An Advertising agency is commonly known as an “ad agency” that is creative and involves planning, creating, and handling advertising and other forms of promotion and marketing for its clients. Advertising agencies are responsible for selling the products and services of their clients and even formulate marketing and branding strategies.
The clients for advertising agencies are business enterprises, corporations, NGOs, and private companies. These agencies operate both on the local and global level for managing advertising expense accounting.
When an advertising agency is small with fewer employees and clients, the accounting is normally pretty simple and straightforward. However, as more employees come on board, and the client base increases, accounting becomes increasingly complex because of revenue generation from multiple sources. The increased use of digitalization and social media platforms are also adding complexities to the accounting process.
Here are some requirements in accounting for advertising and digital marketing agencies
- Managing media and other liabilities
- Managing Payables
- Preparation and maintenance of trial balance
- Yearly Budgets
- Tax Planning
- Preparation and reporting of financial statements
Unless an Advertising agency gets an accounting partner by its side, it will invariably encounter financial challenges and perhaps face legal implications as well. Though it appears simple, a 9padvertising company’s functioning is rather complicated with many competitors and its lack of knowledge on other aspects of the business than creating and advertising.
- A Digital Partner
As more advertising companies are shifting their focus from traditional advertising to digital marketing by adopting digital content creation, running social media accounts, engaging with eCommerce, and other digital ways, a great synergy is emerging between digital advertising and digital accounting companies. Both being in the digital space, streamlining operation and reducing operational cost becomes easier. Digital accountants will be better positioned to understand the issues of non- tangible assets, payrolls for freelance employees, etc. peculiar to advertising companies. Even double taxation due to transactions between two jurisdictions can easily be avoided.
- Creative Nature of Business
Advertising agencies are creative and need to excel in uncommon and unorthodox perspectives for their business success. However, bookkeeping and accounting activities juggle with numbers are not really the cup of tea for advertising professionals.
- Tax Savings and Compliance
Due to multi-locational presence, advertising agencies are usually subjected to varied tax laws applicable in different states. Varied and complex tax laws may cause a huge monetary loss for the agencies when they lack experience and expertise related to taxation and may also pose serious tax compliance challenges and avoidance of hefty fines.
- Cost Reduction
Outsourcing digital accounting is always a better choice to save money and reduce mental tension as compared to hiring in-house accountants and managing an entire set up.
- Guidance on Business Decisions
Taking up advertising assignments may not be worth every time due to lots of hidden and opportunity costs. It should be a data-based decision instead of guesswork, and your digital accountants can really help you in making a profitable deal.
- Support in Emergency situations
There are times when advertising agencies face emergencies due to improper tax filing, reporting improper financial statements, or liquidity crunch. Your digital accounting partner can then lend expert support in resolving the emergency issues.
- Professional Reports
External accountants are basically experts, and the periodic financial reports they generate always have a professional touch helping you attract new investments or raising funds from financial institutions.
Post Covid repercussions and downturn in the economy have forced many small and medium-sized companies to turn inwards for their advertising and digital marketing needs. This has already caused a dent in your revenue, requiring a systematic organization of finance and accounting, especially on a war footing.
At IMC, we can readily come by your side with a group of highly qualified and seasoned accountants and work for hand in hand to address this critical issue. We validate the fact that advertising expense is an asset that needs to be considered an investment.
You may already be using an online cloud-based virtual accounting system. However, it may not be all that comes to your help in plugging all holes. Having a system and putting it into its best use is entirely different and needs knowledge and experience.
With their hands-on experience, certified accountants from IMC can delve into your system to assess adequacy, accuracy, and reporting aspects of the system, analyze gaps, and suggest better futuristic solutions, improved cost reduction, and cash flows measures and immediate forecasting needs.