Accounting Problems Clients Face & How You Can Fix Them
From integration of technology to adhere to accounting and tax policy changes, there are several problems accounting clients face. Here’s how accounting firms help.
Recently, a client of ours had to borrow funds at an exorbitant rate because they did not give attention to their working capital cycle. This happened because they had no designated accounting staff and their books were not being well maintained. Invoices were not being sent out and the payments kept increasing. To top that, because their books were not well-taken care of, the client had a hard time obtaining outside financing. Sound books are often the first and most important records required by loan providers and investors.
Does this story sound familiar? That’s because small business clients are often too busy handling the day-to-day administration of their business that bookkeeping and accounting usually takes a back seat. The consequences of this however can be grave as was seen with our client’s story.
According to a Clutch survey, the most common financial challenges accounting clients in Canada face include:
1. Unforeseen expenses
2. Mixing personal and business finances
3. Late receivables
4. Clerical errors in the books
5. Outdated records
In this blog, we’ll go through the most common financial problems small business clients in Canada face, and how an accounting firm can fix them.
Businesses often have limited capital to support their operations. Unexpected expenses, such as technology expenses faced during the COVID-19 pandemic, can leave Canadian businesses vulnerable to losses.
Accounting firms can tap into this problem by helping clients develop a contingency plan that covers unexpected expenses. It may be setting up a line of credit, applying for government aid, or factoring in secondary expenses. Your accounting firm can use its expertise to help businesses prepare ahead of life's little (or big) surprises.
Mixing Personal and Business Accounts
This problem is common among small businesses and independent entrepreneurs. The same Clutch survey referenced above shows that 27% of small businesses report having this accounting problem.
As an accountant, your role extends to that of a consultant. You can advise them to open different accounts or at least get separate business and personal cards to better track expenses.
Clerical Errors and Outdated Records
This is one of the most common problems accounting clients face. Without proper accounting software, especially if the business is recoding finances on a cash basis, clerical errors are bound to happen.
These mistakes can affect payroll, cash flow, and financial statements, which ultimately affect the clients’ tax returns. As an industry expert, an accountant can pick up these errors and provide a solution by offering budget bookkeeping services. There are many back-office bookkeeping contractors that you can work with and outsource these offerings.
Changes in Tax Policies
It doesn't matter whether your accounting client is a small business or a big corporation. Changes in tax regulations can affect how they report their taxes.
Your accounting firm is likely to keep up with these changes and understand how they apply to different clients. You can be proactive and inform your clients of recent amendments. Educate them on what they need to do to ensure they are on the right side of CRA.
Personal taxes have so many moving parts, that at times it can be overwhelming even for accountants. While the CRA provides plenty of information for us to use, it can be confusing as to which forms should be submitted. It is no surprise that individual filers often find it hard to figure out their tax situation.
A highly effective solution for this problem is available to you in the form of Taxbotic tax software. Whether your client is struggling to.
● Figure out what all applies to their financial situation, or
● What documents they need to send to you for preparation of their T1
Taxbotic can alleviate their concerns – and by proxy, yours - through automated and streamlined tax preparation documents.
Learn why so many accountants choose Taxbotic this tax season. Start your free trial today.