Accountants Help SMB Owners Gain Operational Insight
Small businesses must constantly juggle competing priorities and make the tough decisions on where to allocate valuable resources. In an uncertain economy, most struggle with where to spend and where to cut. Most small businesses can’t afford to have a full-time accountant on staff, and while some owners may have solid working knowledge of the day-to-day bookkeeping or accounting needs of their businesses, many rely on the expertise of a designated accountant only during tax season. Once tax season is over, many of those same small business owners will likely go back to managing their books on their own. ‘
What many small business owners probably don’t realize is the value that comes from building a relationship with an accountant on a consultative basis throughout the year. An accountant can serve as a trusted advisor who can offer invaluable counsel to take a business to the next level, or even just assist in navigating through an uncertain economy. Accountants bring knowledge, experience, expertise and a perspective that can help build a plan to turn business ambitions into reality.
Here are seven reasons that all small business owners should keep in mind when deciding whether an outside accountant is a fit for their operation.
1. Business owners using an accountant report the service is key to their success. In an accountant usage study conducted by Sage among Canadian business owners, 90 per cent of respondents agreed that working with an accountant was a critical element of their success.
2. Accountants can bring your financial information to life. If all your data is just “sitting” in a database and you’re not interpreting, analyzing or using it to help drive your business direction and decisions, then you’re missing out on a great opportunity. Have an accountant help you dive into the numbers and use them to propel greater business growth and profitability in the future.
3. Accountants can provide a new perspective. Sometimes small business owners are so “in the weeds” running the day-to-day operations of their business that they may not be able to see the whole picture. Someone who is removed from the business can provide a different perspective that may otherwise be missed. Meeting with an accountant can be like taking a step back, looking at the bigger picture and gaining a fresh, new perspective. Sometimes that’s all it takes to come up with the next big idea.
4. Accountants have reach. Don’t underestimate how valuable it is to receive guidance from someone who has insight and knowledge across hundreds of businesses and industries. Accountants not only get to see the financial information of many businesses across a variety of industries, but they also have visibility into best practices that are working for other businesses as well as the mistakes others have made that have led to failure. Being able to have this insight and share information on what has or hasn’t worked for others is invaluable – why reinvent the wheel if you don’t have to?
5. Businesses need a plan. One reason thousands of businesses fail every year is because they didn’t have a plan. In fact, 23 per cent of respondents in a recent survey bySage affirmed they don’t have a formal business plan in place. When asked why, they said, “I just didn’t know where to start.” This is where an accountant comes in. A good accountant will partner with a business to look at all the data and help build a roadmap to success. Poor planning isn’t necessary, but bringing a professional on board can help small businesses plan for success.
6. Accountants understand tax. No matter how you slice it, taxes are not always easy and straightforward. Rules and regulations change on an almost continuous basis; aligning with an accountant can help ensure that your business remains compliant and is a critical step in maximizing your tax savings. Many small business owners who have relied on the expertise of an accountant will point out that that the tax savings they realized by working with a professional have paid for the accounting fees 10 times over.
7. Accountants can be critical to getting through an audit. If your business has ever been audited by Revenue Canada, you probably know that the ongoing assistance of an accountant can turn the usually frustrating and daunting experience into a much easier process. Participants of Sage’s accountant usage studies also agree – 84% of respondents said working with an outside accountant during an audit was very helpful.
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Can your business survive without the assistance of an outside accountant? Probably. But the extra insight, guidance and expertise offered by an outside accountant can be the catalyst that could make your business thrive.
Six issues at the top of tax and finance leaders’ agenda
New Deloitte research reveals that tax leaders are under increasing pressure to add strategic value as companies accelerate business model transformation, from undergoing digital transformations to rethinking their supply chains or investing in green initiatives.
According to Phil Mills, Deloitte Global Tax & Legal Leader, to “truly deliver value to the business, the tax function needs to rethink its resourcing model and transform its technology infrastructure to create capacity and control costs”.
And the good news, according to Mills, is that tax and business leaders have more options at their disposal to achieve this.
Reflecting the insights of global tax and finance executives at global companies, Deloitte’s Tax Operations in Focus study reveals the six issues at the top of tax and finance leaders’ agenda.
Trend 1: Businesses seek more strategic counsel from tax
Companies are being pushed to develop new digital products and distribution channels and accelerate sustainable transformation and this is taking them into uncharted tax territory. Tax leaders say their teams must have the resources and skills to give deeper advisory support on digital business models (65%), supply chain restructuring (49%) and sustainability (48%) over the next two years. This means redrawing the boundaries of what tax professionals focus on, and accelerating adoption of advanced technologies and lower-cost resourcing models to meet compliance requirements and free up time.
According to Joanne Walker, Group Tax Director, BT Group PLC, "There’s still a heavy compliance load today, but the vision for the future would be that much of that falls away, and tax people become subject matter experts who help program the machine, ensure quality control, and redirect their time to advisory activity.”
Trend 2: Tipping point for resourcing models
Business partnering demands in the tax department are on the rise, but 93% of tax leaders say their department’s budget is remaining flat or falling. To ensure that the tax function can redefine itself as a strategic function at the pace that is required, leaders are choosing to move increasing amounts of compliance and reporting to a combination of shared service centers, finance departments, and outsourcing providers that have invested in best-in-class technology.
Trend 3: Digital tax administration is moving faster than expected
in addition to the rising focus of the corporate tax department partnering with their business counterparts, transformative changes to the way companies share tax information with revenue authorities is also creating an imperative to modernize operations at a faster pace. Nine in 10 (92%) respondents say that shifting revenue authority demands on digital tax administration will have a moderate or high impact on tax operations and resources over the next five years—and several heads of tax said the trend is moving faster than expected.
"It’s really stepped up in the last couple of years," says Anna Elphick, VP Tax, Unilever. "Tax authorities don't just want a faster turnaround for compliance but access into a company’s systems. It's not unreasonable to think that in a much shorter time than we expect, compliance will be about companies reviewing a return that's been drafted by the tax authorities."
Trend 4: Data simplification and lower-cost resourcing are top priorities
Tax leaders said that simplifying data management (53%) and moving to lower-cost resourcing models (51%) must be prioritized if tax is to become more proactive at delivering strategic insights to the business. Many tax teams are ensuring that they have a seat at the table as ERP systems are overhauled, which is paying dividends: 56% of those that have introduced NextGen ERP systems are now highly effective at supporting the business with scenario-modeling insights. Only 35% of those with moderate to low use of NextGen ERP systems said the same.
At Stryker, “we automated the source P&L process for transfer pricing which took a huge burden off of the divisions," says David Furgason, Vice President Tax. "Then we created a transfer price database to deposit and retrieve data so we have limited impact on the divisions. We are moving to a single ERP platform which will help us make take the next step with robotics.”
Trend 5: Skillsets are shifting
Embedding a new data infrastructure and redesigning processes are critical for the future tax vision. Tax leaders are aligned — data skills (45%) and technology process experience (43%) are ‘must have’ skills in a tax department of the future, but more traditional tax specialist knowledge also remains key (40%). The trick to success will be in tax leaders facilitating the way these professionals, with their different backgrounds, can work together collectively to unlock lasting value.
Take Infineon Technologies, which formed a VAT technology and governance group "that has the right knowledge about how to change the system to ensure it generates the right reports", according to Matthias Schubert, Global Head of Tax. "Involving them early was key as we took a greenfield approach, so we could think about what the optimal processes would look like and how more intelligent systems could make an impact
Trend 6: 2020 brought productivity improvements
Improved productivity (50%) and accelerating shifts to remote working (48%) were cited as the biggest operational benefits to emerge from COVID-19-driven disruption. But, as 78% of leaders now plan to embed either hybrid or fully remote models in the tax function long term, 34% say maintaining productivity benefits is a top concern. And, as leaders think about building their talent pipeline and strengthening advisory skill sets, 47% say they must prioritize new approaches to talent recognition and career development over the next two years, while 36% say new processes for involving tax in business strategy decisions must be established.