Businesses pay between 13% and 26% in annual taxes. Tax bills are at times hefty and daunting, but they don’t have to be. Working with a CFO can greatly increase your tax savings.
You may be wondering how a CFO can help you decrease your tax liability. Continue reading this article to discover more about what they do. And learn how you can save on your next tax return.
How Do Outsourced CFO Services Help With Tax Savings?
Outsourced CFO services can help with tax savings in several ways. Firstly, they can help with the identification and elimination of tax deductions. Secondly, they can offer guidance on the best way to invest to minimize taxes. Thirdly, they can provide advice on how to manage personal income and expenses.
Outsourced CFO services are beneficial because they offer several benefits including:
- Tax savings
- Reduced accounting fees
- More time for business owners
The best part is that these services offer a wide range of benefits. A few include helping with the financial and accounting aspects of your business and providing you with the best advice on how to save money.
What Does a CFO Do?
The CFO is responsible for the company’s financial health and is the most senior executive in charge of the company’s finances. The person in this position needs to have a good understanding of accounting, finance, and economics.
The CFO is responsible for making strategic decisions that will affect the company’s profitability. Some ways they improve their financial health is through the following:
Increase Business Value:
A CFO’s job is to maximize the value of a company. This is by investing in the right areas and making sure that the company is not wasting money.
A CFO needs to make sure they are aware of all areas of the company and that they are invested in maximizing their ROI. They need to think about what will increase the value of their company, whether that is through investments or cost cutting. Other ways include:
Succession planning is transferring the business to the next generation. This process starts with identifying potential successors and assessing their readiness to take on leadership. Leaders then develop a plan for transitioning the business.
The CFO can help increase the value of the company by doing succession planning in two ways:
- Helping to find successors who will be able to take over when they are ready
- Helping develop strategies that will make it easier for them to transition out when they are ready
Succession plans also help in boosting employee morale. This is because they know that they are being groomed to take over from their seniors someday. It also makes them proud that they are being considered for promotion opportunities.
Increase Recurring Revenue
It is important to have a strong recurring revenue stream to be able to grow and scale. A lot of companies have a hard time doing that because it’s hard to predict what the future will hold.
This is where the CFO can help by taking an active role in increasing the company’s recurring revenue. The CFO has access to all the data of the company. They can use this information to increase the company’s recurring revenue and business value for shareholders.
Professionalize Operations and Processes
A CFO has a lot of responsibilities. They are responsible for overseeing all the company’s finances. This includes everything from accounting to budgeting to tax planning.
The role of a CFO is not just limited to handling finances, they also have an important role in overseeing the company’s operations and processes. The CFO can improve business performance by professionalizing these aspects of the company.
The following are some of the benefits of professionalized processes and operations:
- Increased productivity
- Improved quality of work
- Better customer satisfaction
- Increased revenue
- Reduced costs
Outsource to Save Money
Outsourcing is popular among business owners who are looking for ways to increase their business value and save money at the same time. CFOs have started to outsource tasks that they don’t have time for and that they can’t do themselves.
Outsourcing is a common practice for many companies, but it can be difficult to find the right person or company to work with. Outsourcing can help with cost savings and time efficiency.
Reduce Business Risk:
The CFO is the one who is in charge of all the financial aspects of a company. They are responsible for making sure that the company has enough cash flow to operate and that they are not overspending.
The CFO’s job is to reduce business risk. They do this by:
Implement Financial Controls
A CFO can reduce business risk by putting in place financial controls. These include:
- Creating a budget and sticking to it
- Setting up a system of checks and balances
- Maintaining accurate records of inventory, sales, purchases, and cash flow
- Monitoring the company’s cash flow daily
- Ensuring that the company has sufficient funds to meet its obligations
They must have a good understanding of their company’s financial position. They need to know where the company is at risk, what are the risks, and how to fix them.
Benefits of financial controls include:
- Controlling risk
- Monitoring financial performance
- Controlling cost
- Assuring stakeholders
- Providing transparency
- Preventing money laundering or fraud
- Reducing errors
- Increasing cash flow
Financial controls are important to protect the company from financial risks and losses.
Business Continuity Planning
A business continuity plan is a planned course of action to follow when a company faces an emergency. It is a way for the company to recover from any disaster and minimize the consequences of any incident.
The CFO should establish a business continuity plan with the following steps:
- Create an emergency plan for all possible disasters that might happen, including natural disasters and terrorist attacks
- Implement procedures to recover from emergencies as quickly as possible
- Create an emergency contact list to help employees get in touch with each other during emergencies
- Establish procedures on how to communicate with customers, suppliers, and other stakeholders during emergencies
Business continuity plans are crucial for any company to have in place. They help to reduce the risk of business interruption. A sound plan also ensures that the company can maintain operations and keep its customers satisfied.
The CFO is typically a member of the executive team. They are often required to have a background in finance and accounting, as well as expertise in business strategy and branding. They provide insight into tactical operations, such as:
A CFO is the chief financial officer of an organization. They are responsible for overseeing all financial matters of the company and ensuring that it has enough funds to operate. A CFO is not a manager, but they can help with organizational structure in a couple of ways.
Firstly, they can provide advice on how to set up the company’s finances and make sure that it is operating within its budget. Secondly, they can provide advice on how to set up the company’s organizational structure and make sure that it is operating efficiently.
A tax-efficient organizational structure can help a company save money on taxes. Other benefits include:
- Lowering the corporate income tax rate
- Decreasing the need for large cash reserves
- Lowering operating costs
The CFO is responsible for leading the audit readiness initiative. The CFO should be aware of any changes in the organization’s financial reporting and accounting processes. They must also remain updated on any changes to regulatory requirements.
They ensure the company is financially sound and that it can meet the needs of its stakeholders. Being audit ready is a way to ensure that your business is compliant with the law. It also shows investors, consumers, and other stakeholders that you have a well-planned strategy for your business.
Benefits of an Outsourced Chief Financial Officer
The chief financial officer (CFO) is one of the most important positions in a company. They are responsible for many different tasks, including managing the company’s finances. They also oversee investments and acquisitions and ensure that the company complies with financial regulations.
There are many benefits to an outsourced CFO. One of the main benefits is that it can be less expensive than hiring a full-time CFO to work on-site. Outsourcing can also offer more flexibility in terms of location and hours worked. The outsourced CFO will also have more time to focus on key tasks because they don’t need to handle any other responsibilities within the company.
Other key benefits include:
Financial Expert at Your Fingertips
In the highly competitive financial world, it is important to have a financial expert on hand. This is especially true for startups, as they are still trying to make their mark in the market. They need someone who can give them advice and help them take their company forward.
Financial experts can help startups with everything from accounting and tax to investments. They are also good at advising on how to manage cash flow, which is a key part of any business.
A financial expert will also be able to give you tips about how you can save money and improve your finances in general. This will be beneficial for any company that is looking for ways to cut costs without cutting corners on quality or service delivery.
Save Time and Money
An outsourced CFO can save the business money and time. They can do the bookkeeping, payroll, and taxes for a fraction of the cost.
You can focus on your company’s operations without worrying about the financial side of things. This will allow you to get back to running your business and take advantage of the benefits that come with owning a business.
Outsourcing your CFO can save a lot of time and money for you and your company. However, it is important to be careful in choosing the right outsourced CFO for your company.
There are some factors that you need to consider before hiring an outside firm. You should consider the experience level of the outsourced CFO and their qualifications. It’s also important to understand how responsive they are and the pricing structure.
Streamline Financial Reporting
Outsourcing a CFO to manage financial reporting is beneficial for both parties. The outsourced CFO will have the necessary skills and knowledge to handle all the financial aspects of your business.
They will also be able to complete tasks more quickly and efficiently than you could do yourself. This is because they are experts in their field. They also have access to all the necessary resources, such as software, tools, and other people, who can help them complete the task.
Companies need to keep track of their finances as accurately and quickly as possible. This is so they can make informed decisions about how best to proceed with their business.
Clear Forecasts and Projections
Clear forecasts and projections are essential for any company looking to grow. Having an outsourced CFO can help you stay on track with your finances and achieve your goals.
Having a clear projection for the future is important for any business. It helps in making decisions and taking the right steps to get to the desired goal. Clear forecasts and projections help in getting a better understanding of where the company stands at any point in time.
You can use financial projects in many different ways. A few ways include strategic planning, forecasting, and budgeting.
The impact of better financial forecasts and projections is two-fold. First, it can help companies plan for the future by developing a strategy that is based on their financial forecast.
Second, it can help companies make better decisions. This is by providing them with the information they need to make informed decisions.
Better Risk Management
Risk management is an important aspect of any business venture. However, there are many different ways in which companies can go about managing their risk.
When you hire an outsourced CFO, they will take care of the entire process for you. They make sure that your financial investments are sound. And they also help to identify and mitigate risks.
Transparent Budgeting Practices
Transparent budgeting practices are a must when it comes to outsourcing your CFO. It allows you to see all the expenditures and investments. This way you can make smarter decisions and not be surprised by any sudden expenses.
The benefits of having transparent budgeting practices with an outsourced CFO are:
- You know what is going on in your company at all times
- You can make better decisions
- You will have more control over your company
An outsourced CFO can provide a company with an expert in financial management. They can help in the development of the company’s long-term strategy and assist with compliance issues.
The benefits of having improved compliance are:
- Improved cash flow
- Reduced risk of fines or penalties from the government or regulatory agencies
- Better protection against lawsuits
Rapid Business Growth
CFOs can provide a fresh perspective on your business and help you grow it more quickly. They bring in new ideas and provide the experience that you need to go from small-time to a big-time company.
The company can focus on its core competencies while the outsourced CFO handles all the financial and administrative operations. It will be able to save time and money as they do not need to hire a full-time CFO. And the company will be able to grow faster by spending more time developing and marketing its products/services.
Tips on How to Save on Taxes:
Taxes are a necessary evil. They provide funding for the government and help to maintain a healthy economy. However, they can also be a major burden on businesses. When you’re looking at how to save money on taxes, it’s important to consider your current spending habits.
A CFO can help greatly with tax planning. They can make a variety of recommendations, including:
The simplest way to save on tax is by purchasing equipment that will allow you to spend less in the long run. Buying new equipment can help you avoid paying taxes on the cost of the purchase and will also allow you to deduct any upkeep costs.
Equipment purchases are considered depreciating assets that will eventually wear out and need to be replaced. This means you can deduct the depreciation cost from your taxable income each year. This will result in a lower tax liability.
Facility upgrades are one of the best ways to save on taxes. A lot of businesses don’t know that they can take advantage of tax credits and deductions for facility upgrades.
The IRS offers some tax incentives for business owners who want to make their facilities more energy-efficient. There are also incentives for making the space safer or providing better working conditions.
Diversify Your Workforce
One way to save on taxes is to diversify your workforce. If you create a hiring plan that recruits and hires from certain groups, you can get a credit.
The Workplace Opportunity Credit is a tax credit for employers who hire and retain employees from certain targeted groups. It is available to employers who hire members of the following groups:
- Qualified veterans
- Qualified ex-felons
- Qualified disabled veterans
- Qualified disabled ex-felons
- Low-income individuals who are members of families with a total annual family income of not more than $25,000
To qualify for the credit, an employer must have a written plan describing its efforts to recruit from these groups. It must also employ at least one member of each group in the year for which it claims the credit and must be an eligible employer.
This credit can be up to $10,000.
Deferring income is a form of paying taxes later. You can do this in several ways, including:
- Deferring salary or other compensation
- Deferring dividends
- Deferring interest payments
- Deferring capital gains on investments.
The deferral can be for a few months or years. Deferring income can be a great way for a business to save on taxes. It involves delaying the collection of revenue, which in turn reduces the amount of taxable income for the year.
This is an option for businesses that want to defer some of their income and enjoy tax savings.
Maximize Tax Credits
Tax credits are incentives available for businesses to help them save on taxes. They can be used as a way to incentivize the business to do something they might not have done before.
In the United States, there are many types of tax credits for businesses. They help businesses reduce the amount of taxes that they owe. Tax credits have been around for decades and have helped many different types of industries grow.
Types of business tax credits include:
- Retirement plan startup costs
- Small business health insurance premiums
- Employer credit for FMLA
- Work opportunity credit
- Research and development credit
- Disabled access
- Employer-provided childcare
- Alternative fuels and vehicles
- Social security and Medicare paid on tips
- New markets credit
Working with a CFO will ensure your business maximizes the number of credits it is eligible for.
Get Help with Business Taxes Today
Now you understand why having a CFO can help with tax savings. Not only can a CFO stop you from overpaying on taxes, but they can transform your entire financial department.
If you’re ready to get started with an outsourced CFO, you’re in the right place. Schedule a free consultation today to discover more about our CFO services.