Episode 126: Financial Professionals 101: Practice Owner edition! (with Linzy Bonham)

In this episode of "Therapy for Your Money," Julie Herres and Linzy Bonham discuss the various types of financial professionals that therapy practice owners might work with or encounter. They highlight the importance of understanding the roles and responsibilities of these professionals to make informed decisions for one's business.

Bookkeepers and Accountants for Therapists
The discussion starts with an overview of bookkeepers and accountants. Bookkeepers manage the financial records, transactions, and basic financial tasks, while accountants have a more comprehensive understanding of taxes, bookkeeping, and payroll. Accountants might also provide forward-looking analysis, helping business owners plan for the future.

Fractional CFOs (Chief Financial Officers) for Therapists
The hosts introduce the concept of fractional CFOs, who are like strategic financial partners for businesses. Fractional CFOs help with big financial decisions, budgeting, measuring financial key performance indicators, and achieving financial goals. They play a vital role in guiding businesses through periods of growth and keeping them on track.

Financial Coaches and Profit First Professionals for Therapists
Financial coaches focus on educating and empowering business owners to manage their finances effectively. They address mindset and emotional aspects related to money, helping business owners develop skills and habits for informed financial decisions. Profit First Professionals specifically use the Profit First methodology to prioritize profit in business finances.

Payroll Services and Financial Planners
Payroll services automate payroll-related tasks, ensuring compliance and accuracy. Financial planners, on the other hand, offer guidance on investments, retirement planning, and insurance products. It's important to distinguish between fee-for-service financial planners and those who may also sell financial products, as this can affect the advice and recommendations they provide.

Tips for Practice Owners: 

• When seeking financial professionals, make sure to clarify their roles, responsibilities, and compensation models upfront. 
• Assess your business's needs and goals to determine which professionals align best with your requirements.
• Regular communication with your chosen professionals can help you make informed financial decisions and stay on track toward your objectives.

LINKS & RESOURCES
GreenOak Accounting - www.GreenOakAccounting.com
Therapy For Your Money Podcast - www.TherapyForYourMoney.com
Profit First for Therapists - www.ProfitFirstForTherapists.com
Profit First Academy - www.ProfitFirstForTherapists.com/Academy
Money Nuts and Bolts - Learn More about Linzy and her services

Podcast Production and Show Notes by Course Creation Studio

Transcript

Episode 121_ What are the different types of finan… with as a practice owner_ (with Linzy Bonham).txt

Episode 121: What are the different types of financial professionals you might work with as a practice owner? (with Linzy Bonham)
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Julie Herres: You're listening to Therapy for Your Money, a podcast about all things, money and finance for therapy practice owners. If you want to feel confident and in control of your financial life, then you've come to the right spot. I'm your host, Julie Herres. I'm an accountant and the owner of Green Oak Accounting.

Julie Herres: My firm specializes in working with private practices across the US and my team and I have worked with hundreds of private practice owners. I'm on a mission to share all the best practices I've learned along the way. Because I want you to have a profitable private practice.

Julie Herres: My new book, profit First for Therapists is available at most online retailers. You can get it in paperback, audiobook, or ebook as well. Go check it out.



Julie Herres: Hello there and welcome to Therapy for Your Money. In today's episode, we are visiting what are all the different types of financial professionals that you might work with or encounter as a business owner? Uh, so this is an excerpt from a webinar I did over the summer with Lindsay Bonum. Uh, Lindsay is a money coach specifically for therapists in private practice.

Julie Herres: She is, at this point a. She has retired from her therapy business and all she does is money coaching and you can find her over at Money nuts and bolts.com. So in the discussion today, Lindsay and I talk about what are the different expectations you can have about your professional? What does each one of them do so that you can have a better understanding of who you might want to work with and who might be most helpful for you at the current point of your business?

Julie Herres: Enjoy. First of all, we're gonna go over what exactly does. Your financial professional do. 'cause there's a lot of different titles that you might see. Um, and they're all a little bit different, right? Kinda like I always wonder like L P C, lp, L C P C, right? There's a lot of different professional licenses in the mental health feeling, or L L C S W, like they're all a little bit different.

Julie Herres: So I'm gonna go over some, some, we'll go over some of the, uh, financial professionals you might encounter. A bookkeeper is, The keeper of the books, uh, they're usually knowledgeable about bookkeeping or they certainly should be, uh, they may have payroll knowledge. Uh, and I say may because not, not always, right.

Julie Herres: They may just really do bookkeeping and have some basic like, oh, the, here's how you run payroll, but may not understand all the, the payroll tax pieces. Typically, they do not do any kind of tax preparation. Uh, and they may or may not understand tax rules or tax consequences, right? So they, they have a basic understanding again, but they may not know.

Julie Herres: Be able to answer some more complex questions. Like if I buy, you know, this large thing, how does that work exactly? Right. Is it depreciation? Can you take the expense? Like they might not know all the different pieces. Um, for a bookkeeper there is no, um, degree or license required, right? So it might be someone who has.

Julie Herres: A community college degree or a high school degree, or just learned, you know, on the field. Uh, and typically when you're hiring a bookkeeper, you're going to pay them either hourly, monthly, by the project, and that might depend on, uh, how they, how they do things or, um, you know, your preference as well. Yeah.

Julie Herres: Like, 

Linzy Bonham: I think about it like, the bookkeeper keeps things tidy. They like tidiness, they're tidy folks, and so they're like making sure that everything is like recorded well, and that it's all in order. But as you say, like. What I'm hearing is they don't have the strategic piece, right? Like that's not what they're there to do.

Linzy Bonham: They're not there to help you think through strategy or understand consequences. They're just making sure that the things that you've bought have been recorded and the money coming in has been recorded and that everything is like accurate. 

Julie Herres: Yes. Yes. So it's neat and tidy and they might, they might be able to have a discussion with you on like, what exactly does this mean?

Julie Herres: But as far as like looking forward or more strategic items, um, that's typically going to be someone who's more like an accountant. Um, so your account. Definitely should be knowledgeable about taxes, bookkeeping, and payroll. Right? That is someone, when we think of like maybe, uh, an associate as a bookkeeper, right?

Julie Herres: This is someone who's basically fully licensed, right? That's usually what we're, how, how I think of the. The comparisons, they typically are going to have either an accounting degree or years and years of experience. Um, an accountant may or may not do tax preparation. Right. And that's just a personal choice in the sense that they might say, I only work on the accounting side, or sometimes I may only work on the tax side.

Julie Herres: Um, they're both, they both have their complexities and so you may or may not do both. Um, an accountant is often doing, Look back accounting. So kind of like a, a, a bookkeeper. You're looking at what has happened in the past, right? Like what happened last year? What might it mean, uh, for, you know, next quarter, next month, next week.

Julie Herres: Uh, but we're, we're looking back ultimately at, at the records. Um, and again, they may be paid. Hourly, monthly, or by project? Uh, when you, when you're talking to someone that you're thinking of working with, they will typically tell you like, this is how I do things and this is how you can expect to pay. Um, so an accountant though, may hold a c p a, an EA or no license.

Julie Herres: Right. If they're just, if they're, they have an accounting degree that doesn't necessarily grant a license. So when, when we think of an accountant, and we're kind of building the blocks, right? Building blocks here, uh, bookkeeper, accountant, fractional, C f O. So an accountant can also be. A fractional C F O, right?

Julie Herres: A fractional c f o will al will be an accountant, but fra an accountant may or may not also be a fractional C F O. Um, and so when we talk about C F O or Chief Financial Officer, we're really thinking of forward looking, right? We're thinking about, uh, what is, what are we planning for next year? How do we get there, right?

Julie Herres: So some of our clients, for example, will come to us and say, I'd like to. Uh, reach 5 million in revenue next year or 500,000, or five 50,000, right? Whatever that number may be. But like, this is where I'd like to be, and we kind of back into it. I was like, okay, that sounds wonderful. How can we get there? Is it realistic?

Julie Herres: What is it going to take? So we might back into it as far as. That means you need to add, you know, 50 sessions per month, uh, in order, 50 net sessions to get there. Is that doable for your team? Right. And just have the discussion. Um, sometimes the, the C F O is not necessarily going to have all the answers for you, but they might be able to ask the right questions.

Julie Herres: Like, Hey, this is what it would take to get there. Can you do this? Is this realistic? For your team. They're not the ones going in and actually doing, seeing the clients and, and doing the work, but they're, um, they're helping you figure out what it will take. They might help you build a budget or manage a budget and say, Hey, this was our forecast.

Julie Herres: We didn't meet it. What do you think happened? Right. And just asking the question again and thinking through like, what would it, where did we miss the mark? Is the forecast too aggressive? Uh, did, is there something that happened that was unplanned? Um, A C F O is usually someone that you're going to come to when you're thinking about making a big financial decision.

Julie Herres: Something like, um, I'm thinking of hiring for the very first time, or, I want to add a location, or I wanna make this large investment. Can I afford it? How can I structure this? What can I do? Um, A C F O will often help identify and measure your financial KPIs or key performance indicators. And so they might say, let's focus on these two this year.

Julie Herres: Right? This is where we need to keep the focus. But they'll help you track and measure that. Um, and they're typically going to assist you with identifying the financial goals for the business and scaling the business. So not every practice needs a C F O, but certainly what we, what we see is when there's a practice in a, a big period of growth where there's really aggressive goals, big goals, like I wanna double in size in the next year.

Julie Herres: A fractional C F O can be really, really helpful in. Keeping the machine going right. And helping you stay on track. So when there's a little shiny object coming, coming in over here, it's like where you think, oh, maybe I should go do this. They can help bring you back on track and like that's not in line with the goals that we've talked about so that they can keep you, um, accountable and on track.

Julie Herres: Mm-hmm. Lindsay, what would you add for C F O? I mean, my words 

Linzy Bonham: for c f O are big picture and strategic. Mm-hmm. Right? So they're bringing in that like again, the big picture. Keeping you to like your bigger vision of where you're going, um, but also strategic understanding, like, okay. If this, then this is, does that even make sense?

Linzy Bonham: Is that even possible? Right. Because I think sometimes too with numbers, um, we can run numbers and they look very beautiful on paper. They look so nice, but it's also helping think about what do these numbers mean? Like what would it actually mean if you were seeing 30 clients a week, what would your life actually look like?

Linzy Bonham: Is that actually sustainable? Um, and so, yeah, I think about that too. It's like it is really bringing that analysis. Um, looking forward and from looking back, being able to make, you know, educated projections forward as to what these numbers actually mean, which is very important. 'cause numbers on their own don't actually, uh, mean 

Julie Herres: that much.

Julie Herres: That's, yeah, that's a really good point. A, a story that's coming to mind as you say that is, and we, we have a client who I know we've been working with on like, this is the take home pay that she wants to bring home. Right? Based on like, this is what I, I, in, in my ideal life. I bring home this dollar amount.

Julie Herres: Yeah. And then recently this, this same practice owner came to us and said, well, I'm really thinking about this big investment. Can I afford it? And the answer is yes. Yes, you can afford it, but. This is the goal that that has been laid out. If you, you can afford it, but you will not be reaching, you'll have to delay reaching this other goal.

Julie Herres: Right. Which one is more important? Mm-hmm. And so that's an important conversation to have. 'cause like, yes, you can afford it, but. There's usually, there's usually a trade off it's costs 

Linzy Bonham: somewhere. And it does make me think of, um, there's a podcast Julie called Afford Anything, which is like, it's like a fire podcast.

Linzy Bonham: So like financial independence retire early, and the concept between of afford anything is you can afford anything but you can't afford 

Julie Herres: everything. I love that. I love that you have to make choices. To get what we want. Mm-hmm. Yes. Like, which trade off is more important. I love it. Exactly. Yes. So c f o definitely will, would be able to answer questions.

Linzy Bonham: Um, yeah. And just to go back to that for a sec. Mm-hmm. Um, Julie, just to clarify, so right now we are talking about, um, different financial professionals who are available. So a fractional C f o part of it being fractional is they're working with you and they're also working with other folks. Right? This is a service that they're offering, um, which is.

Linzy Bonham: You know, piles onto all those accountant things we just talked about. 

Julie Herres: Yes, exactly. And for, for most private practices, you typically can't afford to go hire A C F O, right? Mm-hmm. That they have that as a one full-time person. For most companies, that's 150 to a $400,000 position. So it doesn't make sense.

Julie Herres: It can make a lot of sense to have a little fraction of that c ffo where you're just getting, you know, they're working with a handful of people just like you. Right. So you don't get them exclusively Yes. But you do get access to that person with that higher level. Yes. Higher level, yes. You get a slice of them.

Julie Herres: Yes. A little slice. Um, payroll service, we're, I'm going to go over this really, really quickly, um, just because I, I like to make this distinction between apparel. Service is typically a software that automates. Everything related to payroll, payments, the filings, the reports, and the compliance. Um, so there is usually a fee for doing this.

Julie Herres: Sometimes you're also doing this through your accountant or your bookkeeper, right? They may be including this in the fee where they're using a software behind the scenes to do that. Um, but ideally this software is going to let you know when you are not in compliance. Uh, if you have team members, I always recommend using a payroll service or a payroll software to automate all of that because it's so easy to make a mistake.

Julie Herres: The stakes are so high, it's so expensive. The, the penalties are so large if you make a mistake. And so it's never ever worth saving, you know, $50 a month to do this manually. Like, this is money well spent, this may or may not be stacked onto. Um, you know, what you do with your accountant if you, if you have one.

Linzy Bonham: Okay, so a financial coach. So financial coaches help you develop knowledge and skills around money so that you can do many financial tasks on your own. Um, so they coach you in overcoming your own internal obstacles around money, like those like mindset, emotional pieces, and help you stay connected with your motivations.

Linzy Bonham: Um, and they support you in building habits and systems and understanding your numbers so you can make informed financial decisions. So, you know the word. Coach here is key. Like they are helping you to be able to do it yourself, uh, as much as is appropriate. I will be very clear, I'm a financial coach and I always suggest folks work with accountants always, and I will sometimes even like, debate with my students that they do need an accountant, even if they think they don't.

Linzy Bonham: Um, but it's really about like empowering you in as much as is appropriate for you to be taking care of the financial pieces and the financial responsibility of your business. 

Julie Herres: Yeah. And Lizzie, I would say financial coach stacks really well with any of the other professionals Yes. That we, we've talked about.

Julie Herres: Right. They're kind of, they're not in competition. They can work really well. Mm-hmm. Um, really well together as well. Yes. 

Linzy Bonham: They're different things. Um, definitely like servicing different 

Julie Herres: parts of your business. Yes. Yes. And a good financial coach or business coach like this can, can help any, any business of any size truly.

Julie Herres: Absolutely. Yeah. Yeah. Um, Next up we have the Profit First Professional. So this is also, uh, the acronym is P F P, um, a Profit First Professional is also a type of financial coach, right? A different type of financial coach. Um, obviously I wrote the, the profit first book, so that's very top of mind, uh, for me.

Julie Herres: Um, so it's possible to just work with a profit first professional that is not. Also an accountant, right? They may or may not be an accountant, but their goal is to be an accountability partner so that you're able to successfully implement, um, obviously their goal is to maximize your profit, right, as the name implies.

Julie Herres: And they're going to play an active role in your, your cashflow management. Um, but usually they're not doing all the things for you. They, they're probably not doing the bookkeeping or doing the accounting where they're just helping you stay accountable and like, Hey, It's transfer day. Are you doing your transfers today?

Julie Herres: How's it looking? Right? And help you make adjustments as needed. Uh, an accountant can also be a, a profit first professional, but a profit first professional is not necessarily an accountant, right? So they may be a coach, like there are, for example, dentists that are profit first professionals for other dentists where they use the system, they love it, they're wonderful at it, but that, that does not make them a tax expert.

Julie Herres: Right? So it's good to know kind of where that, where that limitation is. Um, and then this is our last, the last financial professional we'll cover today. We have a financial planner, right? So this is kind of adjacent to accounting, where we typically don't do as accountants, anything that the financial planner does and vice versa.

Julie Herres: We know about what each other does, but, but we don't, there is no crossover there. So your financial planner is typically the one who's going to manage the investment. Um, they may recommend investments. If they're going to recommend personal insurance products like life insurance, disability insurance, right?

Julie Herres: All the things that you may need as a, um, as a self, someone who's self-employed, they're going to help you plan for your retirement needs. So they may help you look at what will you need in retirement? How do we back into, you know, how much do you need to be investing now? Um, on occasion an accountant will be a financial plan planner.

Julie Herres: This is pretty rare. It it is fairly rare though. So usually you're going to get, um, referred out what an accountant might say is it would be tax advantageous for you to do this type of retirement, for example, right? For example, for A one K, and then you would go to your financial advisor and say, My accountant recommended a 4 0 1 K.

Julie Herres: What should I open, what, how would I invest the funds that are in that 4 0 1 k? Right. That is kind of how that division of, um, of power would happen. 

Linzy Bonham: Um, I won't go too, too far into this because I feel like this is a different it's a different journey. Yeah. Path. Um, but it is, Important to know that some financial planners or advisors are fee for service and their whole thing is just about, you know, giving you the best possible advice that they can, um, where many others are, are selling you products, right?

Linzy Bonham: So it's helpful for you to understand when you, if you do decide, and I think everybody ultimately should work with a financial planner to ask them very transparently from the beginning, how do you get paid? Are, is it fee for service? Am I paying you, you know, $2,000 for you to make this big plan for me and that's it.

Linzy Bonham: And you're just gonna tell me, you know, to get insurance, but you're not gonna try to sell me certain insurance? Or do you actually make money from, you know, holding my, my money? You know, you get a certain percentage of what I invest with you, or are you selling certain products? Are you selling, um, mutual funds or insurance?

Linzy Bonham: Because that does, um, bring some complexity into the picture. And it's not to say that folks selling products can't still. Sell you good products, but it does mean that they are gonna be limited in what they can offer you. Mm-hmm. Um, and so definitely before you work with somebody like that, really understands exactly how they're making money.

Linzy Bonham: Um, and that'll help to inform, you know, um, the information you get from them to, uh, just be critical and make sure that you're 

Julie Herres: getting the best products that you can. Great point. Uh, 'cause sometimes if, if someone works for a specific company, they can only sell the products of that company. Mm-hmm. Yeah.

Julie Herres: Right. And they're, we always hope that they have your best interest in mind. But they may sell you also the product that makes them the big commission. Yes. The biggest commission that, that does unfortunately happen. Absolutely. And or 

Linzy Bonham: just the best product they have. But that's not as good as you doing your own investing.

Linzy Bonham: So, which is again, this is why I'm like, this is a whole other world. 

Julie Herres: Yeah. And we could do a whole hour just on that. Yes, 

Linzy Bonham: yes. And it's not what either of us do, to be clear. Um, but uh, yeah, I guess it's a little bit of like a little buyer beware. Just make sure you know, you know how the person you're working with is getting paid.

Julie Herres: Very good point. I'm glad, I'm glad you went down that, that little detour. Just a little, just a little caveat. Yeah. Make the distinction between a tax accountant versus a monthly accountant, because there's sometimes some confusion here, right? Of like, oh, I have a tax person. I have a tax guy. So like, they're handling all of this.

Julie Herres: When you have a tax person, um, and you, you, you've worked with them just to do tax, they definitely are preparing your tax return. Um, they're going to advise you on tax issues as needed. Uh, typically they're going to provide your year end adjustments, right? If anything is needed for your books. Um, sometimes your quarterly estimated tax payments, if you.

Julie Herres: Have them, but they're typically not touching your bookkeeping. Right. They're, you're giving that to them and they're assuming that it's correct. Unless it is glaringly incorrect. Right. But they're not hired to go in and, um, Do that. And there's a really also a really good chance that they are not thinking of you outside of tax season, right?

Julie Herres: So they're not, most often not going to reach out to you in August and say, Hey, just checking in how, how are things going? Like if you are not, you know, actively working with them for tax season, you will never cross their mind until it's tax. Tax season again. Um, and I'm, I'm not saying tax accountant or monthly accountant, neither one is good or bad.

Julie Herres: I just want you to know kind of what you're getting into so that to manage that expectation and, and the relationship as well. Uh, a monthly accountant, right? Typically they're going to be involved in your books. If it's not doing it, they're reviewing it, they're going to provide monthly reports, they're going to notice trends, discuss changes, advise on tax issues as things come up, right?

Julie Herres: Because you're ha you have that ongoing relationship with 'em. Um, and they have an ongoing relationship with the business. So whether they're looking once a quarter, once a month, they're, they are in there, uh, with you and they're just going to know more about your business. Um, and a monthly accountant may or may not do tax prep, right?

Julie Herres: So it kind of depends. Both are. Options. And you can also have both and they can coexist, uh, together. But if you're working with a tax accountant and you need something, you're going to need to proactively reach out to them, uh, to say, Hey, I have this question about this. Right. They're, they're not just, you know, there's usually not just an a meeting coming up right on the, around the corner.





The information contained in this podcast represents the host and guest general opinions and should not be construed as personalized accounting and tax advice. Listeners should consider all facts and circumstances before applying this information and seek appropriate advice from an accountant, financial planner, lawyer, or other professional.

Any info provided does not constitute accounting, tax, or legal advice.