Startups have become common, thanks to the innovative generation. Numerous start-ups are achieving unicorn status, and naturally, more people now prefer working at startups over established companies. One of the key features of a successful or growing start-up business is a good CFO, who makes tough financial decisions easy, including international tax advice. 

Most startups have a CEO and CTO to handle functional and technological challenges, but very few have a CFO. This is mainly because hiring CFOs can be costly for small start-ups.  However, research shows that startups with a CFO have an average turnover about 500% higher than those without one. 

Role of a CFP in a start-up 

• Financial planning and analysis. 

The main role of a CFO is to handle and oversee all financial operations within the organization, including planning, analysis, accounting, tax compliance, expense management, financial reporting, and more. 

A CFO may recommend outsourcing tasks like accounting and bookkeeping. These can be done in-house once the start-up grows and expands. Additionally, if your start-up deals with international clients, a CFO can help with global tax compliance codes. 

• Protection from legal ramifications.

Apart from its main finance function, a CFO also deals with the legalities of a business. One of the key features of a CFO is having in-depth knowledge about the laws in your country as well as other countries if your business demands it. They can also be helpful in creating employee compliance documents. While you will eventually need a lawyer to draft legal documents, the role of a CFO is indispensable. 

• Budgeting and forecasting. 

One of the most important jobs of a CFO is to be able to create an effective and realistic budget for the organization. A well-drafted budget allows for cash flow management and forecasting. Forecasting is the process of predicting future growth and making financial decisions accordingly. When companies can forecast, they can implement potential policies. 

• Human resources. 

As part of the financial operations, a CFO is responsible for one of the most important components of finance management: payroll. This involves ensuring everyone is getting paid fairly and on time. A CFO also forms the finance department of the start-up, which requires people skills and great communication. 

• Risk management. 

A CFO also plays a major role in risk management. The process involves assessing, identifying, and controlling threats, which can come from various sources. For example, management errors, legal liabilities, natural disasters, and accidents. 

First, a CFO identifies the areas exposed to risk. Secondly, they examine the risks by carefully analyzing their chances of occurring and their impact. Thirdly, they create weekly, monthly, and yearly reports of risk exposures. 

If you are starting a start-up soon and want it to be successful, consult with a CFO today!