How to Make Your Accounting Firm Profitable in 2022
Making your accounting firm profitable in 2021.
At the time of writing this, the month of January in the year 2021 is wrapping up its first week. And while we can all breathe a sigh of relief that 2020 is finally over, we still have to sort through the damages of last year before we can fully "write it off" ...so to speak.
It's true managing and leading an accounting firm or consultancy was already challenging prior to the pandemic. Amendments in laws and regulatory bodies, along with evolving business needs, meant the road was never hassle-free. However, the unprecedented nature of lockdowns, social distancing and oscillating financial trends left many firms and organizations floundering unlike any year prior.
Having observed how accounting firms changed during one of the worst global pandemics, concern for this coming year is very valid. However, to give you a little message of hope, crises like the pandemic are catalysts for changing employee habits and technology.
With that said, here are some tips on how you can make your accounting firm profitable in 2021.
Be ready for further changes
This tip is presented at the top of the list as change is inevitable and unstoppable. Yes, there are moments of stagnancy, but it never truly stops. Right now, change is of the essence in every facet of business for accounting firms.
Be prepared for change by adopting new technology, such as accounting software, that can automate processes, including audit and fraud detection. Bookkeeping and tax preparation guidelines may also be changed, affecting your services.
Overall, we recommend a contingency plan to ensure your accounting firm won't cease operations or face lag time as it copes.
Cloud technology - A necessity in remote work conditions
Many countries around the world are still under lockdown. This means that accounting firms are operating remotely with agents and accountants working from home. Those that can conduct their operations online will become the preferred choice for businesses and personal clients alike.
Cloud technology offers various advantages that make your accounting firm’s digital transformation profitable. It gives you an opportunity to save on expenses and operating costs that can instead be put to better use.
By automating accounting processes, such as bookkeeping, tax preparation, billing, and payroll, you reduce your number of redundancies and increase efficiency. This way, you end up saving time and money you would have otherwise lost.
Offer in-demand services that incur increased profits
CPA firms design their services in a way to take the burden of accounting, taxation and payroll management from their clients. The objective is to free up their time so they can focus on creating incentives and mapping growth strategies.
You can increase the value of your services by adding strategic advisory as an offering in your portfolio. Like your accounting firm, other businesses are also concerned how their financial situation and accounting needs will change throughout the pandemic.
Strategic advisory services can give you the opportunity to increase your clients’ revenues, along with your own firm’s profitability.
Consider gig economy a friend
The gig economy has become a buzzword in modern professional lexicon. Accounting firms can make use of the gig economy and increase profitability for your accounting firm. This type of economy is run by gig workers such as freelancers, independent consultants, and other short-term contract-based workers.
Gig workers prevent the need for you to hire permanent accountants and consultants. Instead of paying salaries along with a benefits package, you only pay for the hours they provide their services. It also gives you an opportunity to delegate duties and explore a new niche with the time you now have available.
Revisit your accounting firm’s roster
Yes, there is a thing as having too many clients. If you can’t hire additional accountants, bookkeepers, and tax and payroll experts, or take advantage of the gig economy, having more clients in your roster is not a good idea.
When you’re spread thin, you end up making mistakes that can cost you money and your relationship with the client. You can make wrong entries, miss receivables, miss tax filing dates, or neglect compliance requirements.
All in all, a recipe for disaster.
With the ongoing pandemic, accounting firms are adjusting to the changes. It's vital you are realistic about your client roster. Long-term financial success and longevity are achievable when you can effectively and accurately carry out your accounting duties.