Making Businesses Understand why They Need You as their Accountant

A little under half of businesses have never worked with an accountant and have no plans to! On the other hand, in the same study, those who have worked with an accountant, just under 75% of them are very satisfied with their accountant. If a large majority of businesses are happy with their accountant, why are there so many businesses without them? As an accountant, it’s crucial to figure out what these businesses need & help show them why your work is beneficial to them.

So, what do businesses really want?

There are many different things a potential client may be looking for when it comes to wanting an accountant. For starters, every relationship is built on trust, and relationships can not last without it. In the aforementioned study, 78% of business owners said they want a trusted advisor, making this the top rated answer. The next top answers, tying in at 74%, are that they want accountants to understand their industry and respond quickly. Finally, being affordable comes in at fourth at 70% and communicates clearly ranks last at 69%. 

In addition to what clients say they want, it is important to know what the top, long-term issues that your clients face with money are. At the top of the list, and perhaps the most obvious, is cash flow problems (32%) If you have bad cash flow problems, most of the other common issues clients face will follow suit. This is shown by the second top answer being low profitability at a close 31% as well as the fourth and fifth ranking answers, needing capital (21%) and too much debt (11%). Your job as an accountant is to take all these worries and advise your clients to the best decisions they can make.

How do you help as an accountant?

The most considerable hurdle for accountants is that many business owners do not know why they need you. Clients need to understand that you bring more to the table than help in filing taxes and making the books look clean. There is no better place to start than being a great listener and truly understanding their issues as well as being sympathetic towards them. Furthermore, ask open-ended questions to let the client steer you in what they really need and to grasp a better understanding of what to do to help your client. Next, we all know that prompt responses are important but it is also important to streamline finances and ensure your accounting software is efficient too. If a client hasn’t moved onto the cloud-based world, it is time for them to move to online accounting software. There are many different choices out there, like QuickBooks Online or Xero, but no matter the software you will want to see to it that it fits the client’s needs, they understand it (and/or can learn too), and that is within a client’s budget. Using an accounting software reduces the chance of human error, subtracts the amount of work that has to be done from manual adding in information, and overall streamlines processes in day-to-day accounting. Additionally, as the financial advisor, you can help a client develop better financial procedures and systems to really help all these processes. On the topic of quick responses, it is vital to ensure that you have an easy, yet secure, way of communicating. You will want something where it makes it simple to send and view any financial reports, ask questions, and see if any tasks that either side (meaning you or the client) need to be done. Finally, clear communication means being able to talk to your clients in a way they can understand. This means taking your time to ensure they really comprehend what you’re doing and you are not confusing them with common work jargon. (Check out our blog here for very common accountant words when it comes to reviewing financials for some on how to explain these!)

Businesses need your accounting!

Trust comes from taking the time to get to know your client’s needs and delivering quick & efficient solutions. By guiding them through their finances at every step, and learning with them as you deliver great service, trust is bound to happen, and you will have clients who love you!

Client Guide to Year End for Your Accountant

The end of the year can be a stressful time for everyone; between the holidays, New Years’, and the dreaded tax season that looms over for April. As an accounting firm, we have our procedures in place for year end, but that could mean more ‘work’ from clients to obtain everything we need. Instead of all the back and forth, here are some ways to ensure your business is all set for your accountant and CPA at year end and why it’s important!

Gathering Documents for Year End

The type of business you own may require more things for year end, but there are many documents required for everyone. For starters, bank (and loan!) statements for the whole year. It seems obvious, but you may have missed one, or maybe you’ve been so busy you have forgotten to send the last few. Whatever the case may be, checking that your accountant/CPA has all your statements can save everyone some time. Furthermore, we require statements for every active business account and for each of those accounts, we need statements for every month. If a statement for December ends any time before the 31st, we will need January’s statement (the following month after December, into the new year) as well. Often, you see this with credit cards. For instance, your CC statement may end on the 9th every month. To accurately reflect the whole year for this account, we would need January 9th’s as it has information for December 10th to the 31st.

Next, if you do any type of contract work, confirm that you have all the needed W9s from each contractor. (Note that there are certain exclusions to this, so be sure to double check with your accountant/CPA if you are unsure or have any questions!) After that, review your transactions with no Vendor name. (In QuickBooks Online, also known as QBO, the Vendor is referred to as the person or business that that transaction went through. So if you bought food at Walmart, for example, the Vendor would be Walmart.) This is not as essential as the other tasks in this blog, but it can be important, as we’ll discover in the following section. Finally, review any other reports that your accountant/CPA may be missing that you want recorded in your books. For example, for many of our clients, we break-apart their sales to accurately reflect all the different types of things they are selling. These break-aparts always come from a report that, more often than not, the client is sending over to us. Now that you have a list of some of the vital documents needed, you may be wondering, “Why?”.

So WHY do we need all these things?

If you are unfamiliar with accounting, you may be questioning why all of these things are so important. You know that you have to hand these things over, but you are unsure what the exact reasoning is. First off, reconciliation is the process of using financial statements to verify, correct, and accurately reflect your current financial situation. In essence this means having bank statements allows us, the accountant/CPA, to make sure that your accounting software, (for us, we primarily deal with QBO), is reflecting what the bank is telling us you have done with your account throughout the year/months. This is why it is SO important to send over statements every month. We must see if the statements align for each individual month, and if we need to correct anything, we have to know all the transactions in said month from the bank statement.

Another thing a good accountant will need is all the W9s from contractors you’ve paid over the year. When you are an employee, you fill out a W2; if you are a contractor you fill out a W9. After a W9 is received, we can file 1099s- which is a tax form that shows different type of income that are not from employees. It is important that your business has all the W9s it needs so you, as the business owner, are not liable for any untaxed income on their part. Without a W9, there is no way to file a 1099, and thus you have no proof as to whether that money they received was ever taxed- which makes you liable for it. Finally, and although it is not a major issue, cleaning up your “Transaction without Payees” tab in QBO can be important. (Adding a Vendor as we talked about earlier.) Let’s say you have a $5.000.00 transaction coded as “Contract labor,” but they have no Vendor, how will we know who’s W9 to give? Additionally, cleaning up the Vendor list can verify that transactions are coded properly, and make your Book Review tab, in QBO, look cleaner!

Wrapping Up the Year End for Everyone!

Keeping these things in mind for year-end is helpful for everyone, but do not be afraid to ask your accountant or CPA any questions you may have! We are here to help your business grow and flourish through good financial planning! As a final parting note, it is a good habit to send all documents needed monthly, as well as checking in and reviewing these items throughout the year, to make year end easier on you as the business owner. This also allows time for a more in depth discussion about your financial reporting and how you can use those numbers to make better financial decisions in your daily operations.

Financial Reports – P/L & Balance Sheet

When it comes to the world of accounting, some of the most common reports include the profit and loss report and the balance sheet. Whether you are working with someone or trying to figure out your finances on your own, knowing all about these reports can be beneficial to improving your finances.

What is a P/L and Balance Sheet Report?

A profit and loss (P/L) report can capture how much money you’re making (or losing) within a certain time period. (A month, quarterly, a year, etc.) A P/L report may also be known as an income statement, statement of earnings, or statement of operations. Some key components of a P/L report are revenue, cost of goods sold (COGS), Gross profit, Expenses, and Net profit(loss). Revenue is how much money you’ve made without including any COGS or expenses. COGS are the costs for your business to deliver goods and services. This includes things like materials, labor, and shipping. Gross profit is the money you’ve made by subtracting COGS from your Revenue. Expenses are split into two categories: Direct & Indirect. Direct expenses are typically COGS as they are the items needed to make/deliver the service. Indirect expenses include things like utilities, rent, and fuel. Indirect expenses will never be counted as COGS. Net profit is the remaining money after you have subtracted COGS & expenses from your revenue. Net profit would be the actual profit (or loss) for your business in said time period. nn The balance sheet is the overall financial position of the business. It shows what you owe as well as what you own. This is determined by assets and liabilities. An asset is something you own. There are two types of assets: Current and noncurrent. Current assets are anything that can be converted into cash within a year whereas noncurrent is anything that takes longer than a year. There are also current and noncurrent liabilities as well. With current liabilities being items due within a year and noncurrent due after a year.

How do these reports help me determine my finances? How do I use them effectively?

The P/L report is a clear way to see whether you have gained or lost money that month. Additionally, the P/L report allows you to see what expenses are costing more and see how often money is coming through. This is beneficial because it can make predicting future revenue trends more accurate, thus allowing you to budget better and stay on track with your goals. nn The balance sheet is helpful for quite a few reasons. For one, it can help you decide if you are able to expand your business by knowing if you can manage the money that floats in and out or if you need to focus on receiving more cash. Another way the balance sheet is useful is by helping the company see if they are prospering or failing. This can give way to a company changing its policies, correcting more mistakes, and refocusing its goals to better align with the state of the business. Additionally, the balance sheet is important to potential investors or those looking to buy your company because it allows them to see whether the business is worth the investment since you can see everything due, paid, and what the business is like without these things.

Financial reports are helpful

Although there are many ways to look at financials in a business, knowing the fundamentals of the P/L report and the balance sheet is a very helpful step in knowing the state of your business