Without a reliable accounting partner on your side, your marketing agency will inevitably face financial and even legal challenges over time. Finding the best digital accounting firms is easier than you might think. In this article, we will discuss 6 of the most important reasons why advertising agencies everywhere choose to outsource their accounting responsibilities.
According to estimates from 2018, there are currently about 189,000 people working for marketing firms in the United States. Marketing is one of the most important components of running a business, so it is no surprise that many new agencies choose to open their doors each year.
While the purpose of marketing and advertising may be apparent to many business owners, running a marketing agency can still be rather complicated. Not only will your agency need to compete against seemingly countless other firms (including dozens in your city), but the firm will also need to maintain other aspects of the business you may not be familiar with. Managing cash flow is crucial for advertising agencies to balance income and expenditure, improve profitability, and ensure smooth operations without payment delays.
Accounting is one of the most common business functions that marketing and advertising agencies of all sizes choose to outsource. Only a small portion of marketers are familiar with key accounting concepts, and an even smaller portion does not have any sort of formal training. Additionally, digital marketing plays a significant role in the growth and operational efficiency of accounting firms.
Digital Focus
In the modern era, an increasing portion of advertising firms is offering a distinctively digital focus. These firms are responsible for things such as creating digital content, running social media accounts, managing e-commerce platforms, and various other tasks. Naturally, partnerships between digital marketers and digital accounting firms are far from uncommon. Learn more about e-commerce accounting here.
With a digital focus, both partners can streamline operations and reduce general operating costs. Furthermore, by operating in the digital space, it will be much easier for your business to gather actionable insights and make data-supported decisions. Your accountant will be able to present, interpret, and act upon this information in a way that benefits your company. They will also be able to address issues that are unique to the marketing space, such as valuing intangible assets, avoiding double taxation for interstate transactions, and managing payrolls for freelance employees. Business intelligence plays a crucial role in enabling these data-driven decisions, helping to integrate various financial systems, and identifying opportunities for enhancing financial management.
Better Tax Practices for Advertising Agency Finance
According to an industry-wide survey conducted by Deloitte, 58% of businesses choose to outsource their tax needs, which represents a 17% increase (when compared to past surveys). Certified Public Accountants (CPAs), who must complete several exams to be legal bookkeepers, will be familiar with the tax laws and tax deductions that can help your business improve its bottom line. Specialized CPA marketing strategies can further help CPAs attract clients by addressing their unique needs and ensuring the right clients find them through effective digital marketing techniques.
Unless you are extremely familiar with the US Tax Code, your business is likely overlooking many tax deductibles. These deductibles can include marketing expenses, employee benefits, and even the Wi-Fi in your home. Though the relevant deductions available will vary by business, hiring an experienced accounting firm can help decrease the portion of your revenue that is going directly to taxes.
Digital Agency Accounting Specialization
In a diverse economy, such as the digital economy of our modern world, businesses will trend towards specialization over time. Rather than assuming they can do everything on their own, many businesses will recognize whatever it is they do best and delegate all other tasks to various experts.
By hiring an outsourced accountant–as opposed to managing your books on your own–your digital marketing agency will be able to focus on the portions of the business that actually generate profits. This can include finding new clients, servicing existing clients, creating new campaigns, and various other tasks. Additionally, implementing effective digital marketing strategies is crucial for attracting new clients and establishing a strong online presence.
Cost-Effectiveness
Ultimately, the reason why many marketing and advertising firms choose to use a digital accountant because these firms can help them improve their bottom line. Accounting, bookkeeping, and tax prep is something that all businesses–regardless of size, industry, or structural complexity–will inevitably need to do. Because of this, it is not a question of if someone will manage your accounting responsibilities but who should be in charge.
Hiring a full-time accountant, depending on benefits and experience, can cost a company $100,000 per year or even more. A sound financial strategy helps manage these costs effectively. Because many new and growing advertising companies simply do not have the capacity to bring on a full-time CFO, they will instead pursue fractional CFO options. According to another recent study published by Accounting Today, 79% of companies who hired an outside accounting firm would recommend their partner to another business.
Financial Strategy Decision-Making
Your accountant is more than just someone who records what has already happened; your accountant is someone who can help you plan for the future. With the right accounting framework in place, your business will be able to recognize profitable opportunities and make decisions that are in your best interest. Additionally, marketing services tailored for accountants can provide strategic planning and digital marketing execution, helping you make informed financial decisions.
Suppose that a potential new client is willing to pay $10,000 per month in exchange for a specific (preplanned) marketing campaign. Should your business accept this new project? The answer will naturally depend on many different factors, such as opportunity costs, the need for supplies, costs for your business, and various others. Instead of turning this decision into guesswork, you can work with an accountant who will help you decide whether the project will have a positive or negative impact on your bottom line.
Emergency Resources
In an ideal world, accounting emergencies would never happen. In the real world, however, these emergencies come up quite often. Accounting emergencies can include misfiled taxes, the release of inaccurate financial statements, liquidity problems, and various others. If left unaddressed, the effects of bad accounting practices will typically compound over time.
The best outsourced accounting firms will be able to help you weather these storms as soon as they emerge. Some even offer 24/7 support, making it easier to stop these problems before they get out of hand. While you may not need to access these services very often (or even at all), they are certainly a valuable resource to have within reach. Finance officers play a crucial role in addressing tax remittance and payroll issues, creating a supportive environment for government agencies to efficiently collect taxes and minimize employee concerns.
Why Your Advertising Agency Should Outsourced Accounting for Marketing Needs
If you are considering outsourcing your marketing agency firm’s accounting needs to an expert, you are certainly not alone. Many different benefits can come from making the decision to outsource. By understanding why so many firms make this decision each year, you can determine if doing so is right for your business. Additionally, incorporating social media marketing is crucial for engaging with clients effectively.
To learn more about outsourced accounting options for your marketing agency, contact us.
