As is the case in most countries, the lion’s share in the total number of registered companies has always been micro entities. This has warranted financial reporting practices that allow for administrative relief to micro entities. From about a decade ago, companies that fall under the micro-entity category have been able to prepare and file simple accounts in most of the countries. Some companies do not even adopt the micro entity regime, instead choosing to file compliance through the small company accounts route with just a Balance Sheet along with a Profit and Loss statement. This may have been easy to follow and can sound simple, but as an owner of a micro-entity or a potential one, there can be a host of other accounting challenges that you don’t anticipate.
- Shortage of Skilled Staff
Able resources, quick to the draw when it comes to learning on-the-job is a tough ask in accounting. Even more so for a micro-entity, where supplementary resources may not be available to fit into the role.
Having spent considerable amounts of time in training and development, a trained resource may not choose to stick around for too long. This can cause significant disruption in the smooth functioning of your company. Not to mention the financial implications.
- Impact of Resource Churn
As existing employees leave and new ones are hired, the accounting practices are bound to be volatile, no matter the robustness of systems and practices you have in place. Each one has his/her own methods of preparing accounts and crunching the numbers. The end result could be an inconsistent set of accounts that may cost you your business.
- Employee Turnover Cost
Your own books should be able to take the cost of those doing them. An unreliable and unskilled resource is going to cost you as dearly as one who leaves without adding any value to your firm - in quality and quantity. And in time, you can see this affecting your Balance Sheet.
- Absence of Agile Workforce
All the above points on human resource challenges may lead to your organization being stunted in terms of growth and agility. Without proper resources who have advanced accounting knowledge, your company can stagnate at your current position. They will tend to be unaware of information regarding management practices and controls. And this can have an effect on how you do business and grow.
- Administrative Deficiencies
When the human resources side of your business is not strong, a lot can go wrong. Records are not maintained resulting in inadequate reconciliations. The systems in place for control of receivables and payables go awry, and sometimes, even incorrect payments take place. This can damage your entire organizational ecosystem.
- Cost of a Full-time Resource
Hiring an accountant full-time can be expensive. Although the cost could vary based on several factors including experience, level of expertise required, your specific industry and so on, one will have to be paid in excess of $40,000 per annum in most advance countries.
In the light of all the above challenges, it may be time for you to evaluate the performance of different organizational resources like human, physical, financial aspects that make your micro-entity a well-oiled business. Not all hope is lost though. Holistically, taking note of the organizational strategies pursued, there are tons of opportunities that await you to get your accounting game strong.
One of the key factors in ensuring that your micro-entity stays afloat in terms of accounting and finance, is to seek the expertise of accounting firms or professional companies that specialize in outsourced accounting. These organizations have a plethora of resources and knowledge that can be harvested to bring proper controls into your system, set standards for management information and even glean essential business insights from dashboards.
Compliance is another tricky and cumbersome area that an accounting firm can help you overcome. They are likely to look after the finer details in all reporting forms to submit to the authorities, the formats they are mandated to be in and aid in timely payment of tax. In matters of legal compliance and procedures, accounting firms have a vast storehouse of information and can help you navigate the waters with ease.
Another area of opportunity lies in the administrative revisions introduced recently in countries like UK. Most micro-entities, until the recent past were using the accounting regime of small companies which called for a simple profit and loss statement to be submitted. The Financial Reporting Standard for Small Entities (FRSSE), for financial years beginning on or after 1 January 2016, changed the rule. Small companies are now required to use the accounting protocol – FRS 102 – as larger UK companies did but with less reporting standards under section 102 (1A). With this new rule, however, micro entities need not have to comply with FRS 102 (1A). They are given a new standard to be followed, tailor-made for micro entities - FRS 105.
In this context, the creation of a more appropriate financial reporting model, customized for micro entities or your organization could prove to be a challenge. This is where liaising with a robust and experienced accounting organization can be an asset. They can help prepare accurate accounts, ensure that disclosure requirements are met and even suggest practices or software that can boost your business’ efficiency and profitability. Another area of aid is bringing in controls on operational and financial management with profit analysis, working capital management, tax management for Company and Directors and compliance aspects for accounts production, VAT, GST, Tax reports and so on.
At Taurus Quest, we have over 14 years of expertise in providing exceptional business services in the field of accounting. Our experienced employees are agile and up-to-date with current best practices in book-keeping, preparation of accounts, management of reports and filing tax returns among other services. We also supplement your accounting requirements legal, customer-care, business intelligence, database management and publishing services. To start a discussion about how we can help you, get in touch with us at email@example.com