Many MSPs run their business to pay as little taxes as possible. This practice often means running expenses like leased vehicles, travel, and other “owner expenses” through the company. Such a practice does yield beneficial tax outcomes at the end of the year, but it may not be the best for increasing the value of the business.
MSPWorld will hold a session specifically on accounting best practices designed particularly for MSPs. Here is what you can expect.
Accounting Best Practices
MSPs have a lot to contend with in running their operations. Accounting shouldn’t be a mystery. And yet, many MSPs have difficulty in dealing with common accounting principles involving sales and use tax, how to invoice services, products, and combinations of the two, and the proper setup of a chart of accounts designed to maximize the accuracy of reporting for a managed services practice.
Categorizing your MSP Revenue
A well-constructed chart of accounts can help immensely with organizing the revenue flowing into an MSP business. The categorization of income is necessary to keep a watchful eye on the trajectory of your MSP business. Blending non-standardized revenue lines into your business will make it difficult to generate a true and accurate picture of your MSP valuation.
MSP Succession Planning
The first generation of MSP pioneers is getting older and thoughts of succession planning are becoming more common. A large percentage of MSPs are privately held companies and unable to pass shares easily to other shareholders.
However, there are other succession models which can allow business owners a way out of their companies and into retirement or their next venture. Any succession plan requires accurate and useful accounting to maximize value and allow a sale or transfer of ownership to occur.
Accounting may be difficult to understand, but it doesn’t have to be. Attend MSPWorld this Spring and learn how to make the most of your MSP books.