Accounting for Growing Businesses

Imagine that a real estate developer pays landscaping charges for three separate rental complexes on one bill using the parent company's credit card. In the moment, this seems like an efficient way to do things, but it can cause some issues down the line. Firstly, the expenses aren't properly tracked for tax reporting purposes. Secondly, it makes it difficult to get the full picture of expenses and profits for each location. When pulling the financial reports, it will look like the parent company has enormous landscaping costs, while each rental complex has none at all.

Large corporations often have policies that prevent things from getting too complicated. But many small businesses grow quickly and suddenly lose track of things. By then, it can feel "too late" to enact any kind of standards, and headaches get kicked down the road until they pile up into bigger issues. Even the most organized teams have the occasional slip-up; and of course, as new entities are born and others are retired, processes need to be adapted and fine-tuned.

A Blackline Survey in 2023 reported that 99% of top businesses struggle with multi-entity accounting, with the majority of teams reporting losing at least one night of sleep over the stress.

Have you dealt with any of these? You're not alone!

• Duplicate and/or missing transactions

• Improperly coded or allocated intercompany expenses

• Double sales tax payments and other unnecessary costs

• Difficulty in understanding profitability across locations, teams, jobs, or products

• Frazzled management and employees

• Duplicate and/or missing invoices

• Increase in taxes, audits, and penalties/fees

An accountant well versed in multi-entity work not only identifies these issues and can fix them by hand, but also suggests processes to keep them from happening in the first place. It's a little bit accounting, a little bit operations. At Northbound, we specialize in this field of accounting.

Even if you don't need it now, you can rest assured knowing that as you expand, Northbound has your back.