Industry Insights for Accountants
“Payroll and taxes are fun and easy!” – Said no one ever. As an accountant, you know firsthand how small business owners feel about all things payroll and tax-related, and you know that it’s not favorable.
Because of the confusion that often surrounds these topics and the fines they can accrue for mistakes associated with them, many small business owners go searching for accountants and bookkeepers to help them out. With your expertise, you also know that payroll and tax conversations are not the same for all industries, and there are complexities that you should be aware of. We partnered with Accounting Today to survey small business owners in seven different industries to help you as an accountant better understand what these small business owners need most from their accounting services. By knowing what these business owners struggle with, you know which services in your accounting firm you can offer and have examples ready that will help business owners’ approach, and overcome, these challenges.
In the tech industry, business owners see a bright future. This means that accountants can help them by optimizing opportunities and addressing financial obstacles. While technology/software companies are seeing growth in terms of revenue, they also struggle with financial challenges, with the biggest being low profitability and need for capital.
One of the largest ways accountants can help in regards to this industry is by offering business/financial forecasting and tax planning - Other ways accountants can help include forecasting cash flow and ensuring tax compliance.
For the full list, download the technology/software industry sheet.
The healthcare industry has seen many changes in recent years. Currently, the industry is shifting from fee-for-service models to value-based care, which means providers are reimbursed based on the outcomes they achieve, not the volume of the services delivered. To handle this shift successfully, healthcare organizations need to offer a holistic health approach. Changes in the industry lead to new challenges for these small business owners, with the largest challenge being cash flow. While listing the same financial challenges as mentioned previously in the technology/software industries, those in the healthcare industry had a slightly different ranking, which can be seen with other information in the healthcare industry sheet.
The biggest thing small business owners in the healthcare industry are looking for in an accountant is someone who can act as a trusted advisor. These business owners understand the importance of having an accountant but want someone who can explain things easily, correct mistakes, and make compliance and taxes easy and seamless. As previously mentioned, there are a lot of changes happening in healthcare, so having an accountant to guide these business owners through those changes is vital.
Did you know that manufacturing was a $2.33 trillion market in 2018, and transportation is expected to hit $15.5 trillion by 2023? This industry is booming, and with increasing revenue, accountants are in a great place to set business owners on the path to success. The accounting services manufacturing/transportation businesses are looking for in 2019 are tax services and business/financial forecasting. As with other industries, cash flow remains a problem, and if major growth is expected, an accountant can offer advice in multiple areas to ensure business owners have enough capital on hand to handle the growth.
Besides help with growth, the number one thing small business owners in the manufacturing/transportation industries are looking for is an accountant who understands the business and industry. They are looking for accountants that can advise on industry-specific tax codes and can keep them safe from audits.
The full breakdown of what manufacturing/transportation business owners want can be found here.
Even though nonprofits operate differently than for-profit businesses, they struggle with many of the same challenges. With smaller budgets, nonprofits struggle to keep up with technology and find ways to connect with their audiences on social media. Like other industries we’ve discussed, nonprofits often report cash flow problems and struggle with finding capital. According to the research, to cope with the challenges, 42% of nonprofit leaders reported consulting an accountant or financial expert. 63% of nonprofits use CPAs, or accounting firms for tax services, and 53% seek out their help for bookkeeping. Most importantly, accountants can help nonprofit business owners by understanding their industries, and that many of their struggles are the same as for-profit businesses.
From dog walking to running errands, somebody who works in the personal services industry has a handle on how to tackle the to-do lists of others, if not themselves. Interestingly, out of the research gathered on these seven industries, those in personal services are the least likely to seek out an accountant. Working in the personal services industry comes a slew of financial concerns, with low profitability, cash flow, and loss of major clients listed as the top three concerns. Accountants can help these business owners by being a trusted advisor, having clear communication skills, and offering rates affordable to those with a non-traditional income structure.
While leaders in the professional services industry are generally used to advising others, whether it be on legal or even tax issues, they often need a third-party to help guide them to their own financial success. The professional services market is expected to grow 5.4% annually through 2020, and small business owners are ready to take advantage. These business owners understand the value of an accountant more than the typical industry, and they know what they are looking for in an accountant. Additionally, with this anticipated market growth, are expecting revenue and profit increases.
This puts a CPA or accountant in an ideal position to suggest ways to improve business practices to situate their company positively. With growth comes the need for accountants who can help manage cash flow and assist in business planning. Additionally, professional service firms need to stay on top of trends in technology and the automation of back-end services, which means making suggestions to keep these businesses ahead of the curve could help separate them from the pack.
Like tech and manufacturing/transportation, the construction industry is booming – 70% of construction small businesses surveyed reported increased profits in the past 12-month period, compared to just 55% of businesses overall. Additionally, 60% of construction companies expect the next year to be profitable for them as well. While these small business owners are taking advantage of these successes, a solid 40% of them still say they are experiencing cash flow problems, while 21% report the need for capital and 17% state they’ve lost a major client in the last year.
Leaders of the construction industry most commonly seek accounting assistance with tax services, bookkeeping, and tax planning, and they’re overwhelmingly happy with the services they receive. When looking for an accountant, communication is key - 82% of look for an accountant that understands their industry, while an additional 76% look for someone that can communicate well with non-accountants. They’re also cognizant of their bottom line, seeking accountants that are affordable and that will act as a trusted advisor to them and help them make recommendations when needed.