Now that you’ve started down the path of entrepreneurship, there are a series of essential roles to fill, like CEO and marketing team positions. However, many people make the mistake of leaving the financial department last in the staffing queue.
Within the financial department, the most ignored position is that of Chief Financial Officer, also known as the CFO. The lack of a CFO is the reason many enterprises don’t make it.
At Gonzalez & Arrambide, we want to showcase the importance of hiring one of our vCFOs to help your business boom.
Duties of a vCFO
The CFO is responsible for managing the financial aspects of your business. Yet, a full-time, in-person, CFO can be costly. This is where hiring a virtual CFO (vCFO) could make a lot of sense for small businesses and startups.
A vCFO is a consultant or business that offers the services of a CFO, but does their job remotely, and usually on a part-time basis. The vCFO will focus on creating high-level financial strategies and putting them into action.
Our vCFOs at Gonzalez & Arrambide can provide financial services on a weekly, monthly, or quarterly basis. Our vCFOs are also ready to provide advice for a specific project. However, if you already retain the services of a full-time CFO, it would be redundant to get a vCFO.
Yet, if you have a new start-up, keep on reading to learn why a vCFO is the best option for you.
5 Reasons to Hire a vCFO
1. Customized Goal Setting
The first thing a quality vCFO will do is understand and lay out your business’ short and long-term goals. These goals will become the blueprint from which to build your custom strategy.
You get customized experience to your needs and goals. This cuts any expenses on services you don’t require.
2. Report Design and Problem Solving
The vCFO will design and set a standard report to help organize your finances. A vCFO will have seen many issues and situations in different companies, this allows them to organize your finances in the most effective way for you.
Their experience will help you get past your problems even before they happen. You’ll have the benefit of learning from others’ mistakes.
3. Technology Efficient
The vCFO will optimize any of your financial technology. This way they will maintain the financial organization within your business and cut expenses on software you don’t really need.
Virtual CFOs have experience with a wide range of different systems and products since they work remotely. They will be able to provide first-hand advice on different systems, and find one suitable for your needs.
4. Experience and Custom Balance Sheet Builds
Hiring a vCFO gives you a fresh pair of eyes that have seen many businesses before. A quality vCFO will analyze your balance sheet when they come on board. If needed, they will rework it.
By outsourcing your CFO services with us, you’re bringing instant experience. That experience could be vital, especially when it comes to a newly found business.
5. Streamline Financial Processes
Working with a vCFO, you’ll gain from their financial expertise and obtain help with developing and streamlining your financial operations. Since the vCFO will have worked with various clients across different industries, they have insight into operational improvements.
Find the Weslaco Financial Services You Need at Gonzalez & Arrambide
As your business grows, a vCFO can grow with you. Whether you only need the Gonzalez & Arrambide vCFO services one day a week, or part-time as you become more successful, we are here to support your business at every step.
There is a lot more to starting up a business than creating a product, drafting a business and marketing plan, and making a lot of revenue. The tax collector still needs to take their cut, and taxes–even outside of a business setting–can be complicated.
At Gonzalez & Arrambide, Inc. we want to help new entrepreneurs like you get up to speed on identifying what taxes may be applicable to their business by highlighting most of the ones that they may be responsible for paying down below.
Business Taxes in Texas
In contrast with other states, the low business taxes and lack of personal income in Texas gives the Lone Star State two advantages over many other states:
- Businesses keep more of the revenue they generate.
- Top talent individuals are attracted to the lack of personal income tax.
This is even better for small businesses. With the business tax rate already being low as is, it shrinks or decreases to zero for businesses whose revenues don’t exceed particular thresholds.
For instance, smaller businesses with less than $1.18 million in receipts pay $0 in business taxes–known as the zero-tax threshold or no-tax-due threshold. Bigger businesses that have over $1.18 million to $10 million in receipts only pay around 0.375 percent, and if you’re a sole proprietor or in a general partnership, you are exempt from the franchise tax.
For startups and entrepreneurs, this can make the few early years a little less stressful.
It is, however, important to keep in mind that Texas refers to its tax on businesses as a franchise tax, but the state doesn’t have a corporate income tax. To clarify, the difference between corporate income taxes and franchise taxes is that corporate income taxes apply to profit while franchise taxes are basically a mandatory fee for companies who have the privilege of doing business in a city or state–usually determined by the capital held by or the net worth of the business organization.
S and C Corporation Taxes
The S Corporation is popular among small businesses. Texas still requires S corporations to pay its franchise tax depending on the business’s annual revenue. This tax can only be as high as 1 percent, and individual shareholders in the company aren’t obligated to cover state taxes on their portions of the company’s income.
This advantage offers benefits to small S corporations whose annual revenues don’t pass the zero-tax threshold. In a sense, they work tax-free since tax isn’t established on the business itself or on the individuals who gain money from the business.
As companies grow from LLCS to S corporations and then ultimately a C corporation, so too will they be responsible to pay franchise taxes where they will follow the same zero-tax threshold rules mentioned above.
Limited Liability Company Taxes
LLC is the other common choice for small businesses. In most states, LLCs are entities that provide protection to business owners from some legal liabilities but give their incomes to those owners, who take care of the personal income tax instead of business income tax on their proceeds.
With S corporations, however, Texas goes against the national trend and charges the franchise tax to LLCs, which applies to every business type.
It is worth emphasizing that the income that goes to the owners as personal income isn’t imposed on state income tax in Texas.
Partnership and Sole Proprietorship Taxes
Most of Texas’ small businesses are partnerships that pay the franchise tax, whereas sole proprietorships don’t.
However, if a partnership is a business that is directly owned by individuals, meaning that the business income is distributed directly to them, partnerships and sole proprietorships are treated the same and aren’t charged the franchise tax.
The business owners are obligated to pay federal income tax on this income but not state tax, given that Texas doesn’t tax personal income.
Most partnerships in Texas, including LPs and LLPs, are assessed with the franchise tax.
The Virtual CFOs at Gonzalez & Arrambide are Available to Assist You
At Gonzalez & Arrambide, we offer our clients Virtual Chief Financial Officer (VCFO) services designed to help businesses manage their financial obligations efficiently without having the need of a full-time CFO, all at a reasonable rate that can save you a lot on startup costs.
Every dollar counts when it comes to running a business, and having an accurate report of your cash flow and how it is affected by taxes is crucial to staying afloat.
If you’re starting up a business, let us help you sort out all of the tax information and create a financial plan that is right for you.
Implementing processes to advance your organization’s long-term goals is one aspect of business management. However, one of the more critical components to running a profitable company involves strategic planning, or documenting and establishing a direction for your business, including assessing where you are and the direction it’s trending.
Strategic planning is not only an opportunity to record your organization’s mission, vision, and values, but to also lay out your business’ goals and to develop an action plan to achieve them. A well-prepared strategic plan will play a pivotal role in the growth and success of your business, and will offer leadership and support staff the means to respond to opportunities and challenges that arise.
Notwithstanding, the best-laid plans can sometimes go awry. When developing and implementing a strategic plan for your organization, there are ways to avoid making mistakes as you move forward.
Making the Right Decisions: Avoiding Mistakes in Your Strategic Business Plan
1. Employ an internal facilitator with experience leading planning sessions. An outside qualified consultant may offer the best way to run any planning sessions. An additional benefit of hiring an outside consultant is that they bring in an objective (and outside) perspective, while encouraging others to participate and offer their own opinion.
2. State your objectives clearly. Exercise a measure of structure and lay out objectives to avoid the session going off track. Clear objectives help guide sessions and offer a way for people to remain on task.
3. Establish an environment that invites trust and openness. Brainstorming as a group is critical, and it’s important to do so in an atmosphere free of judgment. On occasion, the most out-of-box ideas create meaningful change. Not offering an environment where participants are able to freely speak their minds may stifle great ideas.
4. Engage in follow-up for ideas from your strategy session. Strategic planning sessions involve taking leadership away from their busy schedules, so it’s important to utilize that time wisely and to implement action items that emerge from the session. Lack of execution is a common way to remain stagnant and miss out on opportunities to advance toward greater success.
5. Invite the right people to the planning session. Small group sessions offer opportunities to get things done more swiftly and with greater ease, whereas larger groups with more participants offer improved opportunities for great ideas.
The larger the group, the more responsibility a facilitator must undertake. Including individuals from different disciplines and levels of expertise who offer broader perspectives is a surefire way to develop strategies that are innovative and effective.
In summary, strategic planning sessions can help ensure your business advances in the direction you expect for success, but adopting the right framework and working with the right people are critical to a positive outcome.
Gonzalez & Arrambide, Inc., Offers Their CPA Services to Help Your Business Succeed
With 25 years as one of the most trusted and respected accounting firms in the Rio Grande Valley, Gonzalez & Arrambide, Inc., has guided individuals and businesses in addressing their financial and accounting needs.
Call us today at (956) 447-9009 and learn how we can help you grow your business!