Do the financial statements you received from your pricey C.P.A. firm every month consist of the same boiler-plate cover letter an income-statement and a balance sheet that you put in a folder in your desk drawer to look at later?
If you own or manage a “service-based business” and your C.P.A. files your federal taxes under the accrued-method of accounting, you should look for a new C.P.A. firm or rethink the risk vs. reward cost of decreasing some or all the professional services you purchase from them annually.
Most Service-Sector Businesses have little need for most of the expensive and likely unnecessary professional services provided by C.P.A. firms. Ironically; many service-based enterprises have been misadvised and invest too much “time and money” performing unnecessary tasks within the “accounting-and-financial” scope of their business.
Most C.P.A. firms utilize relational based software like QuickBooks to generate monthly financial statements and provide other accounting and financial services for their clients. The only Income Statements format QuickBooks financial software creates is in the traditional “Revenue Minus Cost-of-Sales=Gross Profit,” minus departmentalized operating expenses presentation or displays each account in a simple trial balance financial statement chart-of-accounts arrangement.
This traditional and only Income Statement format QuickBooks can generate is not an appropriate format for any Service-Based Business. In fact; most of the software functionality, data collection, and informational reports provided in relational based financial software like QuickBooks are intended for the use of companies who operate under the accrued method of accounting.
This information provided for business users who operate and file federal taxes (under this one of two methods of accounting) is more likely to be misleading than add any informational value when utilized for making decisions for enterprises that file taxes under the less complicated cash method of accounting. The accrual method of accounting requires many incremental time-consuming tasks each month to properly close each period within the calendar year.
The accrual method of accounting is intended mostly for manufacturing businesses who must keep track of and assign a value to inventory or large publicly held corporations who are required to issue both quarterly and annual financial statements and operate under the rules and agency regulations necessary for all companies in the public sector of the economy. Now is the perfect time to save time and money and take the “non-service side” but very challenging and necessary financial, tactical and strategic-scope of your Service-Based-Business into the 21st-Century.