SMBs face operating expense challenges, how to alleviate that
66% of small businesses face financial challenges, with 43% in 2020 claiming the most prominent challenge as paying operating expenses.
Some of the issues our clients have faced include:
Neglecting necessary reporting. All financial transactions must be recorded. Items like sales, expenses, and earning all count toward this reporting. Falling behind on reporting can cause a compounding effect that will eventually harm monthly cash flow and impacts other reports business forecasting rely upon. And effective and modernized financial reporting solution does not rely on spreadsheets and receipts. Automated systems and trusted partners delivering real-time and collaborative insights give you more freedom in understanding where your business stands.
Poor tax compliance. Approximately 85% of small businesses overpay on their federal income taxes annually, while others underpay. The additional time it takes to these situations takes time and money to solve. In other words, the cost of compliance can have a negative impact on small businesses in a disproportionate way compared to larger corporations. According to the IRS, companies with under $1 million in revenue carry nearly two-thirds of the business compliance costs.
Mixing business and personal finances. Monitoring cashflow is difficult with comingling business and personal funds. It’s a risk practice that could be a red flag to auditors and ultimately damage the value of a company. Outsourcing accounting is probably the best option in this situation. Opening a business account is the first step. Then finding a team to monitor cash flow monthly and provide reporting is next. All business-related items can be easily organized and readily available with no extra effort on your part.
Managing financial challenges is a very real part of owning and operating a business, particularly for small businesses, but it doesn’t have to be so difficult. Almost all your back office functions can be easily managed with unlimited support from our dedicated team.