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A New Hope: Financial Services

By Harrison Greenspan


The seismic impact of COVID-19 has left the business world to scurry, as the financial ecosystem is in uncharted territory and the situation evolving every day. Now more than ever, the financial services industry offers a ray of hope and clarity to these trying times. As such, it is imperative that the financial service industry be transparent, flexible, and act decisively in response to the challenges COVID-19 has posed. Whether you’re helping private individuals or other businesses, countless Americans are looking for guidance regarding their financial situation. This is especially true since the financial services world was not all too prepared for the circumstances of a global pandemic.

A report called “Confronting the Crisis: How Financial Services Firms are Responding to and Learning from COVID-19,” was backed by a flash survey of senior executives in the U.S. financial services industry. A quarter of these executives held C-suite positions (senior executives), as the remainder held other executive roles. According to the report, “early indications suggest that not all financial services institutions are leveraging their plans in the same way.” For example, the survey within the report portrays close to a quarter of those firms were relying on existing business continuity plans, while around 40% “used modified plans and a third created new ones on the fly.” However, the results of these modified plans were not all too encouraging. Close to three-quarters of respondents felt that their firms were “better than moderately prepared to handle the impacts of the crisis.” Additionally, only 16% of respondents felt that their response to the pandemic worked well.

However, the respondents also pointed to various ways in which the existing resiliency plans fell short, primarily due to pandemic-specific procedures or measures. For example, 59% of respondents did not include pandemic-specific actions within their respective plans, 50% did not address extreme shelter-in-place order, 34% noted gaps in how to address technology, and 20% recognized good plans, but said they were not harmonized or linked. At large, the report found that rethinking and digitizing client interactions is a high priority for executives.

So basically, the financial services industry is still trying to dog paddle through the treacherous waters of this unforgiving pandemic. If you’re someone with accounting knowledge and skills, now might be a great time to launch a financial services small business, particularly if you can learn from the mistakes of existing financial services businesses.

The Responsibilities of Bookkeeping & Accounting for Your Clients

If you are a detailed-oriented individual with an understanding of accounting, bookkeeping just might be the area of accounting your new small business focuses on. As a bookkeeper, you would be recording the day-to-day transactions of an individual or business. Essentially, bookkeeping refers to the record-keeping aspects of financial accounting, which includes the recording of sales, purchases, receipts, and payments, documenting each financial transaction, whether cash or credit, into the correct daybook (where all the financial transaction are recorded), and into the general ledger (which serves as the central repository for all accounting data). From here, an accountant can create financial reports from the information recorded by the bookkeeper.

While bookkeeping might seem straightforward or obvious on the surface, today more than ever, bookkeeping is a multi-faceted job that might require more than one person. However, the additional amount of preparation, organization, and analyzation guarantees the security, power and success of businesses. To start, a new client will work with an accounting software specialist who creates an accounting data file specifically tailored to the client’s needs. The accounting software specialist will ensure that the client has access to the software and reports they need. While you may be thinking this job can be covered by instead using a simple accounting software such as QuickBooks or FreshBooks, by offering a specialist’s perspective and guidance, your client will feel much more at ease. As such, accounting software alone does not address your clients’ unique needs and requirements, as QuickBooks will not tell you what your financial numbers mean or how to improve upon them. This is why a full-charge bookkeeper needs to be a part of the equation for your financial services small business.

And although I mentioned the basic duties of bookkeeping, a full-charge bookkeeper has even more important responsibilities. A full-charge bookkeeper manages payroll, handles deposits, creates and maintains monthly financial reports, and manages the ever-changing world of sales taxes (including quarterly taxes and withholdings). Moreover, a full-charge bookkeeper reconciles bank statements to internal accounts and even helps out during an internal or IRS audit. Whether your client wants to get a small business loan, answer an auditor, or simply design next year’s budget and business plan, your clients will want the assistance of a full-charge bookkeeper. Further, a full-charge bookkeeper will genuinely create a set of checks and balances for the business (and personal) success of your clients. They will record and analyze individual department spending of your client’s business as well as review and fulfill accounts receivables and payables. At the end of the day, a full-charge bookkeeper will also help identify inefficiencies and create more accurate future budgets by analyzing the contrast between your client’s spending with its budget for review. A few data entry errors can cost your client’s business a significant amount of time and money, so a detail-oriented bookkeeper is essential. However, a controller can help mitigate those risks.

A controller is basically a chief accountant, as they are responsible for supervising the quality and accuracy of accounting and financial reporting of a business. Typically, controllers are hired as management-level positions and basically oversee the staff that does bookkeeping for a business. A controller’s responsibilities don’t end there though, as they are expected to act as a key financial advisor to a client on any number of issues relating to the business’s financial situation or on the regulatory climate, such as proper staffing levels, expense controls, fraud controls, and tax strategy.

Additionally, the controller is responsible for ensuring that your client complies with financial reporting rules and laws. But perhaps most crucial to the role is budgeting and monitoring performance throughout the year against the annual budget, which is a crucial factor that any client you have needs to track to ensure they’re operating according to the master plan. For example, if the business deviates significantly from its budget, the controller should be able to determine where and how the deviation occurred, and subsequently make recommendations on what to do about the situation at hand. Depending on the circumstances of that situation, a strategy to mitigate the damage could include adjustments to operations, the budget, or both. Without a controller to keep a sharp eye on the numbers, others will likely be unaware of the need to take any sort of action at all.

Licenses You May Need & Certifications Your Clients May Want You to Have

Pursuant to a state’s policing powers, a license is a state’s grant of legal authority to practice a profession within a designated scope of practice. On the other hand, a certification is a voluntary process by which a nongovernmental, private organization grants recognition to an individual who has met predetermined qualifications specified by that organization. Similarly, the National Commission for Certifying Agencies defines certification as “a process, often voluntary, by which individuals who have demonstrated the level of knowledge and skill required in the profession, occupation, role, or skill are identified to the public and other stakeholders.” As such, regardless of whether or not you have been certified by a private organization, a license may still be required, thus prohibiting anyone from practicing who is not licensed.

So, which licenses and certifications will make most sense for your portfolio when launching your financial services small business? As aforementioned, a license is determined by the state (or states) you plan on doing business in, meaning you will have to look up exactly what is required for you to practice in that respective state (or states). The National Association of State Boards of Accountancy (NASBA) not only has contact information, but also a listing of statutes for the State Board of Accountancy in each of the 55 jurisdictions. You’ll most likely find in further research that the gold standard for accounting practices involves getting a Certified Public Accountant (CPA) license as issued by your respective state. However, please keep in mind that there is a difference between a CPA license and a CPA certification. For more information on the differences between the two, the Accounting Institute of Success gives you a helpful breakdown. And for the top 10 financial certifications that will make your financial services small business stand out from the rest, please click HERE!

Although the appropriate licenses and certifications will be essential to launching your small business, it may also be quite noteworthy to follow the GAAP.

The Generally Accepted Accounting Principles (aka the GAAP)

The GAAP refers to a set of accounting principles, standards and procedures adopted by the U.S. Securities and Exchange Commission (SEC) and issued by the Financial Accounting Standards Board (FASB). Since 2009, FASB has been the “single official source of authoritative, nongovernmental U.S. generally accepted accounting principles.” FASB relies on assistance from the American Institute of Certified Public Accountants to establish these principles.

What does the GAAP actually do? It attempts to standardize and regulate the definitions, assumptions, and methods used in accounting across all industries. There are 10 principles to follow:

1) Economic Entity Assumption

2) Monetary Unit Assumption

3) Time Period Assumption

4) Cost Principle

5) Full Disclosure Principle

6) Going Concern Principle

7) Matching Principle

8) Revenue Recognition Principle

9) Materiality

10) Conservatism

Do all your clients have to follow the GAAP? Nah. The United States law requires businesses that release financial statements to the public and companies that are publicly traded on stock exchanges and indices to follow GAAP guidelines. Further, the SEC requires publicly traded companies to follow GAAP in addition to other SEC rules. While a potential client such as a small business owner might not see the value of abiding by GAAP standards, they should if they ever want to go public as a company. Moreover, investors tend to desire seeing businesses abide by GAAP, so it can only be in your client’s best interests.

For a complete and detailed breakdown regarding GAAP, please visit Accounting Coach, which is also a fantastic website to refresh all things accounting.

Launching Your Financial Services Small Business, Today!

While it might seem overwhelming to launch a financial services small business in this climate, especially due to the vast number of varying requirements, nothing worth doing comes easy. If you’re already an experienced bookkeeper simply have experience working in the financial services industry, now should be the time to build your own financial services small business particularly tailored to combat the ever-changing and frustrating market climate, thanks to the pandemic. And even if you’re not experienced within the industry, it’s never too late to get started on those certifications and licenses, especially if data and finances tickle your fancy.

If you’re interested in learning more of the nitty gritty details of financial reporting considerations related to COVID-19 or an economic downturn in general, click HERE!

--- Are you interested in launching or sustaining a pandemic proof small business? Spot issues, take action, stay safe, and thrive in a post Covid-19 world with Legalucy. Learn more at

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