9 Business Moves to Make for 2023

Business Management
December 20, 202210 min read

1. Switch to online accounting software

It’s not 2003 anymore. Questions about the security, down time, and functionality of online software have largely been answered. As I look back, 2018 seemed like the tipping point where software providers of all stripes threw up their hands and embraced online as the future of their products. In the 5 years since then, the movement has only strengthened. 


Which online accounting software should you switch to? That’s the $10,000 to $250,000 question, and really an article itself. However, you should at least know that accounting software is divided into tiers:

  1. Tier 1 is the heavyweights like Oracle and SAP, with price tags well into the 7 figures. 

  2. Tier 2 is the middleweights like NetSuite and Microsoft Dynamics. 

  3. Tier 3 is the lightweights like QuickBooks and Xero. 


Tier 1. Don't even think about it. 


Tier 2. I’d look first at NetSuite, Intacct, or Dynamics 365 Business Central. Odoo is another rising star in this space. 


Word of caution: Don’t be fooled by YouTube videos demonstrating the amazing functionality of these platforms. Enter the Tier 2 arena only if you have cash spilling out of your pockets, and only after you’ve fully and completely outgrown Tier 3. 

Side note: Start now to be ready by January 1, 2024!


Tier 3. QuickBooks Online, Xero, and Zoho (along with entry-level FreshBooks and Wave) are the dominant players in this tier. Go with QuickBooks Online, unless you've got really unique (or extremely basic) accounting needs. 

2. Start a real estate company

Wait, do you mean quit selling IT services and get into real estate? 

No, I mean if your company owns real estate, move it to a separate company.

There are at least two reasons:

Taxes. At least for my US readers, rental income is generally treated more favorably than regular business income. Having your main operating company pay rent to a real estate company essentially re-characterizes some of your current business income as rental income. 

The future. Holding real estate in a separate company is almost always a good thing when it comes to selling your company. It gives you the option of selling only the business, or of selling the business and real estate to different parties. The standard caveat applies: Always, always talk to your tax advisor before proceeding. 

Which leads us to Point 3…

3. Quote out your tax services If you have a good tax CPA, hang on for dear life

I’ve seen the following scenarios happen quite regularly:

  1. A tax accounting firm expands or gets bought out. Their smaller clients no longer receive as much personal attention. 

  2. A business outgrows the small tax accounting firm it’s been with for many years. 

  3. A tax accounting firm keeps increasing fees over time (often without also increasing value) to the point the fees become unreasonable. 

In any of these scenarios, the solution is to get a quote from two or three other tax firms. From each vendor, ask for both 1) a quote on tax prep services, and 2) a brief analysis of opportunities they see in your tax situation. You might be amazed.

It is key to do this before year end, when tax accounting firms still have time to give you a well-thought-out quote and opportunity analysis. After the first of the year, forget it.

UPDATE FOR 2023: The world has changed dramatically since I wrote this point for 2020. Today it is almost impossible to find a good tax CPA who is actually looking for work. If you have one, keep paying whatever is necessary to keep them. If you don't have one, try your best to follow the above points, but honestly, good luck getting a good tax CPA to even pick up the phone. 

4. Reboot your chart of accounts

If you are like 90% of the entrepreneurial universe: A) you don’t know what your chart of accounts even is, and B) it’s a mess. Side note: This comment (at least Part A) does not apply to loyal readers of my newsletter!

In short, your chart of accounts is the list of “buckets” your bookkeeper or finance team puts transactions into. Generally, your financial statements and your financial budgets can be no more accurate or informative than your chart of accounts.

I’m shocked by how few business people (and even accountants!) grasp the critical nature of this point. While an in-depth explanation is waaay beyond the scope of this article,  here is an article that covers this point in more depth.

5. Become an S Corporation Become an S Corporation, or possibly a Partnership

This is a quick point for my American readers. Briefly - most profitable, mid-sized, privately-held companies in the US are taxed as S Corporations if they can be. If that’s you, and you haven’t made an S election, talk to your tax advisor today.

UPDATE FOR 2023: The main premise for an S Corporation is saving Social Security tax on corporate profits. Lately, I've observed several innovative ways to use partnerships to achieve the same Social Security tax savings, or at least save enough income tax to offset the Social Security tax. Of course, this only applies to multi-owner companies. 

Obviously this point cannot be comprehensively discussed in three paragraphs. As always, my goal is to provide big-picture perspective to get your journey set in the right direction. 

6. Sign up for full-service payroll

A surprising number of companies still run their payroll in-house, using the payroll system included with their accounting software. That’s because many business owners aren’t aware of the full-service options, and switching can be a touchy subject with a lot of bookkeepers and controllers.

With an in-house payroll system, the payroll clerk is responsible to submit payroll taxes to the appropriate government agencies, file payroll tax returns, and issue year end payroll forms to employees. Over the course of a year, this can be surprisingly time-consuming, and even the best bookkeepers seem to occasionally miss deadlines and generate penalties.

With full-service payroll, payroll hours are submitted to an outsourced payroll provider and they take care of the rest. All payroll tax payments and payroll forms are prepared and submitted to government agencies by the outsourced provider.

The advantages of this are many:

  1. The payroll provider takes responsibility for any penalties or late fees. 

  2. If employees start working in a new state or locality, the payroll provider handles the reporting mess. 

  3. Utilizing a full-service payroll provider lowers the required competency levels of your in-house bookkeeping team. 

  4. A full-service provider removes pain points from your bookkeeper’s schedule, particularly at year end. 

I can’t think of anyone who switched to a full-service provider, that later ended up switching back. It’s one of those no-brainer decisions.

One of my top picks is up-and-coming Gusto. QuickBooks Payroll is also good, especially if you use QuickBooks for accounting. Or, a local accounting firm can be an excellent option as well. 

For larger companies, heavier hitters like ADP or Paychex are popular choices.

Image by Miquel Parera on Unsplash

7. Take on long-term debt Lock in a larger line of credit

Call me cynical, but at the end of the last recession I promised I wouldn’t forget the lessons I’d learned. One of those lessons was: Take advantage of long-term debt when it’s available.

Right now (this was written in 2020) lenders are falling all over themselves to issue loans. Now is the golden hour to refinance short-term debt (e.g. lines of credit) into long-term. If you don’t have any short-term debt, consider financing some of the fixed assets you’ve purchased with cash.

UPDATE FOR 2023: The window to capture long-term low interest rates evaporated during 2022. If you had listened to my advice in early 2020 it would have been a bit early, but if you waited until now, you're too late.

However, it's not too late for one BIG POINT: Lock in a larger line of credit, for a longer time period, at more favorable terms. Many companies had a good year in 2022 and have strong balance sheets. Now is the time to capture better liquidity for the next 12-24 months. Aim for a 24-month commitment from the bank, with interest at the Prime Rate or below. Even if you think you'll never need it, do it. 

8. Make a thoughtful projection

As readers of my newsletter know, I’ve never been a big fan of budgets, but I like projections. 

A budget attempts to control spending. A projection tries to predict it. To start the year, you should at least have a plan that works on paper. If you can’t even get your business to survive on paper, you’re probably sunk.

This point ties in with a chart of accounts reboot, because a good projection uses the same income and expense account groups as your financials. For example, it’s not wise to break out revenue into 3 categories on your projection (e.g. Sales-Boston, Sales-New York, Sales-Hartford), but only 2 categories on your financials (e.g. Sales-New England, Sales-New York). It will be an exercise in frustration.

Also, cost projections should be percentage-driven based on sales, not fixed. If sales are $1,000,000, cost of sales might be 65%, or $650,000. You want to build your projection so cost of sales is always 65% of sales, not a hard number of $650,000. That way if sales go up or down, you can adjust your projection.

9. Hire a contract CFO for 10 hours

This is one the best-kept secrets of my profession. The highest value you’ll get from even a full-time onsite CFO occurs in the first 5 to 100 hours from when they step in your door. Why not skim off the cream and hire for that amount of time?

Image by Scott Graham on Unsplash


For $5,000 to $7,500 you can go on  Upwork ,  Graphite , or  Toptal and hire two unconnected CFOs to review your company - each for 10 hours. Pick the highest-rated ones you can find. I’d have them interview you for 2 hours, interview two key employees an hour each, and then review your financials for 3 hours. In the remaining 3 hours, each CFO would summarize his or her recommendations.

If your company is complicated, you could expand the scope and hours. You’ll be amazed by what you learn.

UPDATE for 2023: Similar to the tax CPA point, the only problem is finding a good entrepreneurial CFO who is actually available and willing to do a short-term project. 

Bonus Point 10 (New): Review pricing

When I wrote this article in 2020, no one worried about inflation or supply chain issues. Prices and interest rates had been stable for years, and if anything, we worried about oversupply and deflation. 

The past two years have been ridiculous on many levels. Entrepreneurs have been running around like hyperactive squirrels pulled in all directions. Even Elon Musk seems a little dazed lately.

In this atmosphere it's easy to overlook big changes. Have you given steep raises or bonuses but failed to build them into your pricing? Are your overall prices keeping up with overall inflation? Have you focused on key items like steel, or lumber, or corn, and forgotten about increases to some of your smaller expenses like screws, maintenance, and meals? 

Perhaps most importantly, does your current pricing account for increased interest expense? The debt at many companies is still locked in at low interest rates. When that debt gets refinanced, or new equipment is bought, the increased interest expense will likely be substantial. It's time to build that extra cost into prices now.

Conclusion 

I think most entrepreneurs sense 2023 could be an interesting year, to say it gently. This is the ideal moment to use the success of 2022 to build a strong base for 2023. 


Scott Hoover

Back to Blog

Be Your Own

9 Business Moves to Make for 2023

Business Management
December 20, 202210 min read

1. Switch to online accounting software

It’s not 2003 anymore. Questions about the security, down time, and functionality of online software have largely been answered. As I look back, 2018 seemed like the tipping point where software providers of all stripes threw up their hands and embraced online as the future of their products. In the 5 years since then, the movement has only strengthened. 


Which online accounting software should you switch to? That’s the $10,000 to $250,000 question, and really an article itself. However, you should at least know that accounting software is divided into tiers:

  1. Tier 1 is the heavyweights like Oracle and SAP, with price tags well into the 7 figures. 

  2. Tier 2 is the middleweights like NetSuite and Microsoft Dynamics. 

  3. Tier 3 is the lightweights like QuickBooks and Xero. 


Tier 1. Don't even think about it. 


Tier 2. I’d look first at NetSuite, Intacct, or Dynamics 365 Business Central. Odoo is another rising star in this space. 


Word of caution: Don’t be fooled by YouTube videos demonstrating the amazing functionality of these platforms. Enter the Tier 2 arena only if you have cash spilling out of your pockets, and only after you’ve fully and completely outgrown Tier 3. 

Side note: Start now to be ready by January 1, 2024!


Tier 3. QuickBooks Online, Xero, and Zoho (along with entry-level FreshBooks and Wave) are the dominant players in this tier. Go with QuickBooks Online, unless you've got really unique (or extremely basic) accounting needs. 

2. Start a real estate company

Wait, do you mean quit selling IT services and get into real estate? 

No, I mean if your company owns real estate, move it to a separate company.

There are at least two reasons:

Taxes. At least for my US readers, rental income is generally treated more favorably than regular business income. Having your main operating company pay rent to a real estate company essentially re-characterizes some of your current business income as rental income. 

The future. Holding real estate in a separate company is almost always a good thing when it comes to selling your company. It gives you the option of selling only the business, or of selling the business and real estate to different parties. The standard caveat applies: Always, always talk to your tax advisor before proceeding. 

Which leads us to Point 3…

3. Quote out your tax services If you have a good tax CPA, hang on for dear life

I’ve seen the following scenarios happen quite regularly:

  1. A tax accounting firm expands or gets bought out. Their smaller clients no longer receive as much personal attention. 

  2. A business outgrows the small tax accounting firm it’s been with for many years. 

  3. A tax accounting firm keeps increasing fees over time (often without also increasing value) to the point the fees become unreasonable. 

In any of these scenarios, the solution is to get a quote from two or three other tax firms. From each vendor, ask for both 1) a quote on tax prep services, and 2) a brief analysis of opportunities they see in your tax situation. You might be amazed.

It is key to do this before year end, when tax accounting firms still have time to give you a well-thought-out quote and opportunity analysis. After the first of the year, forget it.

UPDATE FOR 2023: The world has changed dramatically since I wrote this point for 2020. Today it is almost impossible to find a good tax CPA who is actually looking for work. If you have one, keep paying whatever is necessary to keep them. If you don't have one, try your best to follow the above points, but honestly, good luck getting a good tax CPA to even pick up the phone. 

4. Reboot your chart of accounts

If you are like 90% of the entrepreneurial universe: A) you don’t know what your chart of accounts even is, and B) it’s a mess. Side note: This comment (at least Part A) does not apply to loyal readers of my newsletter!

In short, your chart of accounts is the list of “buckets” your bookkeeper or finance team puts transactions into. Generally, your financial statements and your financial budgets can be no more accurate or informative than your chart of accounts.

I’m shocked by how few business people (and even accountants!) grasp the critical nature of this point. While an in-depth explanation is waaay beyond the scope of this article,  here is an article that covers this point in more depth.

5. Become an S Corporation Become an S Corporation, or possibly a Partnership

This is a quick point for my American readers. Briefly - most profitable, mid-sized, privately-held companies in the US are taxed as S Corporations if they can be. If that’s you, and you haven’t made an S election, talk to your tax advisor today.

UPDATE FOR 2023: The main premise for an S Corporation is saving Social Security tax on corporate profits. Lately, I've observed several innovative ways to use partnerships to achieve the same Social Security tax savings, or at least save enough income tax to offset the Social Security tax. Of course, this only applies to multi-owner companies. 

Obviously this point cannot be comprehensively discussed in three paragraphs. As always, my goal is to provide big-picture perspective to get your journey set in the right direction. 

6. Sign up for full-service payroll

A surprising number of companies still run their payroll in-house, using the payroll system included with their accounting software. That’s because many business owners aren’t aware of the full-service options, and switching can be a touchy subject with a lot of bookkeepers and controllers.

With an in-house payroll system, the payroll clerk is responsible to submit payroll taxes to the appropriate government agencies, file payroll tax returns, and issue year end payroll forms to employees. Over the course of a year, this can be surprisingly time-consuming, and even the best bookkeepers seem to occasionally miss deadlines and generate penalties.

With full-service payroll, payroll hours are submitted to an outsourced payroll provider and they take care of the rest. All payroll tax payments and payroll forms are prepared and submitted to government agencies by the outsourced provider.

The advantages of this are many:

  1. The payroll provider takes responsibility for any penalties or late fees. 

  2. If employees start working in a new state or locality, the payroll provider handles the reporting mess. 

  3. Utilizing a full-service payroll provider lowers the required competency levels of your in-house bookkeeping team. 

  4. A full-service provider removes pain points from your bookkeeper’s schedule, particularly at year end. 

I can’t think of anyone who switched to a full-service provider, that later ended up switching back. It’s one of those no-brainer decisions.

One of my top picks is up-and-coming Gusto. QuickBooks Payroll is also good, especially if you use QuickBooks for accounting. Or, a local accounting firm can be an excellent option as well. 

For larger companies, heavier hitters like ADP or Paychex are popular choices.

Image by Miquel Parera on Unsplash

7. Take on long-term debt Lock in a larger line of credit

Call me cynical, but at the end of the last recession I promised I wouldn’t forget the lessons I’d learned. One of those lessons was: Take advantage of long-term debt when it’s available.

Right now (this was written in 2020) lenders are falling all over themselves to issue loans. Now is the golden hour to refinance short-term debt (e.g. lines of credit) into long-term. If you don’t have any short-term debt, consider financing some of the fixed assets you’ve purchased with cash.

UPDATE FOR 2023: The window to capture long-term low interest rates evaporated during 2022. If you had listened to my advice in early 2020 it would have been a bit early, but if you waited until now, you're too late.

However, it's not too late for one BIG POINT: Lock in a larger line of credit, for a longer time period, at more favorable terms. Many companies had a good year in 2022 and have strong balance sheets. Now is the time to capture better liquidity for the next 12-24 months. Aim for a 24-month commitment from the bank, with interest at the Prime Rate or below. Even if you think you'll never need it, do it. 

8. Make a thoughtful projection

As readers of my newsletter know, I’ve never been a big fan of budgets, but I like projections. 

A budget attempts to control spending. A projection tries to predict it. To start the year, you should at least have a plan that works on paper. If you can’t even get your business to survive on paper, you’re probably sunk.

This point ties in with a chart of accounts reboot, because a good projection uses the same income and expense account groups as your financials. For example, it’s not wise to break out revenue into 3 categories on your projection (e.g. Sales-Boston, Sales-New York, Sales-Hartford), but only 2 categories on your financials (e.g. Sales-New England, Sales-New York). It will be an exercise in frustration.

Also, cost projections should be percentage-driven based on sales, not fixed. If sales are $1,000,000, cost of sales might be 65%, or $650,000. You want to build your projection so cost of sales is always 65% of sales, not a hard number of $650,000. That way if sales go up or down, you can adjust your projection.

9. Hire a contract CFO for 10 hours

This is one the best-kept secrets of my profession. The highest value you’ll get from even a full-time onsite CFO occurs in the first 5 to 100 hours from when they step in your door. Why not skim off the cream and hire for that amount of time?

Image by Scott Graham on Unsplash


For $5,000 to $7,500 you can go on  Upwork ,  Graphite , or  Toptal and hire two unconnected CFOs to review your company - each for 10 hours. Pick the highest-rated ones you can find. I’d have them interview you for 2 hours, interview two key employees an hour each, and then review your financials for 3 hours. In the remaining 3 hours, each CFO would summarize his or her recommendations.

If your company is complicated, you could expand the scope and hours. You’ll be amazed by what you learn.

UPDATE for 2023: Similar to the tax CPA point, the only problem is finding a good entrepreneurial CFO who is actually available and willing to do a short-term project. 

Bonus Point 10 (New): Review pricing

When I wrote this article in 2020, no one worried about inflation or supply chain issues. Prices and interest rates had been stable for years, and if anything, we worried about oversupply and deflation. 

The past two years have been ridiculous on many levels. Entrepreneurs have been running around like hyperactive squirrels pulled in all directions. Even Elon Musk seems a little dazed lately.

In this atmosphere it's easy to overlook big changes. Have you given steep raises or bonuses but failed to build them into your pricing? Are your overall prices keeping up with overall inflation? Have you focused on key items like steel, or lumber, or corn, and forgotten about increases to some of your smaller expenses like screws, maintenance, and meals? 

Perhaps most importantly, does your current pricing account for increased interest expense? The debt at many companies is still locked in at low interest rates. When that debt gets refinanced, or new equipment is bought, the increased interest expense will likely be substantial. It's time to build that extra cost into prices now.

Conclusion 

I think most entrepreneurs sense 2023 could be an interesting year, to say it gently. This is the ideal moment to use the success of 2022 to build a strong base for 2023. 


Scott Hoover

Back to Blog

Scott Hoover, CPA

About The Author:

Scott lives in Wisconsin with his wife Priscilla and their active family of eight children. 

He has worked as a CPA and part-time CFO for over a decade, and draws on this experience to provide practical, down-to-earth guidance to his clients.

In addition to his CPA day job, he and his family have a small farm where they raise calves and produce.  In his "spare" time, Scott enjoys writing articles on finance and faith.

Send any comments or feedback directly to scott@beyourowncfo.com.

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