As a small business, it’s always important to stay up to date on the latest trends and changes within your industry.
Especially in a fast-moving economy like Vancouver, most businesses need to be quick if they’re going to keep up with their competitors.
However, your own niche industry isn’t the only industry that you should be paying attention to.
What else, you might ask?
Well, accounting trends (whether you think so or not) inherently impact just about every business that does accounting… Which hopefully is all small businesses!
Even if you don’t do your accounting in-house, and you outsource to a professional like Valley Business Center, it’s important to keep up to date on accounting trends for small business.
That’s why we’ve compiled a list of the top 6 accounting trends for small business that are taking place today in Vancouver.
- Fintech, crypto and open banking
- AI-based accounting
- Cloud-based accounting and automation
- Cash flow management
- Contractors, freelancers, and payroll
- Outsourced accounting
1. Fintech, crypto and open banking
Crypto and fintech are among some of the top words getting thrown around in the world of accounting and finance in the last several years.
With the growth of these markets, they naturally made their way into the world of accounting, and have embedded themselves quite nicely, even at the local level in Vancouver for many small businesses.
Whether you’re investing in crypto as an income source for your small business, or divesting in fintech to support the growth of a digital business, they’re growing trends nonetheless.
Another trend is open banking. This is an initiative that – as the name may suggest – is leading many more banks and financial institutions throughout Canada and B.C. to be more transparent with their data with their partners.
This is a great transition away from the old model of banking with small business, because it means there are more eyes on your money, and it removes a lot of the “cloak and dagger” business that may happen behind closed doors in large financial institutions.
It also has lead to more innovation with FinTech companies like QuickBooks, Xerox, and other accounting software companies updating and upgrading to keep with movement of the industry.
Many of these groups have released features and functions to facilitate for crypto investments and bringing crypto into small business, and it’s also led to many smaller accounting applications that focus on small business to achieve scalability and innovation that was previously unavailable to them.
Open banking, fintech and crypto are a step in the right direction to help small businesses throughout Vancouver (and the rest of Canada) continue to grow and keep up with the global economy.
2. AI-based accounting
Whether you love it hate it (or, quite frankly, are scared of it), AI and machine learning (ML) are here to stay.
This doesn’t mean the terminator is going to be taking over your accounting software. Rather, it means that with support from the brilliant brains of your small business accountant, you can achieve scalability and efficiency like never before.
Although there are parties firmly planted on either side, the jury is largely still out as to whether or not AI is going to create jobs or create job-loss in the accounting industry in Vancouver, especially for small businesses.
What we tend to see is that AI may create some job loss for more menial and repetitive tasks like data entry, cross-checking, or other mundane tasks that are more “make work” projects for small businesses, owners, and accountants alike.
However, for many small businesses, AI-based accounting as a whole is poised to provide some really great benefits to Vancouverites.
We’ve found two main benefits.
- It can deliver more value through efficiency,
- It reduced human error and increases productivity
First and foremost, AI can benefit the way that small businesses deliver their services, perform their routine accounting, and deliver value to their customers.
As a small business owner, let’s face it… When you wake up in the morning the first thing to excite you isn’t doing the books… It’s running the business and making sales!
So, what if you had an AI software running in the background that would record transactions and perform data entries for you?
AI systems can now do this for you.
What it means is that you, as a small business owner in Vancouver, can spend more time making sales and keeping up with your own industry’s changes, rather than focusing on reconciling accounts for hours on end.
What’s even better is that most of these AI-generated reports are totally compliant, and make accounting for real CPAs much easier because there’s fewer human errors, and it’s all standardized.
The Association of Chartered Certified Accountants has claimed in a recent report that
AI-powered automation will soon eliminate almost all tedious and cumbersome data-related tasks like bookkeeping and transaction coding.
What this means is that instead of focusing on crunching numbers you can concentrate more on running your business, and passing the financial strategy, report creation, and budget creation off to your accountant!
In terms of correcting human error, let’s face it… A computer that is programmed to type “how do I reconcile my accounts” 1,000 times into a computer can probably do it faster and more accurately than you.
People are inherently susceptible to biases, errors, and just plainly missing things in the data.
So, if we have an AI software that can in theory automate that process so we don’t miss anything, that data can then be given to real human accountants to be able to strategize and create financial plans based off of it.
For your small business, that can mean greater efficiency because you’re not having to go back and double check every receipt or transaction that took place in the company.
It also means that there’s inherently greater potential productivity for your small business, because (as we mentioned before) these mundane tasks can be performed much faster, without your supervision before passed off to your accountant.
3. Cloud-based accounting and automation
Much like AI-based accounting, cloud-based software has become a trend of the future, and has grown exponentially in the last several years.
According to many online sources, the global market for cloud-based accounting software and automation tools is expected to reach over $11 Billion by 2026/27.
This is huge growth that can have tremendous benefits for small businesses.
Why, may you ask?
Simply put, cloud-based accounting software and cloud-based accounting automation are often much less expensive than older, more manual software.
Not only this, but creation automations within this software also produces tremendous efficiencies for many small businesses who are looking for ways to keep up and get ahead.
In addition, many small business owners are leveraging automation and the capacities of cloud-based technologies to produce financial reports and statements faster and with greater accuracy than ever before.
Now, the same concern often arises with cloud-based accounting as does with AI-based accounting. However, as a business owner, you shouldn’t fear that you’re going to be putting your accountant out of a job just if you download a cloud-based software.
Really, this software is great at making mundane tasks more manageable and efficient; and, as a business owner this can be a saving grace.
A lot of these cloud-based technologies can help simplify complex tasks like payroll, taxes, invoicing, audits, expense and other tasks that take time out of a business owner’s busy day – away from actually running their business.
Often times, the best results have been found when the reports and results from cloud-based accounting software is then exported or shared with accountants, so they can create financial statements, analyses, budgets, and reports from the data that’s been collected on auto-pilot.
4. Cash Flow Management
Small business in Vancouver is a massive industry. According to recent sources, around 98% of all businesses in Vancouver are classified as “small businesses”.
This means that there’s a lot of information that goes out that pertains to these business, and it’s important for these businesses to be supported, so they can support the local economies.
The difficulty for many small businesses, however, is that most of them are living paycheck to paycheck, and rely heavily on the sparse cash that they may have coming in.
This is why a tremendous development that is making waves along with many cloud-based technologies is cash flow management technologies.
These cash flow management technologies tremendously help small businesses and small business owners throughout Vancouver, because they create systems that allow small businesses to better manage, gain insight, budget, spend, and save cash where it’s needed the most.
This way, businesses can better plan for the long-term, make investments to develop their business, or employ staff to support growth.
5. Contractors, freelancers and payroll
One of the biggest trends in not just accounting, but business altogether, throughout Vancouver and much of Canada is the gig economy.
This is largely comprised of millennials and gen z’s that value their work-life balance, want to work from home, or want to venture into the world of entrepreneurship and business ownership.
However, for many other business owners who may be relying on these services, it makes for an interesting change in the world of accounting.
The large reason? Lower overhead, lower payroll, but larger liabilities and expenses that get reported on your income statements and cash flow statements.
The reason behind this is that most small businesses (especially in large freelance markets like Vancouver) are often switching to finding freelance or contracted talent online because it’s less expensive, and can often be higher quality and more time-efficient than hiring full-time staff.
Not only that, but most people that are providing their professional services online are already trained professionals, and don’t require the extra time and financial investment of training!
The biggest trend to be aware of for most Vancouver small business owners is that this a very prevalent trend for many small businesses when it comes to professional services, advertising services, or other in-house activities necessary to the operations of the business.
Two key things to be aware of for small business owners in Vancouver is that it means your payroll will look vastly different with fewer full-time staff, and you’ll have greater opportunity for write offs for many professional and other services.
6. Back Office Outsourcing
For many Vancouver businesses, outsourcing back office functions like accounting, bookkeeping, payroll, and tax prep can help small business owners focus less and less on mundane tasks, and more on running their businesses.
This trend, similar to outsourcing various business activities to freelancers, frees up not only time, but it also can lead to tremendous changes and benefits in a small businesses’ accounting.
Lower payroll, more efficient services, and greater potential for savings on the P&L.
Outsourcing can not only help cut down on costs, but it can also reduce the risk of errors, and provide immediate access to a team of experts to help work through any issues that arise.
One particular benefit to working with accounting experts is the power to unlock insights from your data. A good accounting partner can work with you to create custom analytics dashboards that are tailored to your specific business needs so you can support your strategic planning with reliable data.
This is an accounting trend that is increasingly popular today, largely with the surge of digital businesses and small businesses looking to save money and run leaner operations.
We do the research, so you don’t have to. Valley Business Centre has been providing comprehensive bookkeeping, payroll, and tax services to our clients in Whistler, Squamish, the Sea to Sky Corridor and metro Vancouver B.C. areas. Valley Business Centre provides reliable and effective services to all clients.
Disclaimer
This article is written for informational purposes only. It is current at the date of posting and changes to laws and regulation may result in the information becoming outdated. It is not intended to provide legal, tax, or financial advice. It is recommended that readers get advice from a tax professional before making any final decisions.
