Without a reliable accounting partner by your side, your business will inevitably face financial and even legal challenges over time. Fortunately, finding the best outsources accounting firms is easier than you might think. In this article, we will discuss 6 of the most important reasons why marketing businesses everywhere choose to outsource their accounting responsibilities.
According to estimates from 2018, there are currently about 189,000 people working for marketing agencies in the United States. Marketing is one of the most important components of running a business which is why there is no surprise that many new agencies choose to open their doors each year.
While the purpose of marketing may be apparent to many business owners, running a marketing agency can still be rather complicated. Not only will your agency need to compete against seemingly countless other firms (including dozens in your own city); the firm will also need to maintain other aspects of the business you may not be familiar with.
Accounting is one of the most common business functions that marketing agencies of all sizes choose to outsource. Only a small portion of marketers are familiar with key marketing concepts and an even smaller portion has any sort of formal training.
1) Digital Focus
In the modern era, an increasing portion of marketing firms is offering a distinctively digital focus. These firms are responsible for things such as creating digital content, running social media accounts, managing eCommerce platforms, and various other tasks. Naturally, partnerships between digital marketers and digital accounting firms are far from uncommon.
With a digital focus, both partners can streamline their operations and reduce their general operating costs. Furthermore, by operating in the digital space, it will be much easier for your business to gather actionable data and make data-supported decisions. Your accountant will be able to present, interpret, and act upon this information in a way that is beneficial for your company. They will also be able to address issues that are unique to the marketing space, such as valuing non-tangible assets, avoiding double taxation for interstate transactions, and managing payrolls for freelance employees.
2) Better Tax Practices
According to an industry-wide survey conducted by Deloitte, 53 percent of businesses choose to outsource their tax needs, which represents a 17 percent increase (when compared to past surveys). Certified Public Accountants (CPAs), who must complete several exams in order to be legal bookkeepers, will be familiar with the tax laws and tax deductions that can help your business improve its bottom line.
Unless you are extremely familiar with the US Tax Code, there are likely many tax deductibles that your business is currently overlooking. These deductibles can include things such as some marketing expenses, employee benefits, and even the Wi-Fi in your home. Though the relevant deductions available will vary by business, hiring an experienced accounting firm can help decrease the portion of your revenue that is going directly to taxes.
In a diverse economy, such as the digital economy of our modern world, businesses will trend towards specialization over time. Rather than assuming they can do everything on their own, many businesses will recognize whatever it is they do best and delegate all other tasks to various experts.
By hiring an outsourced accountant—as opposed to managing your books on your own—your digital marketing business will be able to focus on the portions of the business that actually generate profits. This can include finding new clients, servicing existing clients, creating new campaigns, and various other tasks.
Ultimately, the reason why many marketing firms choose to use a digital accountant is that, frankly, these firms can help them improve their bottom line. Accounting, bookkeeping, and tax prep is something that all businesses—regardless of size, industry, or structural complexity—will inevitably need to do. Because of this, it is not a question of if someone will manage your accounting responsibilities, but who should be in charge of doing these things.
Hiring a full-time accountant, depending on benefits and experience, can cost a company $100,000 per year or even more. Because many new and growing marketing companies simply do not have the capacity to bring on a full-time CFO, they will instead pursue fractional CFO options. According to another recent study, published by Market Watch, 80 percent of companies who hired an outside accounting firm would recommend their partner to another business.
5) Financial Decision Making
Your accountant is more than just someone who records what has already happened; your accountant is someone who can help you plan for the future. With the right accounting framework in place, your business will be able to recognize profitable opportunities and make decisions that are in your best interest.
Suppose that a potential new client is willing to pay $10,000 per month in exchange for a specific (preplanned) marketing campaign. Should your business accept this new project? The answer will naturally depend on many different factors, such as opportunity costs, the need for supplies, costs for your business, and various others. Instead of turning this decision into guesswork, you can work with an accountant that will help you decide whether the project will have a positive or negative impact on your bottom line.
6) Emergency Resources
In an ideal world, accounting emergencies would never happen. In the real world, however, these emergencies come up quite often. Accounting emergencies can include misfiled taxes, the release of inaccurate financial statements, liquidity problems, and various others. If left unaddressed, the effects of bad accounting practices will typically compound over time.
The best outsourced accounting firms will be able to help you weather these storms as soon as they emerge. Some even offer 24/7 support, making it easier to stop these problems before they get out of hand. While you may not need to access these services very often (or even at all), they are certainly a valuable resource to have within reach.
Conclusion – Why Your Marketing Agency Should Outsource Accounting
If you are considering outsourcing your marketing firm’s accounting needs to an expert, you are certainly not alone. There are many different benefits that can come from making the decision to outsource. By understanding why so many firms make this decision each year, you’ll be able to determine if doing so is right for your business.