Making sound financial decisions are crucial to the success of any size company. A financial professional will help you understand and chart strategies to help you manage a profitable company, but for many, there may be confusion regarding the respective services of a Certified Public Accountant (CPA) or a virtual Chief Financial Officer (VCFO).
What your business needs will determine what level of financial professional you need. To clear the air, the virtual CFOs at Gonzalez & Arrambide want to discuss the differences between all of these roles so that you can get the most benefit for your business.
The Differences Between a CPA and a VCFO
A moderate sized company with revenue ranging from $2 million to $20 million may have senior executives rely on the advice of their CPA for matters involving certain business finances. In these instances, the CPA will offer a financial opinion based on experience with taxes and tax law, rather than offering insight related to long-term financial advice for the business.
The responsibilities of a VCFO go beyond tax advice and basic accounting. In a nutshell, a VCFO helps with business planning, forecasting, negotiating, and business budgeting, all of the same kind of responsibilities a company Chief Financial Officer (CFO) would do. A VCFO, on the other hand, saves a company money because they aren’t paying for a full-time employee with benefits.
It’s important to note that you don’t need to be a CPA to be a VCFO, and CPA’s aren’t always well-versed on managing complex corporate finances that a VCFO can.
Let’s elaborate a little bit on these roles now.
More Into the Role of the CPA
In the simplest of terms, the CPA is in the business of tax return preparation; that is their primary responsibility. A CPA may collaborate with a VCFO to provide tax advice that will ultimately help guide the company’s financial decisions based on short term and long-term objectives.
The CPA’s knowledge revolves around taxes and tax laws that lend to the strategies that may be developed by an outsourced CFO. Often, a company may mistakenly look to a CPA for business advice that may be best handled by an individual with a background as a VCFO. A CPA will help a company thrive by performing a range of duties including:
- Organizing and updating accounting records
- Staying abreast of tax laws
- Tax preparation and analyzing reports on transactions
- Conducting regular, detailed audits
- Manage financial documents, expenditures, and investments
Consider a VCFO to Help You Strategize While Saving Money
When evaluating the financial goals and objectives of a company, an outsourced CFO will bring strategies and insight that a CPA may not be equipped to handle. A qualified and experienced VCFO will focus on future cash flow and offer expert advice on operational planning to ensure a company is sustainable. In addition, a company may choose to hire a VCFO in order to:
- Chart a financial strategy
- Forecast growth
- Outline sustainability by addressing expenses and highlighting assets
- Improve profitability
- Control expenses and cash flow
- Establish strong financial relationships
- Assess financial risk
- Finance project management
- Liaison shareholder relationships
Ultimately, a business may decide to hire a CPA, a VCFO, or both based on a range of factors exclusive to your company’s needs. Whether you’re a growing business or an established company, hiring the right team can make all the difference in your financial outlook.
The Virtual CFOs at Gonzalez & Arrambide Offer Trusted and Sound Service
Founded in 1996, Gonzalez & Arrambide, Inc. has become a respected and recognized accounting firm dedicated to helping individuals and businesses of all sizes with their business needs and strategy. Our commitment to services ensures we give you what you need to succeed and grow your revenue streams.
At Gonzalez & Arrambide, we offer our clients Virtual Chief Financial Officer (VCFO) services and have helped them improve financial management without spending the substantial resources needed to hire someone in a full-time role.
Serving the entire Rio Grande Valley Greater Metro and located in Weslaco, our VCFOs are more than qualified to meet your business needs.
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As your business thrives and grows, you may find yourself dealing with a broad range of financial issues and topics that you hadn’t fully prepared for. The key to answering these questions means assessing your needs and determining if it makes sense to work with a Virtual Chief Financial Officer (vCFO) to help you chart and properly track your company’s financial resources and goals.
For most business owners, the skills of a CFO lend themselves to developing strategies that aid in the performance and profitability of a business. Unfortunately, when working within budgetary parameters, hiring a full-time CFO may not be financially viable.
But you do have options.
A part-time virtual CFO can be the perfect solution to your problems.
With the ability to handle the duties assigned to a traditional CFO, a vCFO can work remotely and on a part-time basis. A vCFO can act in a dedicated role to monitor the financial well-being of your business and can add incredible value to your company.
What Can a vCFO Do?
A vCFO offers an affordable way to acquire the benefits of a talented finance expert, without the higher expense of a full-time, in-house executive. Working on an hourly basis, and in a remote capacity, a vCFO can perform a wide variety of duties including but not limited to:
- Overseeing the financial initiatives of a business
- Participating in strategic planning activities
- Preparing and managing operating budgets
- Forecasting, managing and reporting on cash flows
- Creating internal controls and assigning duties
- Monitoring and advising on financials
- Managing compliance requirements
The vCFO also serves to identify and oversee the finance and accounting support needed from the roles of controllers, accounting staff, tax accountants and auditors. While the cost of services can vary, a part-time vCFO is still a highly cost-effective solution that also provides a broader financial perspective to your operations.
Benefits of Working with a vCFO
A company not taking advantage of the services of a vCFO is often unaware of the missed opportunities for profit. According to experts, what entrepreneurs may not realize is that money is already being spent on lost profits and misspending.
The dynamics of a business are best explored through the lens of an educated financial professional, and relying on the talent of a vCFO can spell the difference between your company’s survival or failure – especially in today’s tough business climate. If you’re acting as your company’s CEO, you can also expect to serve as a strategic partner for your vCFO to increase profitability and improve cash flow.
As you consider the next step in your company’s financial journey, it’s important to keep in mind that the role of the vCFO is not to act as an agent that will rubber-stamp every and all decisions without first doing their due diligence. Instead, expect them to challenge you on financial decisions and to help you create the kind of transformation that leads to your company’s improvement and success.
Trust the Financial Experts at Gonzalez & Arrambide, Inc.
Since 1996, the financial experts at Gonzalez & Arrambide, Inc., have worked with a range of clients to offer an array of exceptional services to meet your financial needs. Call us today at (956) 447-9009 to explore how we can help you grow your business
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The holiday season is upon us with all of its festivities, cheer, and delicious food. However, this also means that the end of the year is approaching, so now is the time to begin using some simple tax strategies to ensure you can reap the biggest benefit and minimize your taxes.
At Gonzalez & Arrambide, Inc. our accountants have a thorough understanding of tax laws, and are up-to-date on current regulations, which means they can help to reduce your payments and devise a year long plan that will get your personal or business financial matters in proper order.
So as we come closer to the end of the year consider using the following 9 tax tips for both individuals and small businesses.
Individual Tax Tips
1. Accelerate Deductions and Defer Income
Consider deferring bonuses, consulting income or self-employment income and accelerating deductions from state and local income taxes, interest payments, and real estate taxes.
2. Bunch Itemized Deductions
Because many expenses can be deducted only if they exceed a certain percentage of your adjusted gross income (AGI), bunching itemized deductions can help you reach that number.
3. Make Up a Tax Shortfall with Increased Withholding
If you’re in danger of an underpayment penalty, try to make up the difference by increasing withholding on your salary or bonuses.
4. Leverage Retirement Account Tax Savings
Contributions to your retirement accounts reduce taxable income at the time that you make them, and you don’t pay taxes until you take the money out at retirement.
5. Reconsider a Roth IRA Rollover
Converting a traditional IRA into a Roth IRA allows you to pay tax on the conversion in exchange for no taxes in the future (if withdrawals are made properly).
6. Make a Charitable Contribution
Cash contributions must be documented to be deductible, and a charitable deduction of more than $500 in donated property, or $250+ for a car donation require certain forms.
7. Give Directly from an IRA
Using your IRA distributions for charitable giving could save you more than taking a charitable deduction on a normal gift.
8. Zero Out AMT
You can “zero out” your alternative minimum tax (AMT) by accelerating income into the AMT year until the tax you calculate for regular tax and AMT are the same.
9. Take Advantage of Historically Low Interest Rates
An appreciating market and historically low rates create the perfect atmosphere for estate planning.
Business Tax Tips
1. Make an S-election on an LLC you set up this year and use it for operations.
There are new IRS regulations that allow for this retroactive classification at year’s end. However, don’t forget you are required to take some payroll for yourself out of the company if you make this election.
2. Set your payroll amount.
S-Corporation owners or newly elected LLC S-Corps must complete their payroll before year’s end.
3. Put your kids on the payroll.
This overlooked strategy allows you to pay your children for actual services they provide your business. Use a separate business account that complies with regulations and make sure follow the proper procedures and have bank accounts for the children.
4. Put your spouse on the payroll.
You should consider this only if your spouse wants to contribute money to your company 401(k) for tax-planning purposes.
5. Implement a 401(k) before year’s end.
A properly designed 401(k) can be self directed and utilized in real estate transactions, hard-money lending, and small business investments.
6. Start establishing your entity now.
Consider the first of the year as the perfect time to file articles.
7. Close on that rental property.
By reclassifying the assets of a rental property into real and personal property, you can defer thousands of tax dollars. Make sure you take into account the real estate classification and other passive income you may be able to deduct this segregated depreciation against.
8. Make a ROTH conversion.
Consider converting your traditional IRA or 401(k) to a Roth IRA, and start paying taxes at a lower rate without paying taxes on your withdrawals in the future.
9. Push income or expenses to the proper year.
You’ll want to push income to the next year and accelerate expenses to the present year.
Gonzalez & Arrambide, Inc. wishes you a wonderful holiday season.
Our accountants and Gonzalez & Arrambide, Inc. work hard year round to make sure that the holiday season means a time of relaxation and financial prosperity; rather than a crunch time rush full of frustration and uncertainty.
Contact us today at (956) 447-9009 to find out how we can help to make your tax season fill like the holidays.
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With more than $400 billion owed to the U.S. Treasury in back taxes, the Internal Revenue Service (IRS) is set to hire up to 700 new employees for tax enforcement with a push towards audits and collections.
But there’s more to the story—there’s going to be a big focus on business owners.
This can mean problems for those who have yet to resolve issues from prior years. If you have been purposely neglecting those IRS notices, then you are definitely going to want to make sure to take the proper steps to resolve things.
Failure to do so can mean a seizing of assets or more.
At Gonzalez & Arrambide, Inc., we have the knowledge and skills to help you through a tax audit—whether business or individual.
Nobody likes to deal with the emotional and financial stresses that come with the IRS breathing down their necks, so take the following steps to ensure that you are prepared for this new wave of IRS probing:
1. Be aware of your situation.
In order to understand what’s coming, you’ll need to have a good grasp on where you stand. This means reviewing all of your IRS letters, notices, and tax returns from previous years. This can help you put your financial statements in order so you aren’t blindsided by any of the agency’s requests. You might also find that there were some mistakes made by the IRS, which can help to reduce some of your debt. It’s usually a good idea to get assistance from a tax professional during these times.
2. Request a payment plan.
After you understand your situation and how much you owe, you’re going to need to put a plan together. Because paying thousands of dollars out of pocket may not be feasible for every business owner, the best approach is usually to request an installment agreement.
Depending on your agreement, the duration of the payment plan can be stretched out to as long as six years, with payments occurring on a monthly basis and interest/penalties accruing throughout the process. It should also be noted that this type of arrangement stops liens and levies.
The process should be relatively straightforward, and can be done online, if you owe less than $50,000. Just make sure to be in compliance with the agreement at all times. Violating the terms will make things worse, so be aware of the conditions set in place.
3. Act swiftly to negotiate penalties.
Failing to effectively manage your IRS debt can lead to a severe amount of penalties. Acting promptly to the notifications of the IRS can help ease the situation.
By acting swiftly, you leave yourself room for negotiating penalties, which can either lower or even eliminate them—if you can show reasonable cause. Harsh financial circumstances or the destruction of your home or business could qualify you for deductions.
There’s also a program provided by the IRS, which provides some alleviation to those who are in trouble with agency for the first time. Even if you are rejected at first, you can still appeal.
4. Other options.
The IRS has another option known as an Offer in Compromise (OIC), which releases you from some of the debt. Because the process requires disclosing an extensive amount of financial information utilizing forms 656 and 433, it’s best that you get the assistance of tax professionals like Gonzalez & Arrambide, Inc. to help you fill out the required paperwork.
The IRS does reject quite a bit of the submissions so you’ll need assistance in navigating the IRS bureaucracy.
Gonzalez & Arrambide, Inc. are your audit experts.
While it can be a nerve-racking ordeal to deal with the IRS, the accounting and tax audit experts at Gonzalez & Arrambide, Inc. know just what to do to help you get through the process with minimal headaches.
Whether during tax season, or for any other financial purpose, our CPAs can offer you quality support and protection.
Give us a call today at 956-447-9009 and let Gonzalez & Arrambide, Inc. serve you.
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Starting and running a successful business can be a challenging adventure, especially when it comes to deciding on the method in which you choose to handle your business’s finances. There’s always the option of in-house financial management or even online software. However, for most businesses, hiring a bookkeeper or a Certified Public Accountant (CPA) is the most effective manner to ensure that your books are accurate, your tax preparation is in order, and your financial systems exceptional.
But even then, it can be difficult for a business owner to fully understand the differences between a bookkeeper and a CPA.
While the two share common goals, bookkeepers and CPAs do play different roles in the financial cycle. Generally speaking, a bookkeeper will work with you much more frequently to maintain proper coding of incoming funds and expenditures while providing you daily financial updates and reports. On the other hand, you may not touch base with a CPA as often, but they can provide you more insight into your finances as a whole and can offer proactive tax advice. CPAs can analyze your financial situation in its entirety and perform audits to provide holistic business advice.
Your trusted team of financial advisors, which can include a CPA and bookkeeper, should work in unison to focus on what is best for your business and financial needs.
And this is exactly how Gonzalez & Arrambide, Inc. works. Our office provides a comprehensive list of services that can meet all of your needs – from quality bookkeeping and small business accounting services to full-fledged CPA expertise – Gonzalez & Arrambide, Inc. can get the job done.
Now let’s get a bit more in depth to understand the differences between a bookkeeper and a CPA.
What is a bookkeeper?
Bookkeepers perform the daily accounting functions of a given business. Their responsibilities usually include maintaining accurate books, tracking accounts, and developing procedures to track monies. A bookkeeper’s education can vary between being self-taught with several years of professional experience to having an associate’s degree. An accountant will usually supervise a bookkeeper’s work.
What is bookkeeping?
Bookkeepers of course deal with bookkeeping. Bookkeeping is the record keeping of daily transactions to help a business track its income and expenditures in a manner that will help it to maintain a strong business model.
The processes of bookkeeping can include, but are not limited to:
- Maintaining and balancing general ledgers
- Recording financial transactions
- Posting debits and credits
- Producing invoices
- Completing payroll
Your bookkeepers primary role will entail managing the general ledger. The general ledger can be created with specialized accounting software, a computer spreadsheet, or even a lined sheet of paper, and will be used to track the amounts from sale and expense receipts. The level of knowledge your bookkeeper will require is dependent on the size of your business and the number of transactions that take place on a daily, weekly, and monthly basis.
What is a CPA?
Certified Public Accountants (CPAs) are generally required to have a bachelor’s degree in accounting and must pass rigorous testing standards set by the state they wish to practice in. In the state of Texas, after passing the Uniform Certified Public Accountant exam, the individual seeking to become certified must then gain one year of professional accounting work experience under the guidance of a CPA.
The process of becoming a CPA is noticeably quite stringent in comparison to that of a bookkeeper.
Once certified, an accountant can offer a variety of services including auditing, financial consulting, and tax preparation. It’s important to recognize that because CPAs are considered professional experts, their services are usually rendered at a hourly rate.
What is accounting?
While bookkeeping is largely based around transactions, accounting is intended to analyze this compiled information to help produce financial models that will make an organization run more efficiently.
The processes of accounting can include:
- Preparing company financial statements
- Preparing and completing income tax returns
- Analyzing costs of operations
- Analyzing financial entries from the bookkeeping processes
- Assisting a business owner in understanding the impact of financial decisions
The processes of accounting are intrinsically tied in with the processes of bookkeeping, but they help an owner develop a better understanding of the bigger picture of their business, the actual profitability of their services, and the cash flow of the establishment.
Let Gonzalez & Arrambide, Inc. Serve Your Bookkeeping and CPA Needs
The fact of the matter is that when you are looking for a meaningful team of financial advisors, you’ll want your bookkeeping and accounting members to have a great collaborative relationship. Having properly organized financial records and a balanced system to track your finances are both going to be key factors for your business’s success – and they require bookkeeping and accounting practices to work in harmony.
Gonzalez and Arrambide, Inc. can meet all your financial needs – whether you’re a growing business or in need of a bookkeeping/accounting transformation – our team has what it takes to get the job done. Give us a call at (956) 447-9009 to find out how we can help your business grow.
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