What small businesses need is someone in the middle, a Freelance Accountant who specializes in bookkeeping, not taxes. What follows is an explanation of how and why every small business should adopt this three-tier approach.

The top level is the company's CPA. Typically charging $100-$200 per hour, and $65 an hour for "back-work" by their CPA interns and assistants, the CPA, because they are the most expensive, should be confined to just doing the tax return, using your "clean" financials. The CPA should not have to do what they call "write-up", which is doing your books for you. They will charge probably around $65 per hour to do this. It also gets very expensive when your books are full of accounting errors and things that need straightened out and corrected.

Don't think you are saving money having only a low paid bookkeeper, you are likely paying for the CPA to correct all their mistakes. You should never be having your CPA do your basic bookkeeping, your payroll, your payroll quarterlies. That's like hitting a fly with a sledge hammer. Overkill. And very expensive. You won't be hurting their feelings either, they really do not want to have to do payroll or bookkeeping work. In the old days, accountants did everything. Today, with the complexity of the tax laws, you need someone who is thoroughly trained and current on the latest tax laws, you need a CPA. Just because you can do something, doesn't mean you should.

At the bottom is the clerical employee. This person is usually a high school grad, maybe some college, makes an hourly wage of $8.00-$12.00 per hour. This person does the routine bookkeeping work of data entry; entering the bills, creating and mailing invoices, possibly preparing checks to pay bills, doing collection work on A/R, filing away paid bills and invoices, receipting in customer payments. In case you've never read my rants about this, let me emphasize that this person should never sign checks or open mail!

You might already have a great bookkeeper who knows what they are doing but if they know their worth, you also probably have to pay them pretty handsomely! If they are really good, you'll have to pay them well just to keep someone else from stealing them away from you. You really don't want this situation. This is expensive! If you've never read "The E Myth" by Michael Gerber, please do so immediately, he makes the case for not hiring expensive expert employees, he tells you how to change the systems you use so the tasks can be performed by the lowest skilled people possible. Think of how wasteful it is to pay someone a handsome salary or hourly rate, because they are really good, just to do simple bookkeeping clerical tasks. Many business owners fall into this trap. Their obvious answer usually is to hire a part-time inexpensive person to take over some of the simplest duties, but you still are having to pay the really good bookkeeper for 20-30 hours a week! Doesn't make much sense.

As you can see, what is needed is someone in the middle. A person who is thoroughly trained in accounting and your accounting software (like QuickBooks) who can keep the books "cleaned up", in good order, keep the accounts reconciled, watch over your in-house bookkeeper, and is able to hand your CPA a very clean set of financials at year-end from which the CPA can prepare the tax return with little or no adjustment needed. You want to have a freelance accountant on call who can come in once a week for an hour or so. Their rate is usually between $30 and $60 per hour, depending on what part of the country you are located. You get an added bonus from this system; knowledge and confidence that each month you have a good idea of how your business is doing because you can trust the numbers.

A good freelance accountant can also help you look forward. Your books and financials are historical documents, they only look backward. Imagine trying to steer your car down the road, only by looking in the rear-view mirror! Maybe your banker requires a projection from you before advancing a loan or a line-of-credit. Maybe you want a budget to serve as a basis to gauge how key employees or departments are doing. Chances are, your clerical bookkeeper is not equipped to do this. Your CPA does not have the time or the interest to do it. A good freelance accountant will work with you to obtain the correct base information from which to make projections, guide you on what information to gather. They may have Excel templates or specialized software such as Up Your Cash Flow. A word of advise; you know your business better than any of the people I have described here, you cannot and should not delegate the assumptions used in your financial projections to anyone else, you need to be intimately involved in those assumptions. Your freelance accountant can advise and guide you, and plug in the numbers, and put them into a form that is acceptable to your banker, but they are YOUR numbers!

Some of the names people call this in-between type of accountant are: Accountant-On-Call, Freelance Bookkeeper, CFO-For-A-Day, but whatever the name, they operate as an independent contractor, they are not on your payroll, how much time they spend on your company is up to you and the work needed. This is an extremely efficient way to go because you are not having to pay for any more than you get and you get just what services you need. You are matching the correct person to the task to be done, which is always the least expensive way to do anything. Like anything else, you always bring in the right person with the right skills, and hire them only for the amount of work they need to do, no more.