July 13, 2018 0

Why small and medium businesses switch Accountants?

Why small and medium businesses switch Accountants?

The owners of Small and Medium-sized Businesses (SMBs) face a plethora of challenges in their daily operations. As SMBs are small ventures they do not hire many employees, and the founder, in most cases, takes care of all the business requirements, right from marketing to sales. SMBs also face a major capital crunch, and they try to make the best use of their existing resources and facilities. Therefore, managing finances and accounts is one of the most crucial undertakings for SMBs.

As these business owners may not have the expertise required to manoeuvre complex legal compliance and regulations;  they prefer hiring Local accountants. For the accountants to manage finances completely all related information and confidential details have to be shared with. Accountants, therefore, become more than just hired help, they become a part of the growth journey of the business, which offers a touch that extends beyond the simple professional ties. Moreover, business owners are aware that a messed up accounting book could invite serious trouble and determine the success or failure of their business. Thus, accountants shoulder the responsibility of improving the business value of the company among market stakeholders.

That said, SMB owners sometimes are not able to strike a cordial chord with their accountants and may consider switching from one accountant to another. The reasons for switching may be many, and in this article, we’ve compiled the top reasons why SMBs choose to switch their accountants.

Money woes

SMBs work on tight budgets, and the careful management of how the business capital is being spent matters a lot. Knowing the exact financial condition of their business is imperative for the owners of small companies. Having complete information of the daily, weekly and monthly finances and accounts is crucial, as most SMB owners have around 60-70% of their personal wealth and assets tied up in the investments made. Therefore, it becomes equally important that the hired accountants understand the financial objectives and goals of the business before they take control of the accounts department. SMBs are known to switch their accountants when the latter do not contribute in achieving the financial goals of the company. If accountants are not pushing the business towards its financial objectives, they are not really the right fit for the SMB. The owners of small businesses want to stay up-to-date with their income statements, balance sheets and cash flow statements on a regular basis. Therefore, when accountants cannot help the owners gain more clarity and knowledge about the business finances, they are more likely to be replaced.

Tax difficulties

Tax surprises are never welcome. Most small business owners trust their accountants with the taxation formalities because they don’t really have much knowledge about the nitty-gritty of the legal taxation framework. However, managing company taxes is not a one-day task and requires the accountants to be completely involved with the business throughout the year so that at the end of the accounting period, the tax liabilities and projected profits can be correctly filed with the government bodies. When SMBs come across accountants who cost them major tax hiccups, they prefer to replace them with someone who would be actively involved and can provide guidance on how to receive tax benefits by suggesting the industry best practices.

Large adjustments and unexpected bills

The main aim of SMB owners is to ensure complete control over their accounting and financial processes. The hired accountants are expected to help the business owners in this process, but everything goes in for a toss when accountants start entering figures and numbers into the accounting books without the prior knowledge of the owners or even without intimation. When accountants start making large adjustments at the end of the year without properly explaining the reasons, it starts worrying about the business owners. This could mean that there might be issues with the inventory, depreciation and/or the work-in-progress adjustments. Similarly, when unexpected bills start pouring in without clear explanations, it is very natural for the business owners to become concerned. Both of these could reflect negatively on the company accounts and lead to legal troubles. In scenarios like these, business owners, suspecting foul play, are very likely to replace their accountants.

Unreachable accountants

Accountants, irrespective of whether they are working for small or large enterprises, tend to be very busy in the first quarter of the year, as it is the tax season. Many SMBs hire accountants on a per-project or a per-hour basis. The trouble begins when accountants are not reachable when required, and they do not return calls on time, especially during the tax season. In such situations, the owners of SMBs start looking for replacements, as they are paying full cost for the accounting services they’ve hired but are not receiving the business value they expect. For the accountant, a small business may be yet another client, but for the owner of the business, it is his/her livelihood, and considering the same, it should receive undivided, unadulterated attention.

Business relationships

Though it might sound very surprising, the personal relationship between an accountant and the business owner plays a very important role in how long the accountant is likely to work for the business. The owners of SMBs make large sums of personal investments in their business, and the progress and growth of their company is a very personal matter for them. Therefore, every individual who works at an SMB, including the accountant, becomes an ally in the progress and growth of the company. So the role of the accountant is not simply limited to that of a hired help. Accountants should genuinely understand the vision of the company along with its hardships and struggles, so that they can become personally invested in the company and its overall progress. If SMBs do not find accountants who are willing to invest a little more than the regular hours, chances are high that they will start looking for a replacement soon.

Poor trade practices

Just like SMBs, accountants are also running a business of their own, wherein they offer their services and charge the customers for the same. SMBs look to hire accountants who have a strong business track record to display and are up-to-date with the latest technology trends in the market. SMBs may consider replacing their accountant if the latter’s personal business is not flourishing and is reducing in profits. Accountants are expected to help small companies make their business operations more effective and efficient, but the chances of that happening become very slim when they themselves are not operating efficiently. Therefore, poor trade practices on the part of the accountants may become a probable reason for SMBs to start looking for replacements.

Higher accounting fee

The price factor has always been an area of concern for SMBs. Small businesses work on tight budgets, and how much the accountant should be paid is a much thought over the question. The owners of small businesses are always on the lookout for competitive market rates, as they are focused on receiving more business value from their investments. Therefore, if the existing accountant quotes a higher fee, it is very likely that he/she will soon be replaced. SMBs do not have a lot of funding available with them; thus, the business owners will scour the market to get the best deal and will not choose an accountant without first comparing the rates of multiple accounting services.

Also Read – How much do accountants charge?

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