3 Money Questions Every Entrepreneur Should Know The Answer To

Every entrepreneur needs help managing small business finances; a professional partner who understands small businesses can offer strategic financial advice, help manage growth, ensure you’re in compliance, uncover potential business issues and keep you on track.

You need a

strategic financial partner who is in close contact, asking questions and to ensure that they understand your business intimately.

If you haven’t already had the following discussions with your small business accountant, it’s time to ask the following:

1. How can I improve my company’s financial health?

   At the core, this question is all about cash flow. With the help of your accountant, you should be proactively monitoring your cash flow, finding ways to increase your cash flow and reduce costs.
   Understanding your cash burn is a foundational financial exercise. Your burn rate refers to the rate at which you are using up your cash over time. Without a deep understanding of your cash burn (i.e., burn rate), you’re setting yourself up for trouble.
   Your finance professional should support you with day-to-day budgeting, help you refine your accounts receivable and accounts payable systems and maximize your pricing strategy, to name just a few tasks that greatly impact your cash flow.

2. How can I minimize my income tax burden?

   Your finance partner needs to be on top of new tax laws and credits to help you to maximize your finances. With proper tax planning, your company can greatly benefit from tax write-offs.
   Of equal importance, with the right support, you can be assured you are meeting all of your tax obligations, thereby avoiding an unwanted IRS audit due to compliance issues. Your tax accountant should be able to have an informed conversation with you about all of the options available to save on taxes and protect your business.

3. How can I finance my company’s growth?

   Your finance professional should understand your goals for growth and help you to work towards achieving them. A good accountant or CFO will help you to identify when you’re ready to scale — and when you’re not.
   In order to scale, you need to identify milestones to help keep you on track to hit key operating targets, set budgets and plan your fundraising. Your finance professional is key in working with you to understand your milestones and to help you set your path for achieving them.

In addition, your finance professional should have connections to other business partners who can help — banking partners, VC firms, etc. — and be proactive about making introductions. Lastly, your accountant should also provide GAAP-compliant financial statements and other financial documentation you need to submit as part of the due diligence process.

Small businesses often don’t have the internal resources to expertly manage their finances. A more efficient and cost-effective solution is to outsource the finance function to experienced professionals who understand small businesses. If your accountant can’t answer these questions, it might be time to find a new one.

source: yfsmagazine