A complete small business finance starter kit

The other day I was talking to the owner of an environmental consultancy in California whose bookkeeper tried to defraud the business. Luckily, the owner caught it, but now she was second-guessing her whole financial back office. She asked me:

What do I actually need? What people? What apps?

I cannot stress how often I hear this question. Lindsay (not her real name) is a military veteran who built her business from scratch. As such, she invented many of her processes. She purchased software and promoted her assistant to bookkeeper. But was it a good setup? An ideal setup? With a degree in wetland conservation, she knew she didn’t know. Yet she built a multi-million dollar business anyway. 

Inspired by Lindsay, I wrote this article to explain visually all the pieces you need to run an even more successful finance operation. It’s based on our work helping 2,000+ businesses run their back-office.

This will apply across most industries, with tweaks. If you’d like more detail, let us know at info@pilot.com.

Do I actually need a finance team? 

First off, yes, you need a finance team. And the better organized your team is, the more money you can make. Many business owners build their back-office finance setup from scratch, which is remarkable. That’s grit. Half had no finance background, meaning they likely reinvented processes that already exist. This can be inefficient, especially if they don’t have a system for following up on invoices to prevent customers from paying late.

At minimum, you need jobs, people, reports, and software

1. Seven “jobs to be done”

Before you hire, you need to know what must get done. Your business must send and receive money, file taxes, manage payroll, and stay compliant. To handle these tasks effectively, you need accurate financial information—something that starts with solid bookkeeping.

The essential jobs:

• Paying out money—Accounts payable (AP)
• Receiving money—Accounts receivable (AR)
• Filing taxes—Including identifying deductions and credits to optimize your tax strategy
• Bookkeeping—Coding all your transactions to maintain a single, accurate financial record
• Payroll—Covering wages, tax withholdings, and state filings
• General finance admin—Handling tasks like managing software, obtaining insurance, and overseeing other financial operations
• Monitoring for compliance—Especially important for companies with grant reporting requirements 

As you grow, you’ll also need to add in:

• Controlling/managing spend
• Budgeting
• Reporting
• Raising capital
• Forecasting and strategy
• Pricing and product strategy
• Audit and/or M&A support‍

2. Three or so people to handle those jobs

A surprising number of owners do their own payroll and invoicing. If you enjoy it, that’s fine—but outsourcing can free up valuable time. Some owners also successfully manage their own taxes. But as your business grows, you’ll want a tax accountant who can help maximize deductions and ensure you’re filing correctly. 

At minimum, I think you need three people:

• Tax accountant—The person who prepares your taxes (not all accountants do taxes)
• Bookkeeper—The person who reconciles your financial books each month 
• Finance generalist—A versatile person who manages day-to-day financial tasks like paperwork, software, insurance, banking, and government forms

Your tax accountant and bookkeeper are usually different people. Both roles are easy to outsource. Your finance generalist could also be part-time. You just need someone trustworthy who’s good with details.

As you grow, you might also hire:

• CFO—A strategic leader who develops growth plans, forecasts expenses, and helps you increase profitability (You can hire them part-time or for projects)
• Business advisor—Provides insight and guidance based on industry experience
• Controller—Oversees financial operations, ensuring accuracy and efficiency as the business scales

3. Four reports

Your bookkeeper is your key source of financial information. They’ll likely use QuickBooks, which is the standard in accounting software. Once they sync your financial institutions, they can categorize transactions each month. From that ledger, you can pull reports.

At minimum, you need to be able to pull:

• Profit and loss statement (P&L)—Breakdown of your revenue, costs and expenses
• Balance sheet—Snapshot of your company’s financial position, showing your company assets, liabilities, and equity
• Statement of cash flows—Detailed look at how cash moves in and out of your business 

And of course, you can’t exist for long without tax returns prepared by your accountant.

• Tax returns—File them all in one logical place.

4. Nine software tools

The reason you can get away with hiring just three people these days is thanks to software. It can really free up you and your team. Yet don’t overdo it—too many apps create their own challenges. Trying find a few that do many of the things you need.

At minimum, you will need one in each category:

• Accounting—QuickBooks, Xero, FreshBooks
• Payroll/PEO—Gusto, Rippling, ADP, Justworks, Oyster, Deel
• Payments—Zelle, Stripe, Bill, Airbase, Apple Pay, Square
• Ecommerce—Shopify, WooCommerce, BigCommerce, Amazon
• Banking and credit cards—Mercury, Ramp, Bank of America, Chase, CapitalOne
• Document storage—Google Drive, Dropbox, Microsoft, Apple iCloud
• CRM—Zoho, HubSpot CRM, Salesforce
• Integrations—Zapier
• Chat—Slack, Microsoft Teams, WhatsApp, Zulip

All that software is always evolving, too. You’ll have to stay on top of the new features they launch, which can save you more time. For example, Stripe, Mercury, and QuickBooks all offer invoicing. Which should you do? It pays to have an expert to call. (We recommend QuickBooks.)

Wish someone would just do it for you? 

Finances are the most common function for smaller businesses to outsource. And if I can be so bold, I think you should look at Pilot. 

We’re the #1 rated accounting and bookkeeping service on review sites like G2 and Capterra, with 2,000+ happy startup and small businesses customers who tell us they like that we save them time and make things simple. 

For a simple monthly subscription, you can entrust us with your:

• Bookkeeping
• Tax prep
• Payroll
• Accounts payable (AP)
• CFO services

And for everything we can’t do, we can advise and help you see what works for other businesses. That way, you don’t have to reinvent the wheel or ever again ask Lindsay’s question: 

What do I actually need? What people? What apps?