How an Outsourced Accounting Firm Can Help Your Business Reach its 2021 Goals
The beginning of the year is the perfect time for businesses of all kinds to evaluate their current financial situation and develop new goals. Using a goal-setting model, such as the SMART Goal system, can help you create the sort of resolutions and objectives you need to actually deliver results.
Running a business—whether small or large—can often be rather overwhelming, especially when it comes to creating tangible goals. Oftentimes, these goals will be incredibly broad, such as “pursue our mission” or “become the leading widget maker in the industry”. Even when a goal has some degree of tangibility, such as “double in size”, these goals will still only be as useful as the corresponding plans they inspire.
To help turn abstract dreams into tangible realities, businesses of all kinds will hire an outsourced accounting firm. These firms have the infrastructure, operating capacity, expertise, and systems your business needs to improve its financial position. In fact, the first thing you will likely do once you hire an accounting partner is to identify your current goals and determine which actionable steps are needed to get you from Point A to Point B.
In this article, we will discuss just a few of the ways that hiring an outsourced accounting firm can help your business reach its goals. By taking the time to understand the value an outsourced accountant (or, in some cases, a Fractional CFO) can provide, you will be able to determine if hiring one makes financial sense for your business.
1. Developing a Dynamic Budget
Developing a budget is one of the most important components of the accounting cycle, especially when it comes to pursuing your goals. A good budget will help make it easy for your business to determine the validity of a given project, allocate resources where they can be most effectively utilized, and even attract potential investors. Without a budget, your business will likely end up spending much more than originally planned.
Budgets need to be two things: actionable and dynamic. The actionable component is obvious—your budget should make it easy to make real-world decisions. But furthermore, a good budget should be easily adaptable to unforeseen circumstances. If a new challenge or opportunity suddenly arises, your business will need to be able to make changes, quickly. Your accountant can help you balance the needs to be actionable and dynamic, consequently adding value to the budget itself.
2. Planning for Future Projects
Large-scale projects, no matter how ambitious, will require a business owner to have a comprehensive understanding of their business. Every major project you’ve ever seen completed required a tremendous amount of planning (including financial planning). Ideally, your accounting partner will have excellent project management skills.
Whether your business plans to complete a prospective project in one year, five years, or even ten years, you will want to thoroughly account for each of its many components. This involves more than just budgeting—it also involves understanding how your business will change and the role it will play in a future, unforeseen business environment.
3. Better KPI Tracking
To improve your financial situation, your business will need to determine the key performance indicators (KPI) you plan to utilize along the way. Data is the lifeblood of the accounting community. In fact, according to one leading outsourced accounting firm, “For a business to really grow, you need accurate and timely projections, forecasts and benchmark reporting of your company’s performance within your niche.”
The KPIs that will be most useful for your business will depend on your industry, your current structure, the size of your business, and your long-term goals. In some industries, such as digital marketing, identifying KPIs is relatively straightforward. In others, it might be a bit more difficult. Regardless, your accountant will help walk you through key financial KPIs and help you keep a careful watch as your business evolves.
4. Automatic Statement Generation
In the digital era, there are countless programs available that can help business owners automatically generate financial statements. With some basic input, it is easy to create a balance sheet, an income statement, a statement of cash flow, and various other statements your business might require.
Of course, for these automatic statements to be accurate, you will need to have reliable input. A computer program will only be useful if the numbers it is given are accurate. Ask your outsourced accountant for assistance with automatic statement generation and for help creating statements by hand. By having access to statements that are consistently updated, your business will be able to make better financial decisions, and thus, move closer to achieving your newly resolved goals.
5. Restructuring (or Structuring) Your Business
When it comes to setting goals, business owners tend to dream big. In many cases, this might require restructuring your business. Restructuring helps business owners use their resources more efficiently, limit their personal exposure to risk, improve their tax practices, and even help them gain access to more robust capital markets.
Any business that is hoping to restructure (and further pursue its goals) will need to hire an experienced accounting partner. Even if the restructuring is as simple as transforming from a sole proprietorship (LLC) to a partnership, accounting is an important component of making this transition. All parties involved will want to learn more about your business’ current balance sheet and also closely examine its other financial components.
6. Better Tax Practices
Lastly, the number one reason business owners choose to hire an accountant—according to KPMG, Deloitte, and most other major accounting firms—is to help better manage their taxes. An accountant will help ensure you are complying with all relevant tax laws and that your books are consistently managed. They will also help your business limit its total tax liability through various tax credits and tax deductions for business owners.
As soon as your business has a dream, you will need a supporting cast to help you get there. If this dream has any financial components, hiring an outsourced accountant will be incredibly important.