The need for tech-enabled companies to measure, monitor, and customize their services is greater than ever.
With variable cost models, companies in the market for tech-enabled services no longer have to consider it a large capital venture- they can scale easier. The ability to scale benefits tech-enabled companies’ clients, making it more difficult for you to strategize and run your business.
These companies also have pressure to develop and deliver proprietary technology to the market faster than ever. With such a highly competitive industry, tech-enabled companies need to focus on what matters most- innovating and providing the most cutting-edge technology to their consumers.
The fractionalized financial experts at Fully Accountable can ensure your business focuses on growing your tech-enabled business sustainably. You need qualified experts monitoring your finances and providing you with actionable insights and tangible results. Our full-service team ensures you remain compliant while expanding your business and identifying all of your tax breaks. Experience the peace of mind of hiring a fully managed, outsourced accounting firm to take care of your finances.
What are Tech-Enabled Companies?
Tech-enabled companies use existing technology to improve the efficiency or performance that has already made it into the market.
These businesses have potential but are not guaranteed success from inventing something new and unique like high-tech startups do.
Tech companies deliver entirely new products to the market by way of either:
- Push: when the organization uses a new invention to create a new market. From this, the idea that the customer doesn’t know what they want until they have it comes.
- Pull: when the economy or an industry reveals a problem and technology creates the solution.
Tech-enabled businesses don’t push into the market; they respond to pulls. This is a pretty important distinction in startups and funding because most advisors, investors, and even founders seem to neglect the considerations of being one or the other.
- Technology has changed how we do business by disrupting traditional industries with their innovative solutions.
- Tech-enabled businesses are often people first who build tools for themselves that eventually make them successful.
The tech company understandably has more unanswered and unanswerable questions, demanding more tests, trials, research, and patience. While understanding the market is critical, companies should focus on the industry and consumer adoption instead of only focusing on a specific idea. Doing so leads them into partnerships with others who have competitive advantages, positioning them better in the market.
Accounting Challenges for Tech-Enabled Companies
Because of the increased demand for companies to implement tech-enabled processes in their infrastructure, it can be challenging for companies to respond with adequate, effective financial planning.
While you’re trying to scale your business and provide your clients with exceptional service, you also have to develop new cutting-edge technology. The race for more convenience isn’t over and your clients need you to continue to innovate.
Keeping your finances in check throughout this process can be particularly cumbersome. Adding in-house accountants who might not be familiar with your industry can add more stress than it’s worth.
Tech Talent Gap
A survey conducted by IT outsourcer Harvey Nash found that 65% of technology companies are experiencing difficulty hiring. With such a high barrier to entry, you have more pressing problems than hiring an in-house accounting team to monitor your finances and provide feedback.
Additionally, because of the complex, evolving nature of your industry, most of the financial professionals you would consider hiring wouldn’t have the required experience.
Complex Tax Compliance
While expanding your business, you may not be aware of all the potential tax breaks you’re overlooking. You shouldn’t have to worry about determining your nexus and taxability.
Calculating your economic nexus- or the number of sales you make in a given area can be draining. Additionally, the most recent cases defining nexus had the opposite effect, making tax accounting a hassle for any company conducting business across state lines.
Research and Development Tax Credits
Any business that develops, designs, or improves products, processes, formulas, or software is eligible for the R&D Tax Credit. The problem is, several factors go into claiming the credit. It is worth exploring whether your business is eligible for the credit since it applies to current and prior years.
To claim the credit, taxpayers must document their research activities and establish qualified research expenses paid for each eligible research activity.
Examples of documentation include:
- Payroll records
- General ledger expense details
- Project lists
- Project notes
- Other documents produced throughout business operations.
Combining these records with employee testimonies forms the basis of an R and D tax credit claim. The challenge comes from locating and organizing all of these documents and making sure you file them according to IRS standards.
Benefits of Outsourced Accounting for Tech-Enabled Companies
Add Experience and Expertise to Your Team
Amid a talent shortage, outsourcing a core function of your business and trusting that it’s in the hand of industry experts is a competitive advantage. This process has a two-pronged effect.
On the one hand, you’re unloading a significant portion of the stress that comes from hiring an in-house accounting team. Additionally, you can focus on responding to the talent shortage and devote your company’s resources to more pressing organizational needs.
Meet Market Demand
As a tech-enabled company, you need to be laser-focused on shifting industry trends. It‘s challenging to stay apprised about the financial repercussions and feasibility of those shifting trends. Full-service accounting firms ensure you’re ready for whatever happens.
By accessing financial forecasts and implementing sound economic infrastructure, tech-enabled companies can pivot, speeding up the process of bringing new technology to market. Companies that outsource their accounting procedures also ensure they can speed their to-market process up without sacrificing their financial stability.
Around the Clock Support
The demands of the tech-enabled industry don’t stop. When you hire an in-house accounting team, they won’t be able to respond to your changing needs all the time. Outsourcing your accounting team gives you access to around-the-clock support with fractionalized experts who understand your industry and the financial strategies that lead you to success.
Call Fully Accountable Today to Schedule a Free Consultation
Fully Accountable is a full-service outsourced accounting organization that will handle all of your financial needs.
Whether you’re acquiring or merging with another company, uncertain of eligible tax breaks, or simply can’t keep up with the demand during a talent shortage, our fractionalized experts will keep you on the path to sustained growth.
Our controllers and CFOs provide accurate reporting as well as insightful projections and we will teach you how to make the most out of the tech-enabled industry.