Life is full of routine activities. From the moment we wake up and get out of bed we tend to go through a pretty consistent routine from brushing our teeth, to drinking our coffee, to reading the paper.
Let’s face it, we like routine.
It provides a feeling of consistency and security that make us all just a bit more comfortable.
If we are in a good routine then the results are generally good, however if our routine isn’t ideal then the results can be less ideal.
When it comes to our businesses we also find ourselves in routines.
We seek to have a consistency in our people, processes and the results that they create.
Again, successful when good people are performing the right processes, however the outcomes can be detrimental when the wrong people or processes are introduced.
The bigger problem is many times the poor outcomes aren’t immediately recognizable because we are so entrenched in our routine that we don’t think to their for our deficiencies.
Visiting the Doctor, Dentist, Accountant?
Let’s say from the time that you were 30 years old your routine consisted of waking up, stopping at McDonalds for a Bacon, Egg and Cheese McMuffin and heading into work.
Suddenly you are 40 years old and you are 35 pounds heavier and you visit the doctor, what do you think he is going to say to you?
Chances are your doctor is going to ask you about your day-to-day routines. What are you doing every day that is leading to your unhealthy weight gain?
Your business is very similar.
Perhaps over the past 5 years your business went from generating a healthy 25% gross margin and now you are generating a less ideal 17%.
In this case you aren’t going to visit your doctor or your dentist, but perhaps the person that you should be speaking with is your CPA.
What a CPA Can Find in a Business Accounting Check Up
Before getting into the specifics of the Accounting Check Up, I want you to think about something.
When you were in your 20’s you probably only visited the doctor once a year if that, right? As you got a little older, the visits became more frequent. Why do you think that is?
We all know that with age and maturity a bit more attention is required.
The same goes for your business.
As your business grows up there is usually a need for more attention to make sure it is healthy and operating like a well oiled machine.
The business accounting check up is the process of looking at your businesses accounting practices and financial management to make sure that your business is as profitable and that your financial statements are as accurate as possible.
The process of the check up should include the following.
- Financial Statement Reviews and Analysis: Monitoring the creation of the monthly financial statements on a routine basis allows for the health and wellness of the company to be more accurately determined. With the analysis created during a check-up, trends that are both positive and negative can be identified earlier so that adjustments can be made where required and opportunities can be exploited.
- Expense Management and Reclassification: Beyond just looking into the financial statements, part of the check up process should be an in depth review of business expenses. How is the company expenses changing and are there expenses that have shot up that can be better managed such as technology, insurance or maintenance. Are there ways to benefit from a tax standpoint by reclassifying certain expenses? Early detection allows your business to take action and make the adjustments required to increase bottom line performance.
- Legal and Regulatory Review: Does your internal finance team have the chance to keep up with all of the ongoing change in IRS guidelines and GAAP? Most small and medium businesses cannot possibly keep up with these things, however these changes can be opportunities to increase profit or decrease tax liability. Nonetheless, keeping up at the very least minimizes surprises that can affect your business by applying the changes early and dealing with the related impact to your businesses financials. Also keeping your business in compliance and avoiding any legal or financial risks that could be associated.
Is Your Business in Need of an Accounting Check Up?
If your business, like so many is going through the same motions year in and year out, then an accounting check up may be overdue.
Just like the constant analysis of your customer and your revenues, your accounting methods should be closely looked at as well.
Most businesses seek to be as profitable as possible.
And while this can be created through growing revenue, it can also be done by making sure you are running as profitably as possible.
Would you make a small investment to find an additional few percentage points in your margin?
Of course you would!
A better bottom line means a better, healthier business into the future. So if you are looking to get a little more out of your businesses routine, an accounting check up is just what the Doctor CPA ordered!
Disclaimer: The information contained in this Blog (the “Blog”) is intended solely to provide general guidance on matters of interest for the personal use of the reader, who accepts full responsibility for its use. In no event will BRP, or its partners, employees or agents, be liable to you or anyone else for any decision made or action taken in reliance on the information in this Blog or for any consequential, special or similar damages, even if advised of the possibility of such damages.