- June 10, 2020
- Posted by: BackOffice LLC
- Category: BackOffice Blog
The HVAC industry will be experiencing tremendous growth in the coming years. According to the Bureau of Labor Statistics, the demand for HVAC mechanics is expected to increase by about 14% within a short 10-year period (from 2014 to 2024). This is excellent news for business owners in the HVAC industry, since a lot of opportunities will be opening up for them in the coming years.
However, none of these will matter if the challenges affecting the industry (e.g., tight competition, seasonality of the business, high business costs, and complicated HVAC accounting) are not addressed properly.
Improving Your Chance of Success
With the complicated and competitive nature of the HVAC business – and the typically tight margins – you can’t afford to make many slip-ups. One wrong move and you very well could say goodbye to all your hard work as your business slips down the drain.
It’s critical for you to learn how to differentiate yourself from the competition, find your own niche, and deal with the seasonality of the business. More importantly, you should learn how to manage your costs effectively and keep track of your business accounting. Having a mastery of HVAC technology alone won’t be enough to bring you the kind of success you want. You’ll need much more than that.
Yes, you may need to wear several hats at once and deal with things that fall beyond your area of expertise if you want to succeed in the business – this can involve tracking your income and expenses, balancing your company’s books, keeping wages and costs in order, and paying the correct taxes on time.
Let’s face it: Being passionate with your craft may not be enough to see your business through. You need to learn the basics of HVAC accounting or hire a credible accounting outsourcing firm if you want to stay on top of your finances. Failing to meet the challenges could be disastrous.
Meeting the Challenges Head On
You’ll likely encounter several accounting challenges when running your business. What are some of these most common challenges, and how should you deal with them as they arise? Here are some things you absolutely need to know to help you meet these obstacles head-on.
1. Managing cash flow
Most startups and small businesses have problems managing their cash flow. Considering the seasonality of the industry, this can be an even bigger ordeal for HVAC company owners who typically experience marked ups and downs in their business.
Without proper planning and fund management, company owners may not be able to cover recurring costs to keep the business afloat. In fact, this is the primary reason why 82% of businesses fail, according to a U.S. bank study. To avoid this issue, analyze your bills carefully and be conscientious when claiming payments from customers.
2. Managing payroll
If you’re like most small business owners, you may not know anything about managing payroll. While it may initially seem like an easy task, the payroll-management process can be more complicated than you’d expected, especially if you’re doing it manually.
Payroll management requires a lot of data (e.g., hours worked, pay rate, tax deductions, etc.) and involves a series of steps that can easily confuse a non-expert. In fact, incorrect payroll filing is the primary reason why 40% of small- and medium-sized companies are slammed with IRS penalties, according to the 2013 IRS Data Book.
If you don’t want to go through all these troubles, use an automated payroll management system or hire the services of a reliable accounting outsourcing company to do the work. It will save you a lot of time and headaches.
3. Paying taxes
Most people agree that managing taxes is the most complicated and frustrating part of running a business. With more than 10.1 million words in the U.S. Tax Code, it doesn’t take any effort to make an error in preparing your business taxes – especially if you’re filing a paper return. Hiring an HVAC accounting firm can ensure your company’s compliance with state and local tax laws and help you stay out of a mess.
4. Keeping track of expenses
Maintaining a record and processing business receipts once involved literally back-breaking work, since paper receipts were filed or stocked in heavy boxes for processing later. Thankfully, those days are over. There are now tons of accounting software that can be used to keep track of your finances. Just do a simple online search and read the reviews so you can identify which accounting software is right for you.
5. Reconciling books
Businesses without an established accounting system usually find that reconciling and closing their accounting books can easily be one of the most challenging and nerve-wracking aspects of their business. After all, what can be more frightening than the idea of being hounded by the IRS after making a small mistake in your books? Not much, right? If you don’t want to experience this horror, go through your accounting books on a daily, weekly, or monthly basis, and verify your business transactions while you can still clearly remember the details.
6. Analyzing finances
While generating financial reports is essential, you need to know how to interpret and analyze the numbers so you can come up with the best possible business decision. Keep in mind that the numbers alone won’t do you any good. It is the story behind these numbers that can help you take your business to the next level of success.
Do What’s Best for Your Business: Hire an HVAC Accounting Expert
While you might feel that hiring an HVAC accounting expert isn’t viable, it can be one of the best decisions you can ever make for your business. For one, an expert accounting outsourcing firm reduces the risk of committing costly accounting mistakes that can lead to audits, lost profits, and missed opportunities. It also gives you more time to concentrate on things that matter most to your business, like taking on new jobs.
Partnering with a company like BackOffice Solutions gives you the luxury of getting the service you need when you need it. We can take care of your tax returns, manage your payroll, reconcile your accounts, and more, at very reasonable rates.
Contact BackOffice Solutions today for a free quote, and see how we can help take the load off your plate.