As the owner of a small to medium-size marketing agency staffing company, you likely interact with a variety of clients and your employees. People turn to you when they need to find qualified people to fill vacancies in their marketing agency.
While you likely understand the ins and outs of your profession, if you are like many small to medium-sized business owners, you may find accounting confusing. That’s understandable. Accounting for marketing agency staffing companies can be complicated, to say the least. This complication has led some small business owners to completely avoid tax planning for marketing agency staffing companies until they are forced to address it during tax season.
However, accounting and bookkeeping for your marketing agency staffing company is not something that should be left to the last minute. If so, you may end up overlooking key aspects of tax planning for your staffing business that could impact your firm’s bottom line. The following are a few basic principles of accounting for marketing agency staffing companies that can get you moving in the right direction.
Understanding the Basic Principles of Cash Flow
Bookkeeping for marketing agency staffing companies is all about recording and monitoring cash flow. Your marketing agency staffing company can have clients and enjoy a steady flow of sales. However, if your marketing agency accountant is not monitoring the company’s cash flow, the agency could go out of business.
It’s important to understand that cash flow and revenue are not the same. Sales happen when you place candidates in a marketing firm. But you only get cash when you collect the payment or collect the commission from the customer. Cash flow is like fuel for your business, and it allows it to keep moving forward.
A good accountant for marketing agency staffing companies will work with their clients and create a plan to make sure they have enough cash to grow the company. This means monitoring things like:
• How quickly customers pay. The faster customers pay, the more cash the company has.
• The speed with which your staffing firm pays vendors. The slower these bills are paid, the more cash your staffing firm holds onto.
Understanding Percent of Gross Margin
The amount of money your company can take home and reinvest is the gross margin. This is the difference between your sales and what you spend. For example, if your firm spends $40 for every candidate it places, but it receives $100, you have a gross margin of $60, or 60 percent.
Understanding this principle is at the heart of bookkeeping for marketing agency staffing companies because it influences the amount you will charge companies for your service. When factoring the cost of producing your service, things to consider are payroll, taxes, property that you are renting, materials used in the store, and other expenses.
You want your gross margin percentage to be as high as possible. This allows you to cover unexpected expenses while still having money to invest in your company.
Getting The Help You Need
CFO business advisory for marketing agency staffing companies can help a business like yours understand accounting principles and get a better grasp on their taxes and your overall business strategy. Here at Fusion CPA, we offer CFO business advisory, and we can help your marketing agency staffing company with its financial planning, tax planning, and accounting. Our goal is to provide full-service financial management for your company so you can be an industry leader. We are ready when you are. You can learn more about our services by clicking the button below to schedule a complimentary discovery call today!
This blog article is not intended to be the rendering of legal, accounting, tax advice or other professional services. Articles are based on current or proposed tax rules at the time they are written and older posts are not updated for tax rule changes. We expressly disclaim all liability in regard to actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided on this website is not all-inclusive and such information should not be relied upon as being all-inclusive.