate check payment might go unnoticed, or you might not catch it until it’s already been cashed. At that point, there’s not much you can do about it.

Therefore, ensure that part of your financial management includes setting financial controls to prevent scary financial situations


The Bottom Line on Financial Management for Small Businesses

Small business owners sometimes face scary financial situations. The sweet news is that they don’t need to frighten you. 

Let Momentum CFO conduct a financial health check and create a solid financial management plan for your small business.We’ll identify tricky financial situations that may be hiding in plain sight. Then, we’ll show you how to tweak them to keep your business cash positive with a solid financial strategy. 

Book your free consultation today and let’s work together to ensure your finances aren’t frightening. 

Thanks for reading and have a Happy Halloween!

financial planning small business

We’ve been hearing a lot about Donald Trump’s taxes lately. Did Trump avoid paying taxes? Did Trump cheat on his taxes? We are curious too. However, before we pass judgment, it’s important to understand the differences between tax avoidance and tax evasion.


Tax Avoidance

The IRS defines tax avoidance as “an action taken to lessen tax liability and maximize after-tax income”. Therefore, tax avoidance is financially advisable and even the IRS says it’s “perfectly legal.”

Tax avoidance involves claiming deductions, credits, and adjustments allowed by the U.S. tax code. Most Americans practice tax avoidance. Simple examples of business tax avoidance include:

  • Deducting legitimate business expenses, such as loan interest or business travel
  • Setting money aside in a Health Savings Account (HSA)
  • Accelerating depreciation (expensing the cost of capital faster than it becomes obsolete or wears out)
  • Changing your business structure to lower its tax rate

Few people want to pay more taxes than necessary. However, some business owners aren’t aware of all the ways they can legally minimize taxes. That’s why it’s advisable to engage a CPA to prepare your taxes.  A skilled CPA stays up-to-date on the latest tax code changes to help you minimize your business’s tax liability.

Momentum CFO offers services where we will work with you and your CPA to help ensure your business pays as little as legally possible. We create financial projections for you to assist with tax planning. These projections forecast your business’s profit or loss for the year.

Your CPA inputs numbers from Momentum CFO’s projections into their tax planning software. Then, he or she can estimate how much your business may owe. Next, Momentum CFO works with you to take actions that will further minimize your liability. 


 Tax Evasion

On the other hand, we have tax evasion. According to the IRS, tax evasion is “the failure to pay or a deliberate underpayment of taxes”. Unlike tax avoidance, tax evasion is illegal. You could face jail time, fines, or both if you are caught. 

There are many ways business owners can evade taxes.  Momentum CFO does NOT condone tax evasion. Examples of evasion include:

  • Under-reporting income
  • Inflating expenses
  • Paying employees in cash to avoid employer-paid income taxes
  • Claiming personal expenses as business expenses
  • Not paying taxes at all

As a business owner, you should never avoid paying your taxes. However, if you do feel stuck come tax time, drop us an email, and let’s see how we can help you reduce your tax liability. 


The Bottom Line

So… did Trump avoid or evade taxes? Since Momentum CFO hasn’t reviewed his tax filings, we don’t know. It will be interesting to learn more when his taxes are made public.

What we do know is that savvy business owners practice tax avoidance. With smart planning, you can reduce your business’s tax liability. Engage Momentum CFO to create a profit and loss forecast for your business. And, be sure to work with a CPA to confirm that the tax minimization actions you take comply with the U.S. tax code.  

Ready to get started on your financial projections?  Book your free consultation today and let’s work together to minimize your business taxes.

Bookkeeper vs CPA vs CFO , which one to choose? As a small business owner, it’s wise to engage a team of professionals who will help you manage your finances. However, who should be on your team? And how do their roles differ? 

Before we dive into the details, here’s the big picture:

  • bookkeeper processes and records financial transactions in accounting software.
  • CFO is a highly experienced finance professional who’s responsible for your business’s overall financial strategy and management. Momentum CFO specializes in providing outsourced CFO services
  • CPA is a licensed accounting professional who generally focuses more narrowly on accounting and tax matters.

1 | Bookkeeper

A bookkeeper is usually the first professional that a small business owner will engage with to assist with their finances. Generally, bookkeepers process and record financial transactions in accounting software such as QuickBooks OnlineTypical bookkeeping tasks include:

  • Recording sales, expenses, accounts receivable and accounts payable
  • Reconciling bank statements to records in your accounting system
  • Paying bills
  • Sending invoices
  • Tracking inventory
  • Organizing and maintaining documents such as purchase receipts
Bookeeper vs CPA vs CFO - What are the differences?


A good bookkeeper will provide a few basic monthly financial reports. At a minimum, you should receive a profit and loss statement (P&L), balance sheet, and statement of cash flows. Keep in mind that bookkeepers often will not: 

  • Analyze your financial results
  • Provide guidance on how to improve your numbers
  • Create financial projections of profit or cash
  • Make decisions about the financial direction of a business. 

Making these decisions is where a CFO comes in.


 2 | CFO

A CFO is the Chief Financial Officer of a business. Therefore, a CFO will focus on your financial strategy and overall financial management.  A CFO’s role typically includes:

  • Developing a strategy and detailed plans for achieving your business’s financial objectives
  • Providing comprehensive guidance to help you make important financial decisions
  • Preparing annual budgets and financial forecasts (projections)
  • Measuring and improving financial performance
  • Maximizing profit 
  • Assessing and minimizing financial risks
  • Managing cash
  • Establishing policies and procedures to ensure smooth financial operations
  • Raising capital
  • Handling mergers and acquisitions
  • Managing relationships with shareholders, investors, and lenders
  • Overseeing all other accounting and finance staff and coordinating activities among them
What does a CFO do as opposed to a bookeeper or CPA?


At Momentum CFO, we offer outsourced CFO services for small business owners. In addition, the term ‘outsourced CFO services’ may also be referred to as fractional CFO services, part-time CFO services, or CFO consulting services.

How can your business benefit from a CFO? 

Most small businesses will benefit from having a CFO on their team. However, not all small businesses need a CFO on a full-time basis. Furthermore, hiring a CFO full-time can be expensive! 

Therefore, fractional CFO services are a more affordable option for small businesses that need strategic financial guidance on a part-time basis. As a result, you can avoid the hefty salary, bonuses, cost of benefits, and employer payroll taxes that come with hiring a full-time CFO by outsourcing the CFO function. 

What should you look for in a CFO? 

Skilled CFOs have many years of corporate finance experience. They are trustworthy and analytical. Additionally, CFOs are collaborative and can explain complex financial concepts in straightforward language to anyone on your team. Finally, CFOs have excellent decision-making abilities.

Momentum CFO’s leadership has over 20 years of experience. We’ve led finance organizations at various size businesses. From small startups to Fortune 500 enterprises. As a result, we bring the benefits of large company expertise to smaller businesses like yours.   

Ready to learn more?  Schedule a free consultation! Together we’ll explore how Momentum CFO’s part-time CFO services can help you achieve your financial objectives.


3 | CPA

A CPA (Certified Public Accountant) is an experienced accountant who is licensed by the state. In other words, all CPAs are accountants, but not all accountants are CPAs. 

As an example, obtaining a CPA license requires years of accounting study, experience, and passing a comprehensive exam. But, before you hire a CPA, always confirm that they are licensed and in good standing with your state’s board of accountancy. Californians can check their CPA’s license here.

A CPA is a valuable member of your financial team. However, don’t confuse the roles of a CPA and CFOA CPA typically focuses on accounting and tax matters. A CFO focuses on broader financial strategy and management.

Common responsibilities of a CPA include: 
  • Keeping and auditing financial records
  • Preparing financial statements in accordance with GAAP (Generally Accepted Accounting Principles)
  • Ensuring compliance with tax laws
  • Preparing and filing taxes
  • Developing strategies to minimize taxes
  • Representing you in the event of an audit
  • Interfacing with IRS representatives (the least appealing part of the job!)
Understanding you small business tax burden

More differences between a CPA and CFO

Some CPAs offer CFO services. However, a CPA doesn’t usually have the same depth of strategic finance experience as a CFO. Just as a CFO doesn’t have the same depth of tax experience as a CPA. 

CFOs are focused on:
  • Setting forward-looking financial strategy
  • Developing budgets
  • Creating long-term financial projections
  • Managing all aspects of a business’s finances 

In short, the two roles are complementary but different. Therefore, it’s a good idea to engage financial professionals who specialize in various domains of accounting and finance. This will help you successfully manage your business finances with more precision.

Need a CPA? We’re happy to recommend a few great ones here in San Diego. Drop us an email.

The Bottom Line

In summary, all three – a bookkeeper vs CFO vs CPA have important roles to play in your small business. Now that you understand the key differences, you’ll know who to turn to for help with various aspects of your business finances.

Still have questions? Need help forming a superstar accounting and finance team? No problem! At Momentum CFO, we coordinate activities among your financial professionals and will recommend trusted professionals to add to your team if needed. 

Ready to get started? Book your free consultation today and let’s work together to grow your business profitably!

What is the Paycheck Protection Program Flexibility Act?

Have a Paycheck Protection Program (PPP) loan? If so, you may be wondering how to qualify to have the loan forgiven. 

Well on June 5, 2020, the Paycheck Protection Program Flexibility Act (PPPFA) was signed into law.  This means the PPPFA makes it easier for small business owners to obtain loan forgiveness by relaxing the original PPP rules. 

Need to know what changed? Let’s dive in!

PPP Forgiveness Time Period

The Paycheck Protection Program (PPP) is a federal financial assistance program that provides forgivable loans to small businesses. So as a small business owner, you receive funding equal to 2.5 times your average monthly payroll costs. 

Originally, business owners had only 8 weeks to use the loan funds and obtain forgiveness. However, the PPPFA extends the forgiveness period from 8 weeks to 24 weeks after loan origination. 

How Can PPP Funds Be Spent?

The primary goal of the Paycheck Protection Program is to help small business owners continue to pay employees.  For the loan to be forgiven, you were originally required to spend at least 75% of PPP funds on payroll-related expenses. However, many small business owners were unhappy with this requirement. 

Why? Most small businesses were running at a fraction of their original capacity.  They suffered from greatly reduced income. To protect what profit they did have, many businesses decided to reduce their expenses. In many cases, this meant laying off staff.

Therefore,  the PPPFA reduces the requirement for payroll-related spending from 75% to 60%. Furthermore, no more than 40% of the funds can be spent on rent, mortgage interest, and utilities.

Rehiring Deadline and Requirements

The PPPFA also extends the deadline for you to rehire laid-off workers by six months. You now have until December 31, 2020 to rehire your team. In addition, the PPPFA relaxed the requirements for rehiring workers. 

Are you still operating with less staff? Well you may be eligible for loan forgiveness if you demonstrate an inability to:

  1. Rehire similarly qualified employees as those that were laid off
  2. Return to previous levels of business activity
  3. Rehire someone the business employed on or before February 15, 2020

What to Track to Qualify for PPP Forgiveness

How do you apply for PPP Forgiveness? First, keep detailed records of how you used your PPP funds. Be sure to spend only on approved expenses.

Second, provide payroll and other financial information. Thankfully, many payroll processors have developed PPP payroll reports specifically for this purpose. Not working with a CFO? Schedule your free financial consultation now and learn how we can help!

Additional information you’ll need to share:

  • your number of employees
  • how much you spend on mortgage or rent
  • your utilities 

Did you receive an SBA EIDL loan? If so, you’ll be asked to report the loan and loan advance amounts you received. 

How to Apply for Paycheck Protection Program Forgiveness

Here’s the steps to take to apply for loan forgiveness:

  1. Complete the SBA’s revised 3508 application or the 3508EZ form
  2. Unsure of which one to use?  Review this checklist to see if you qualify for using the simpler EZ form. 
  3. Check with your lender for specific requirements for submitting your application.
  4. Submit your application.
  5. Need assistance gathering the required documentation? Your payroll processor, CPA, or CFO may be able to help. Operating without one? Momentum brings the benefits of Fortune 500 financial expertise without the expense of hiring a full-time CFO. Schedule your free financial consultation now.

Repayment of Unforgiven Funds

The PPPFA enables more small business owners to obtain full loan forgiveness. However, if based on your use of the funds, you still feel you will not receive full loan forgiveness, there’s good news. The PPPFA extended the repayment term for the loan from two years to five years.  

In addition, the annual interest rate for the loan was left unchanged at 1.0% annually. 

Need more information about the Paycheck Protection Program Flexibility Act? View the full text of the Act here. 

Still Have Paycheck Protection Program Questions?

Need more help with PPP loans and long-term financial planning? Well, we offer services for small to mid-size businesses to help them avoid the expense of hiring a full-time CFO! 

Save money and time by contacting us at 858.284.0314. Or, schedule your free financial consultation.