The Future of Fintech and Insurtech is Coming Into View
“I Need Somebody” sang a young John Lennon in 1965 on the Beatles song ‘Help’. The film of the same name finds the Fab 4 struggling to record a new album, while protecting drummer Ringo Starr ‘from a sinister cult and pair of mad scientists, all of whom are obsessed with obtaining one of his rings.‘1
The plight faced by small and medium sized businesses in the past 12 months has been scarcely less perilous, confusing, and fantastical. Many are seeking assistance by turning to accountants and other finance professionals to provide not just bean-counting, but strategic advice in a season complicated by pivotal business decisions and unprecedented tax peculiarities.
Evolving Role of Accountants
As Goldbeck has documented in the past, executive boardrooms are relying upon finance experts for an increasing array of strategic advice, and there’s no need for smaller enterprises not to follow suit.
“Clients will increasingly expect accounting and tax professionals to become ‘holistic advisers’ rather than simply being transactional accountants,” predicts Davis Bell of Forbes.2
Partly as a result of this diversification of services, Canadian accounting companies, sensing peril early in the pandemic, have largely bounced back to full staffing levels.3
The Government of Ontario also recognized the importance of sound strategic financial advice during this tumultuous period, investing over $2.2 million through the Ontario Together Fund to provide small business with free, tailored financial advice and online training.4
Qualifying for Relief
Relief funds and forgivable loans have been made available to Canadian businesses throughout the pandemic by various branches of government. Understanding the qualifications and ramifications of these funds, however, is easier said than done.
A business’ ability to obtain financial aid may depend upon their revenue history, involvement with other relief funds, intended use, geographical location, sector, number of employees, and the extent to which they were impacted by lockdowns.
Understanding and demonstrating eligibility can be a strain on business owners who may benefit from the aid of an outside consultant.
Tax Implications of Covid Relief Funds
It’s not only obtaining relief funds that requires diligence, but also understanding the implications of these funds on tax filings. Accounting for relief funds and rent subsidies, as well as providing authorizations for employees wishing to claim home office expenses are among the factors adding to the workload.
“If businesses haven’t been preparing for these taxes, now is the time to put a plan in place, or start working with a tax expert to help develop a plan for this tax season,” advises H&R Block tax expert Lisa Gittens.5
Corinne Pohlmann, Senior Vice-President, National Affairs at the Canadian Federation of Independent Business believes that the government should take these extenuating circumstances into account.
“We are calling on CRA for some leniency and flexibility for taxpayers and employers when it comes to filing deadlines given the complexity of what is required and the ongoing challenges being faced by small businesses due to the pandemic,” she says.5
Cyber Attacks on SMEs
According to the Canadian Federation of Independent Business (CFIB), “nearly a quarter of businesses have experienced cyberattacks since March 2020, with 5% overall saying the attack against them was successful.”7
“While many small businesses have adapted to the pandemic by adopting new technologies, remote-work arrangements and ecommerce platforms, these changes have also created new opportunities for cyberattacks,” said Jasmin Guenette, CFIB’s vice-president of national affairs. “It’s more important than ever for small firms to protect their information systems.”7
Defending against such prevalent attacks is a matter of technological diligence, good practice, and employee education. In addition, a good insurance policy can provide the last line of defense. Parsing available policies is another way in which outside consultants can provide value.
Challenges and Opportunities for SMEs
The disruption continues to present an opportunity for rethinking. New paradigms, new regulations, and new consumer habits necessitate new strategies and financial implications are part and parcel of decision making. Tax responsibilities, cashflow, hiring, investments, and credit policies are important considerations at the best of times, and even more so currently.
Disorder and uncertainty can weigh heavily upon small and medium business owners; simply creating a plan can have a stabilizing effect emotionally. When acquiring help, it’s important to ensure credentials.
“Have you ever heard the saying, “If you think it’s expensive to hire a professional, wait until you hire an amateur?” asks OneRec. “It’s because professionals will do the job right the first time around.”8