Hidden Impact of Neglecting Technical Accounting: Avoiding Costly Business Pitfalls

For those involved with running a company, few issues are more critical than making sure that financial statements are tracked, balanced, and reported accurately. While many business owners start out trying to balance their own books, one of the most critical steps to growing a company beyond its initial startup phase is ensuring that your accounting processes are correct.

Neglecting the financial reporting side of running a company can quickly lead to serious issues that rack up huge financial and legal liabilities. When it comes to financial issues, it's always best to follow the right practices and use technical accounting advisory services that will help ensure that you are following the law, making smart decisions, and taking home as much profit as possible at the end of the day. The best way to do this is by using a technical accounting consulting company to audit, check, and verify all of your financial reporting statements and documentation.

The Importance of Technical Accounting

All business owners need to understand what technical accounting is and why it is so important. Without a technical accounting consulting company to help you understand these issues, it's easy to miss something, turn in the wrong form, or inadvertently report incorrect numbers.

Any of these issues or other breaches of international financial reporting standards can quickly lead to liabilities for you and your company. Lawsuits, fines, and missed profits are just a few of the ways that not paying attention to your accounting and financial reporting processes can cause you real, tangible harm. The following are some of the most important complex accounting jobs that a technical accounting consulting company can help you out with.

Share-Based Compensation

Compensating employees and other workers with shares in ownership of a company is a great way to encourage your workers to work hard, grow the business, and share a piece of the pie. However, it's important to calculate the amount of expenses you will need and document everything correctly in case of an audit.

Revenue Recognition Review

Revenue recognition, or making sure that all revenue is reported correctly, is a major aspect of running a business. Recent changes to the ASC 606 standard created new revenue recognition accounting policies that your business must follow to succeed.

ASC 842 Implementation

Following the ASC 842 guidelines is part of meeting accounting standards on how businesses deal with and report leases, or contracts that control the use of a business's assets. Complex accounting matters like ensuring that the ASC 842 guidelines are handled appropriately take specialized skills and should be handled by experienced professionals.

Complex Debt or Equity

Determining whether to label a financial asset as debt or equity is another job that technical accounting professionals specialize in. This will affect your equity financing, help you strengthen processes where possible, and improve your overall financial condition.

Why Technical Accounting Matters

Technical accounting is one of the most critical areas for any business to focus on because the hidden pitfalls of ignoring or neglecting it are immense. Let's take a look at some of the worst issues that can arise from neglecting financial accounting processes.

Issue #1: Innacurate Financial Reporting

SEC reporting and other accounting standards must be met. Accounting and reporting standards exist for a reason and are taken very seriously by the government, so failing to meet them can open you up to major liabilities. Especially for those who deal with business combinations or complex transactions, it's important to make sure that all financial reporting standards and other complex accounting issues are resolved appropriately.

Issue #2: Missed Profits

One of the key jobs of finance personnel and technical accountants is making sure that all significant transactions are handled correctly and that all possible profit is maximized. Accounting and reporting accurately means that you will make better decisions and handle complex transactions in a way that will maximize your value and money earned.

Issue #3: Lost Customers

After making a profit, the main goal of any organization is to make and retain a customer base. Using accounting advisory services will ensure that your business functions properly, stays open, meets all accounting standards, and satisfies your customers fully. Technical accounting services not only satisfy accounting and financial reporting standards, it will help your business run more smoothly and keep your customers returning.

Issue #4: Legal Liabilities

One of the key goals of financial advisory services is to make sure that you follow regulations and the law so you don't face fines or other legal issues. If your financial statements aren't accurate, it can draw the attention of government agencies like the IRS. Technical accounting advisory services are designed to help you avoid facing the hassle, risk, and threat of audits, fees, or more serious issues.

If you want to make sure your business is doing everything 100% properly, the only way to confirm this is by using technical accounting processes to ensure that all standards and regulations are being met.

Issue #5: Missed Growth

Another important issue to consider when running a business is where you want to go in the future. Whether you want to work on business combinations by acquiring more companies or simply grow the one you have, technical accounting advisory services can make sure that your business is ready to grow into the future.

If you're not able to understand complex accounting issues or follow accounting standards, your company will have a difficult time succeeding in the future. In order to protect your business, allow for maximum growth, and future-proof your company, it's always best to stay on top of your accounting needs.

The Secret to Success

While there is much that goes into running a successful business, you won't get very far or meet your organization's goals without making sure that your technical accounting needs are fulfilled and that all financial statements are reported accurately. In fact, without the right accountants advising you, your future, income, employees, and lifestyle are all at great risk.

Don't leave your success up to chance. Hire a technical accounting consultant to handle your complex accounting matters and financial statements, and watch your business flourish today!