The series of lockdowns, global supply chain problems and rising wage costs have a huge impact on small business bottom line. Unlike their larger counterparts, smaller entities have limited cash reserves, making it difficult to survive and recover after months of slowdown.
With a limited budget, is accounting still a relevant and worthwhile investment? The answer is always yes.
Why is accounting still relevant?
A good accounting process helps you solve your financial problems. With an accountant to help you, you can better assess your cash flow and find effective ways to get your numbers back to normal.
To understand the importance of accounting to your business, let’s take a look at what accountants can do to stay afloat.
Request government support
The Small Business Administration (SBA) offers several COVID-19 relief options for companies affected by the pandemic. To qualify, you must present relevant documents to prove your gross loss of income. Once you receive government support, you must keep records to show that you meet the eligibility requirements.
An accountant can help you select the best applicable scheme for your business and assist you during the application process. They can also guide you in managing the COVID relief funds you have used based on your permitted use.
Be aware that the misuse of funds can cause you greater problems. Under the False Claims Act (FCA)Anyone who tries to defraud the government will face significant penalties.
But if you have an accountant on board, you don’t have to worry about mismanaged funds, thanks to their ability to keep the books in a timely and correct manner.
Help with financial planning
Finance and accounting professionals can help you plan for the future. Because they speak the language of business, you can rely on them to assess your financial position and understand the key factors in your success. They can spot and evaluate growth opportunities, provide logical advice, develop plans, create clear budgets, and make sure capital is in place.
By entering the new normal with a solid financial plan, your business will have a better chance of bouncing back and becoming more resilient.
Read next: Small Business Financial Planning Steps
Make the right investments
Investing during a crisis is challenging, especially when you have cash flow limitations. But according to studies, the most successful companies invest more than their peers in new opportunities. At the same time, they lay their eggs in fewer baskets, opportunities that can drive higher growth and profitability.
The good news is that accountants can help you make informed investment decisions. In addition to their access to critical financial information, they can also understand complex data and economic trends. In addition, they can evaluate their objective capital investment projects in 2 ways:
- Its estimated value after considering the impact of changes in demand.
- How much money you need to stay afloat today
Consulting with your accountants will allow you to determine the potential risks and benefits of an investment.
Manage your taxes
President Joe Biden has introduced several tax changes since taking office earlier this year. One of his proposals, the american employment plan, will increase the income tax of large corporations from 21% to 28%. If the government sticks to its schedule, this tax increase will take effect from January 2022.
But even without the proposed tax changes, the tax preparation and filing process is already complicated and time-consuming. And time is the resource you don’t want to waste. Rather than wasting your time on repetitive tasks, it is better to focus on developing and implementing strategic plans.
In this case, working with tax accountants is a worthwhile investment. They are aware of the latest regulatory changes. They also have more knowledge and experience in tax preparation. With your support, you can be sure that your business is not overpaying or underpaying taxes, which can negatively impact your bottom line.
Similar to getting support from the government, your tax accountants can also inform you about possible tax relief that you can take advantage of.
In general, your tax processes will be more efficient if an accountant manages them for you.
Evaluate other financing options
If your business is still struggling to reach its target income after reopening, your accountant can help you find and evaluate other financing options. Whether you’re looking to get a long-term loan, work with an angel investor, or go into crowdfunding, knowing which option will benefit you the most is essential.
To learn more about the financing options available to your business, see this document (PDF, 215 KB) published by SBA.
Accountants vs Artificial Intelligence (AI)
COVID-19 accelerates organizations’ digital transformation initiatives. But despite the rapid automation of accounting processes, accountants remain the go-to people to provide sound financial advice and mitigate business risks.
Automating your accounting workflow offers a faster and more agile way to manage your company’s finances. For around $ 30, you can already get decent accounting software that can reconcile bank transactions, track projects, and do other basic tasks for you. It’s a cost-effective option to lower your accounting costs, especially during a pandemic.
At first glance, it looks like AI is taking over the accounting jobs. But this is not the case. Even with the help of machine learning, you will need someone who can read, interpret, and make sense of your numbers.
Look at it this way: Your accounting software is the tool that makes things easier, while your accountants are the people who make the software work. Imagine how a smartphone helps you communicate and shop even if you are not leaving your home.
Without accountants managing and interpreting the data, your software is nothing more than another $ 30 purchase down the drain. Any tool will not work by itself if you don’t use it and program it.
It can be tempting to cut your accounting costs when cash is tight. However, you should view your accounting department as a beneficial investment rather than expensive overhead. By changing your perspective, you can also get the results you want.
Outsource to a dedicated accountant
If hiring an in-house accountant isn’t a good fit for you, try outsourcing. This business activity reduces the costs of hiring, human resources, training, facilities and equipment, to name a few. Plus, you don’t have to worry about managing your meter. At financial and accounting outsourcing companies like D&V Philippines, each accountant has a dedicated team leader who oversees staff performance and management.
Contact us today To learn more about our M&A services for small businesses, or download our whitepaper, Invest or the Future: Adopt Cloud Accounting for Your Small Businesses.