Financial management is vital for any IT business, but it’s especially critical for smaller IT companies. Although their financial resources are typically more limited, small IT businesses have to compete with large, generously funded IT corporations in a David versus Goliath scenario to win the same clients. To succeed, these smaller IT companies have to leverage their resources carefully, accounting for every penny while ensuring they’re providing top-notch services or products at competitive prices. Unfortunately, due to rising costs, fewer funding sources, and market unpredictability, many small IT businesses are recognizing it is increasingly difficult to manage their finances in ways that optimize their return on investment (ROI) while staying competitive.
To this end, small- to mid-sized IT companies are discovering the importance of having professional financial management that’s customized for the IT industry. And with a growing number of certified public accountants (CPAs) entering the IT financial management sector, an increasing number of IT business leaders are availing themselves of these services by hiring CPAs with expertise helping tech businesses.
Statistics show that the U.S. tech industry will be worth approximately $1.8 trillion in 2022, with growth increasing by 5–6% each year. And today’s IT leaders are already taking advantage of the new boom in IT accounting services — in fact, statistics show that the tech industry is among the top industries for employing accounting, auditing, and bookkeeping clerks.
What Does an IT CPA Do?
Typically, CPAs set up, analyze, and manage financial data that affects the inflow and outflow of cash in a business. For IT businesses, IT-specialized CPAs have expert knowledge and insight into how IT companies operate, and what these companies need to do to be financially successful. In addition, they understand the unique challenges facing IT entrepreneurs, such as the need for investing in newly evolving technologies. IT accountants know that in order to invest in these technologies, tech entrepreneurs sometimes have to find financial backing at a moment’s notice so they can outpace the competition. Toward that end, an IT-specialized CPA can help a tech entrepreneur analyze the company’s balance sheets to determine whether or not it’s a good time to invest. In addition, IT accountants can help tech entrepreneurs prepare the right documents so they can get financial backing as quickly as possible.
Advantages of Using a CPA for Your IT Business
If you’re the owner or manager of a small or mid-sized IT business, then you know how demanding your industry is. You need to focus on meeting your customers’ expectations while providing cutting-edge products and services in a highly competitive field. There’s absolutely no room for error, especially when it comes to your company’s finances. Even if you had the time, you might not have the professional accounting skills it takes to manage budgeting, taxes, bookkeeping, and other financial components of your business.
Financial management is a unique discipline that requires specific knowledge and expertise that even the best business owner may not have. Likewise, financial management requires a level of time and commitment that a business owner might not be able to give, especially in a small firm. Even essential bookkeeping tasks such as creating an income statement and balance sheet, or analyzing cash income and outflow, can be tedious and time-consuming, especially for small business IT entrepreneurs who have to wear multiple hats in their company.
Here’s a look at several more advantages that an IT-specialized accountant can bring to your business:
Owners of small IT businesses often rely on banks, grants, and other sources to provide essential funding, but it can be extremely difficult to win grants or get loan approval if your finances aren’t in order. By having your finances managed and organized by a CPA small business expert who specializes in your field, you’ll have a much better chance of being awarded outside funding.
As an executive, you want everyone on your team to speak the same language, but when you’re confronted with bookkeeping terms such as “fixed costs” or “overexpenditures,” definitions might vary among your team members. An expert CPA will not only deal with these critical bookkeeping issues, they’ll also explain and demystify basic financial terminology so that everyone on your team can be on the same page.
Planning Future Development
Unlike some other businesses, it’s crucial for IT companies to invest a great deal of time and money in fostering future development. This often involves assessing the costs of new, next-gen technologies and analyzing the benefits that they might (or might not) bring to your firm.
An expert IT CPA can help you analyze the potential profits versus the costs, so you can be in a better position to decide whether those technologies will provide enough ROI to be worth an investment from your company.
IT companies of all sizes are subject to specific regulatory requirements that also affect financial management. A good CPA who is skilled in IT accounting will know about these regulations and will give you the right guidance so you and your firm can be compliant.
IT companies have specific security requirements, including the need for enhanced cybersecurity tools. This is especially true for smaller companies that might not have the huge network protections of their corporate counterparts. A skilled IT CPA will use only the best next-gen security software and can advise you on the most effective tools for keeping your financial data secure.
CPA Services for Your Maryland IT Business
BradyRenner is proud to partner with Maryland-based IT companies in the commercial and federal sectors. Our skilled IT accountants can provide these firms with practical strategies for managing cash flow, capital, and investments so they can optimize funding, profits, and ROI.
If you’re ready to take your IT business to the next level with expert financial services, contact the team at BradyRenner to find out how we can help your company grow and succeed.