Franchise accounting is a crucial part of running a healthy, profitable, sustainable franchise. While some franchisees choose to manage their own finances, others prefer to leave accounting for franchises to the experts. Franchise accountants often have specialized training and deep experience with best practices for franchises. A good franchise accountant will help an owner keep proper records, produce useful reports, and prepare taxes as well as give valuable financial management advice.
Franchise owners not well-versed in franchise accounting are smart shop around to find the right franchise accountant for their business. The following tips will help you make a more informed decision.
Accounting for Franchises: Understanding Different Types of Accountants
There are three main types of accountants that typically offer franchise accounting services, each with their own focus. The challenge for franchise owners is to choose the one that meets the needs of their specific franchise and their broader organization.
- Business Accountants: The main focus for business accountants is business performance, including analyzing cash flow and recommending ways to improve profitability. Business accountants get involved with activities such as valuing the business, submitting loan proposals, preparing a company for sale, and providing overall business-related advice.
- Tax Accountants: Maintaining records and preparing, filing, and paying taxes are important and time-consuming aspects of accounting for franchises. In contrast to business accountants, tax accountants don’t usually analyze data and give operational advice. Tax accountants focus on taxes – including compliance with laws, tax planning, and filing. Most tax accountants also offer general bookkeeping, including software assistance and preparation of financial reports such as, profit and loss statements, balance sheets, statements of cash flows, and receivables.
- Franchise Accountants: While many franchises operate similarly to other businesses, there are often additional reporting, compliance, paperwork, and fees associated with running a franchise. Franchise accountants are specifically trained to work with franchise owners and can assist with things such as franchise agreements, franchise obligations, financing, and managing the cost of operations.
Franchise Accounting: Tips for Choosing the Right Accountant
While any type of accountant can likely provide adequate accounting services to franchise owners, every franchisee has slightly different needs and should their specific based on who can best meet those needs. Considerations may include other businesses owned, complexity of the ownership structure, expansion plans, and the amount of accounting and/or tax expertise inside the company. After deciding on the right type of accountant, a franchise owner should consider these additional tips for choosing the right individual to trust with their franchise accounting.
- Open Communication: When choosing an accountant, open dialogue is necessary to assess fit. Be ready to express needs and the specific areas where help is needed. Then, listen to find out how and if the accountant can solve those problems. Good communication not only determines if there is a good fit, it also provides insight into the accountant’s personality and can indicate if the franchise owner and account will work well together in the future.
- Assessing Education and Credentials: What experience does the accountant bring to the table? A franchise owner will want someone with the right credentials to conduct accounting for franchises, so be sure to assess their educational background, internship or professional experience, completion of necessary examinations, and other examples that show they’ve made a serious commitment to franchise accounting. Ask for references from other franchise clients.
- Being Upfront About Fees: Accounting fees vary widely, often ranging from $100 to $275 per hour. Ask about fees upfront and try to get a yearly estimate of the services required. The final decision shouldn’t be based on cost alone, but knowing the costs will help compare options as a franchise owner considers multiple accountants.
There are plenty of accountants who offer accounting for franchises it’s the franchise owner’s job is to find the right one for their business. In the end, a franchise owner will want to find an accountant who can offer a lock-and-key relationship, where their background, expertise, and experience fits with the services needed to keep the franchise running strong. The accountant’s fees should be reasonable for the services offered and fit in the budget, and the franchise accountant and owner should be able to communicate well, so everyone is on the same page and working toward the same goals.
The right franchise accountant plays an important role in a franchise’s long term success. By keeping these tips in mind for choosing the right franchise accountant, a franchise owner is on their way to finding a solid financial partner.