Managing Expenses in Your Accounting Practice

Business expenses have skyrocketed in recent months, and accounting practices are not immune to the cost increases. Sometimes, as PA accountants and CPAs, we can be so busy watching other people’s books that we are caught by surprise when we see our expenses cutting into our profits. Fortunately, we know how to make changes that will maintain financial health for our firms without compromising service to our clients or support of our staff.

The key is to look at your firm as if you were your client. Schedule a regular cost analysis to make sure costs aren’t creeping up on you unnoticed. Implement some optimization practices and see what automation you can add to your practice that can reduce overhead costs and increase efficiency.

As an accountant, you know how to examine both fixed and variable costs to look for cost-cutting opportunities. Most fixed costs cannot be changed easily, such as rent or mortgage for your office, salaries and benefits, business insurance, property taxes, interest expenses, and other overhead expenses. 

However, options do exist:

• Rent out unused space in your office or share space with another firm
• If you are renting or leasing, ask for a lower monthly payment spread out over a longer period
• If your lease or rent period is almost up, consider a smaller place and offer your staff a hybrid schedule, rotating staff working remotely, so not everyone is in at once
• Reexamine your benefits package, looking for a better-priced health insurance policy
• Review your business policy to see if there are ways to reduce the premium
• Consider refinancing a loan if the numbers are right

Variable costs for an accounting firm differ a bit from those of other companies, certainly manufacturing, whose variable costs are tied to production. But we do have variable costs of our own, including office supplies, travel, and utilities. What would you recommend to a business client? Consider a few changes in your own practice:

• Look at ways to reduce utility costs. For instance, energy costs can be reduced by shopping around for a lower cost provider; reviewing your equipment and replacing or eliminating items that suck a lot of energy; educating your employees to turn off lights and office equipment and to unplug chargers when not in use

• Check with your utility company for a free energy audit to suggest other ways to lower your firm’s energy consumption

• Evaluate office expense policies. It is surprising how much unnecessary “stuff” an office can accumulate. If the office is not well organized, you or your staff could be buying things that you already have but can’t find. Organize office items and create a procedure for purchase requests, so the office is not paying for unnecessary items

• Review your subscriptions to magazines, memberships, and software, and eliminate those that you do not use or whose cost exceeds the benefits

• Reduce travel expenses

Sometimes it can help to have another accountant review your books with fresh eyes and look for ways to optimize the financials in your practice. PSTAP has many members who are happy to offer some mentoring or helpful advice to other members through our member portal. If you’re a member, visit our website to access our portal. If you’re not a member, click here to see the many benefits of PSTAP membership!