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While many industry outsiders view all financial services the same, financial professionals know this is far from the truth. Both CPA and CFO firms offer important and needed services, but they have vastly different roles. CPAs and CFOs differ in terms of revenue, focus, scope, client involvement, and more.

If you are considering starting your own consulting firm, you might wonder whether a traditional CPA firm or a CFO firm is the better choice. The decision will come down to your personal and business goals, but there are considerable benefits to starting your own CFO firm. Keep reading to learn why you should start a CFO consulting firm instead of a traditional CPA firm.

CPA Firms Specialize in Taxes

Starting with the obvious, traditional CPA firms are focused on tax strategy. This niche is certainly sought after by many businesses and individuals, but it is very specialized. CPAs implement thoughtful tax strategies to minimize tax burden and manage financial records in case of an audit.

Businesses seek the help of a CPA firm in specific situations. A company will hire a CPA when they need to ensure compliance with tax law, help preparing and filing taxes, and assistance reducing their overall tax burden. Companies will also utilize a CPA to manage tax audits if they arise.

CFO Firms Focus on Strategy

The role of a CPA is well defined, but CFO firms can have a broader focus. When it comes to strategy, CFO firms are called upon for long-term financial planning and guidance. CFOs have the flexibility to move away from traditional tax-focused strategy and offer forecasting, budgeting, resolution of cash flow issues, optimizing systems, raising capital, and more.

CFOs often bring a different level of experience and insight that traditional CPA firms may not be qualified to offer. As experts in long-range operational planning, CFOs can focus on future cash flow instead of historical data. They can help every arm of a company perform sustainably at its peak.

CFO Services are in Demand

Many businesses are actively seeking the services a CFO firm can provide. They require more hands-on support than a traditional CPA firm can offer as well as services outside of taxes. Clients want strategic consulting and assistance managing their financial operations, and CPA firms may not be up to the task.

A CFO firm can offer a well-rounded experience that meets the unique needs of a client. Instead of simple bookkeeping and tax filing, CFO firms can offer more accurate bookkeeping, regular financial statements, comprehensive reviews, and greater transparency for clients.

CFO Firms Can Offer More Services

By starting a CFO firm instead of a traditional CPA firm, you have greater flexibility in the services you can provide. While CPA firms are often pigeonholed into a tax-focused roles, CFO firms can branch out to offer a wider range of financial services. You can provide long-term financial planning and higher-level strategy for clients.

CFOs can also specialize by carving out a niche. Becoming an expert in your field enables you to provide valuable services to a specific industry. Niche services can help set a CFO firm apart, attracting clients that understand your business and need your services.

CFOs Earn On-Going Revenue

Another major difference between CFO firms and CPA firms is potential revenue streams. CPAs typically charge less for their services than CFOs. CPAs also charge annual fees for tax preparation while CFO firms can bill on-going fees for their services. CPAs must also build up a large client base to generate substantial revenue in a brief period of time.

CFOs can generate recurring revenue, earning more with fewer clients. This allows CFO firms to grow at a sustainable rate, building their client list in a manageable way. With sustainable growth, members of your CFO firm are less likely to experience burnout or unnecessary stress at work.

CFOs Have Constant Client Interactions

If you like to be hands-on and interact with clients on a regular basis, starting a CFO firm is the best course of action. Traditional CPA firms do not interact with their clients on a regular basis. Typically, CPAs collaborate with clients every three to four months, at most. CFOs, however, are in constant contact with clients.

CFOs become trusted advisors for their clients, constantly working together to set and reach goals. With a CFO firm, you can become an integral part of your client’s team and work with clients who understand and appreciate your services. You will even find that clients call on you to assist with tax return preparations as well.

CFO Firms Provide Year-Round Services

It is no surprise that CPA firms tend to earn all their revenue in a brief period of time. While this may seem attractive on the surface, it can lead to a host of problems. Long hours lead to burnout, and you may experience turnover within your firm. Tax laws are always changing, making it difficult for CPAs to feel comfortable and confident in their role.

On the other hand, CFOs can provide services year-round. You can start your firm, providing one service at launch, and slowly build your menu of services over time. Charging hourly rates can generate substantial revenue that is recurring.

CFOs Add Value

Instead of offering a one-time or yearly service, CFO firms can help their clients grow in meaningful ways. While traditional CPA firms are much needed, they are limited when it comes to client interaction and adding value. If you are seeking a rewarding experience, starting a CFO firm lets you think outside the box. Clients place a lot of value on their CFO and consider them an important part of the team.

Are you ready to start your CFO consulting firm?

CPAs are a necessity, but CFO firms are truly able to support growth for their clients. If you want to generate substantial recurring revenue, offer a wider range of services, and add value for your clients, starting a CFO consulting firm is the only way to go. Our team can help you build your CFO firm, unlocking unlimited income potential. Contact us today to learn more about starting your own CFO firm.

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