What’s the difference between interior design accounting and bookkeeping? And what’s a CFO?
If you’re like me and the thought of having to manage your own books is the last thing you want to deal with at the end of a long day, it might be time to bring in a professional.
But how much does it cost?
Should you hire a bookkeeper, accountant or CFO?
Are you just needing help with the basics?
Or is your business thriving and you now want to figure out how to better use your money to achieve those life goals?
Wherever you are with your business, we sat down with Megan Dahle, a fractional CFO for bookkeepers, to talk all about the difference between accountants, bookkeepers, and CFOs so you can determine who you need to hire and when.
What do bookkeepers do?
They track and categorize all of your income and expenses. “Your bookkeeper is going to take everything in the past and put it in the right buckets,” explains Megan. “They’re going to organize the things that have already happened.”
How much does it cost to hire a bookkeeper?
“Do not hire the first person you come across,” says Megan, “Always get quotes. You could probably have your books done quick and dirty for $250 a month. But if you have lots of transactions, lots of detail, lots of hand-holding for your clients for specific payment terms, you can pay upwards of $1,500.”
The more your bookkeeper can automate the tracking process, the more affordable it will be for you. “For example, if they can always put vendor X in account Y and set up Quickbooks to do that for them, that’s going to cost less. But if there are a lot of tailored transactions, that’s going to be more expensive.”
You might want to hire a bookkeeper for your interior design business if…
“If you’re DIYing your books and you’re good at it and everything’s working out, great,” says Megan. “But if you are DIYing your books and you’re spending five hours a week dreading doing it and spending all of this mental energy on your books, it’s time to hire a bookkeeper and get help with that.”
What accountants do for interior designers
“Your CPA or your enrolled agent for your taxes will use the historical information that your bookkeeper has cleaned up for compliance,” says Megan. A bookkeeper organizes and cleans up your financial data. Then, an accountant uses that information to do your taxes and help you make sure that you’re paying the right amount for your quarterly and annual tax payments.
How much does it cost to hire a tax accountant?
Getting business taxes done depends on where you live. You can expect to pay somewhere between $500 and $1500 to get your business taxes done. (Keep in mind that getting your personal taxes done as well will incur another fee.)
You might want to hire an accountant for your interior design business if…
If you have an S-corp (not an LLC), you might find that doing your own taxes is simply too complicated. Also, if you have enough work or enough money in the bank, you’ll find that focusing on your business is a better use of your time.
What fractional CFOs do for interior designers
What does a fractional CFO do?
“For a lot of interior designers, bookkeeping information isn’t necessarily useful to you. Bookkeeping ends up being compliance work, which sucks because it’s not stuff that drives your business forward,” explains Megan.
CFO services on the other hand are forward-looking and are designed to serve you as the business owner—not the government. “CFOs look at the resources that you have, what’s coming down the road, what you’re going to need, what’s your cash balance going to be 3 months or 12 months from now. Instead of reacting to what has happened, we are planning for what we want to happen and giving you a better shot at your goals actually coming true.”
How much does it cost to hire a fractional CFO?
There’s no hard and fast rule because fractional CFOs can offer different services. Some might charge $3000 a month to work with you one-on-one. Others might offer one-time consultation calls to get you on the right track. And others will have temporary projects in the $500 – $5000 range, where you get some hands-on work done as well as a few one-on-one calls. Some CFOs offer lower-priced options if you can’t afford one-on-one work. Megan has an offer called Cash Calendar, which gives you financial planning templates and access to office hours for any questions.
You might want to hire a CFO for your interior design business if…
If you’re at the point where you’ve got all that compliance stuff figured out, but you don’t understand how to set your goals and budget, then it’s time to consider working with a fractional CFO. This service can help you pivot from just having your ducks in a row (bookkeeping and taxes) to really being able to map out where your business is headed in the future and how to improve your profits.
Megan’s tips for easy bookkeeping for brand new business owners
What if you’re just getting started? Here’s what you need to do…
“You need a separate bank account for your business, without question,” says Megan. But you can get away with not using Quickbooks and opting for a spreadsheet program so long as your income and expenses are simple. Because eDesigners don’t manage purchases, this strategy is more of a fit for them.
If you tend to let the client shop the items themselves and just bill for the time you spend on the project, Excel or Google Sheets will likely do the trick.
“As long as you can get your data downloaded from the bank in a CSV format or an XLS format, you’re golden. From there, you can watch a five-minute YouTube video on how to run a pivot table,” says Megan.
If you tend to be in charge of ordering products on behalf of your clients and you’re dealing with a high number of transactions, investing in more robust accounting software will make your life a lot easier.
While hiring help with financial management might seem scary at first, it is one of the smartest things to outsource in order to free up more of your time for client work.
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