IMC Group

Accounting for Advertising and Digital Marketing Agencies needs to be outsourced

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.

Reasons why Advertising and Digital Marketing Agencies should outsource their Accounting Needs

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 9p advertising company’s functioning is rather complicated with many competitors and its lack of knowledge on other aspects of the business than creating and advertising.

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.

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.

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.

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.

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.

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.

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.

Requirements in Accounting for Advertising and Digital Marketing Agencies

Here are some requirements in accounting for advertising and digital marketing agencies

Payroll

Managing Payables

Tax Planning

Yearly Budgets

Managing media and other liabilities

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Preparation and maintenance of trial balance

Preparation and reporting of financial statements

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