Whether you're a butcher, a baker, a candlestick maker or in some other line of business, odds are you could use some sort of financial professional to help balance your books and keep your company afloat.

The question is what type of financial professional should you hire?

The three in consideration are typically the bookkeeper, the accountant, and the chief financial officer (CFO). Deciding which to hire usually involves answering some key questions: How big is your business? What is its growth forecast? How complex are its finances? And what can your business afford? The main reason to hire a financial professional, such as an accountant, is to have a trusted advisor to help run your business and to protect your assets. An entrepreneur, business owner, or CEO typically doesn't have the expertise to run every department, particularly if the business is growing rapidly.

"For the majority of small businesses, knowing how much profit is being earned, how much cash is being generated, and having sufficient cash on hand to pay debts when due requires good accounting records," says Jim Chamberlain, a management counselor and financial expert with SCORE, a nonprofit organization that serves small businesses. "Accounting cuts across all facets of a small business.  Accountants are intertwined with planning, control, and analysis."

Accounting provides financial information to owners and creditors. "You could have the greatest product in the world, but if you're not selling it successfully, if you're running out of cash, if you're in a high-growth company, you need a financial professional," says Carol Scott, vice president of the Business, Industry and Government Group at the American Institute of Certified Public Accountants (AICPA), which has more than 360,000 members. "You need someone who can talk to the banks and the auditors."

The following guide will help you determine the differences between financial professionals and which ones are right for your business.

How to Determine What Type of Financial Professional to Hire: Types of Financial Professionals

Before setting out to hire a financial professional, business executives need a good understanding of the types of accounting information, the business needs, and what types of skills are associated with the different financial positions.

Here is a rundown on the training and skills of each position:

What does a bookkeeper do? A very small business in the service industry may only need the services of a full- or part-time bookkeeper. A bookkeeper records transactions that tend to be mechanical and repetitive, Chamberlain says.  It is a small part of the field of accounting and the least complicated.  A bookkeeper may be proficient after a few weeks or months of training, while an accountant requires several years of study and experience.  

"A bookkeeper will record and summarize transactions per a simple chart of accounts," Chamberlain says.  "These summaries will be used by accountants to prepare financial statements periodically throughout the year or only at year-end. Typically, the tax accountant will use these summaries for the business tax returns."  A bookkeeper usually provides little or no financial analysis. But a bookkeeper completes payroll, payroll taxes, government filings, bank reconciliations, simple financial statements and other required reports, saving the owner valuable time.  

What does an accountant do? The ultimate objective of accounting is to analyze and interpret data. A good accountant is always concerned with the significance of the numbers produced, Chamberlain says. "He or she looks for meaningful relationships between events and financial results," he says. "A good accountant studies the various alternatives and has an eye for trends and financial risks. Everything is questioned."

Accountants possess various skill levels and specializations. The major division is between public and management accounting. Public accountants or Certified Public Accountants (CPA's) are licensed by the states to practice. They specialize in taxes, auditing, corporate regulation, and preparing external financial statements.    

"A company (owner) should hire the most qualified person you can and the most qualified person you can afford," says Scott. "When possible, this person should be a CPA because they have been through training in integrity and ethics and they have to show a commitment to lifelong learning to be licensed."

What does a CFO do? Management accountants may fill the role of staff accountant, controller, cost accountant, or CFO of a company.  While CPAs check work after the fact, such as through audits or tax filings, management accountants are involved at the start of the value chain, supporting decision making, planning and control, Chamberlain says.

Very often, CFOs are also CPAs. That gives them an understanding of what type of accounting information is required, even if their role is more supervisory and encompasses looking across the enterprise to improve the business. "They work their way up," Scott says. "The CFO is not doing debits and credits anymore but looking at the supply chain."

Dig Deeper: Moving From Bookkeeping to Accounting to Finance: How Big Should You Be?

How to Determine What Type of Financial Professional to Hire: Choosing the Right Financial Professional

Many factors should be considered when planning to hire a financial professional. What size is your business? Can it  afford a CFO, a full-time position, or just a consultant? How complex is your financial situation – do you need to comply with regulations or undertake an audit to get bank financing? "In any small company, you still need that professional advice," Scott says. "Just having someone keep the books in QuickBooks who doesn't know about the rules and can't guide you is not the smartest decision." If you can't afford a full-time staff CPA or CFO, Scott recommends getting that professional advice on a consulting basis from a CPA firm.

Here's how to match the accounting skills of each position with your business needs:

Do I need a bookkeeper? As the business grows, the owner should know when it's time to delegate the "numbers" to someone else.  "Hire a bookkeeper when too much time is being spent on daily inputting and processing reports," Chamberlain says.  "Hire a bookkeeper when you spend too much time trying to solve problems associated with your business software.  If your tax accountant tells you that your books and records are a mess, then it is really time to get a bookkeeper."

Then decide whether you need a part-time or full-time person.  Often it makes economic sense to hire a part-time bookkeeper on an hourly basis.  As revenues increase, or transactions become more complicated, a full-time person will more than pay for themselves.

Do I need an accountant? As your company continues to grow, recordkeeping will become more challenging and complex.  "Your bookkeeping tasks will become full-fledged accounting tasks," Chamberlain says.  "Hire an accountant when your accounting system needs to be redesigned; when you need to know the cost of a particular product or service (cost accounting); or when budgeting becomes more important."

An accountant will become a member of your management team, providing guidance on the financial function of your business.  The accountant will teach a business owner the importance of using financial statements for daily economic business decisions.

An accountant can also help you communicate with bankers and auditors, Scott says. "When you're a small company and going to go through an audit, you need to make sure you comply with bank covenants and percentages to keep up with fixed asset levels so they don't pull your line of credit," Scott says. "That is the lifeblood of a small company."

In addition, an accountant can help you comply with federal, state, and local regulations, Scott says. "Just like you hire an attorney for legal advice, you should hire a CPA for financial advice." As a business grows, there are certain financial issues that only accounting professionals will understand – such as whether you have state nexus on sales taxes, which is determined by a complex set of rules about whether you are required to pay sales taxes in a particular state if you have a presence there.

Do I need a CFO? The company will need a CFO when financial demands such as investor relations, capital, financing, banking, investments, and insurance issues become as important as accounting issues, Chamberlain says.  

"Small growing companies are advised to hire strong accounting help early in their growth stage in order to capitalize on the contributions of bookkeepers and accountants," Chamberlain says.  "Many start-ups fail in their first few years because the owner didn't understand the financial red flags of the business.  They wait too long to strengthen the financial function and postpone hiring the help they need.  Critical early stage bank loans or equity investments have been rejected due to the lack of financial expertise within the company."

Adding a financial person to the business is important especially in tough economic times when cash flow may be impacted by customers who are slow to pay and by a glut of inventory.  But even in economic good times, it is important to invest in financial analysis, reports, controls, and guidance to help your business continue on a growth trajectory while meeting regulatory obligations and keeping your books in order.

Dig Deeper: 5 Ways to Improve Cash Flow

How to Determine What Type of Financial Professional to Hire: Additional Resources

American Institute of Professional Bookkeepers
http://www.aipb.org/
Information and resources including accounting, bookkeeping, and tax links.

Cash Flow Calculator
http://www.bplans.com/common/calculators/cashcalculator.cfm
Understand cash flow with the help of this calculator.

CFO.com
http://www.cfo.com
Information and resources for CFOs, including job listings.

SCORE
http://www.score.org
"Counselors to America's Small Business" offers resources on financial management.

The Ten Rules of Cash Flow
http://sbinformation.about.com/cs/accounting/a/uccashflow.htm
Take control of your cash flow to build your dream business.