How to Build a Back Office Geared for Growth

Whether you are franchising a restaurant, gym, or other service business, it’s essential to keep your back-office records organized and maintain effective accounting processes — physical and virtual.

Keeping information organized, employing leading accounting practices, and assessing staffing mix can help you align systems, processes, and people for back-office success.

When preparing for your annual tax return or various types of audits, you must have your historical information organized and stored well. This is especially true if your business works with vendors that trigger required Form 1099 reporting.

Choose a document storage product that can be organized like a physical file cabinet. Create folders for your business: legal, contracts, human resources, policies, insurance, accounting, etc. Build a further framework within the accounting folder: vendor invoices, accounts receivable, credit card statements, and bank statements — by month and year for each. Where ownership structure is a factor, keep records arranged by legal entity.

Having records organized and immediately accessible can save hours when you need to seek additional capital or have a conversation with a banker or CPA.

An up-to-date accounting system can help capture the financial details you need for budgeting, reporting, and research. In the case of franchising, your accounting system will need to keep pace with the rapid growth franchisees.

Choose a system that can meet changing demands — one that can increase performance levels and storage capacity without the need to invest in additional hardware. Scalable software with advanced programming and integration of multiple business functions can also help you see potential problems and opportunities in real time.

Accounting processes involve major financial parts of your business, such as cash, receivables, payables, debt, fixed assets, and equity. Establish procedures for each of these areas to maintain effective and efficient accounting.

• Your back-office procedures should segregate banking and cash handling duties and use technology for security (e.g., positive pay and unique password storage for systems)

• Integrate your accounting system with your bank, point of sale system, and credit card provider to receive sufficient information on a daily or weekly basis

• Establish proper cut-off dates for reporting periods and connect with third parties to convey expectations for timely statements and information

• Follow standard accounting practices, such as not paying vendors without a W-9 form or employees without proper paperwork

These processes may seem easy to follow, but they require attention to detail.

When staffing a small franchisee back office, keep several questions in mind:

In today’s business world, many companies perform back-office functions remotely, either with their own employees or using outsourced providers for payroll, bookkeeping, tax preparation, human resources when services are not needed full time. Deciding whether to hire in-house employees or outsourced contractors depends on your business strategy and what can be performed routinely by others.

In the early stages of a business, outsourcing key functions like payroll and bookkeeping may be appropriate due to the low amount of work. As the company grows, in-house employees may be hired to handle larger volumes of work and provide backups for emergencies or planned absences. However, it may still be advantageous to hire more senior or experienced talent on a fractional basis from outside.

For more information on franchises, contact Brian Baumgart at [email protected] or 414-721-7659.

For more information on restaurants, contact Karen Blacik at [email protected] or 612-256-8344.

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting, investment, or tax advice or opinion provided by CliftonLarsonAllen LLP (CLA) to the reader. For more information, visit CLAconnect.com.

CLA exists to create opportunities for our clients, our people, and our communities through our industry-focused wealth advisory, digital, audit, tax, consulting, and outsourcing services. CLA (CliftonLarsonAllen LLP) is an independent network member of CLA Global. See CLAglobal.com/disclaimer. Investment advisory services are offered through CliftonLarsonAllen Wealth Advisors, LLC, an SEC-registered investment advisor.

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