# Top Accounting Problems For Small Businesses With Solutions | Capterra > Accounting problems can be costly and time-consuming to fix. Learn how to identify, avoid, and solve common accounting problems. Source: https://www.capterra.com/resources/common-accounting-problems --- Accounting BasicsFinance & Accounting # Top 3 Accounting Challenges Small Businesses Are Facing Written by: Amita Jain Amita JainAuthor Senior Writer Experience I've been writing for Capterra since August 2021, with the goal of becoming a trusted voice in the finance technology market. I have... [See bio & all articles](https://www.capterra.com/resources/author/ajain/) Published January 30, 2024 4 min read Table of Contents - [#1. Struggle to outsource accounting needs](#1-struggle-to-outsource-accounting-needs-to-specialized-providers) - [#2. Regret over technology choices](#2-regret-over-technology-choices) - [#3. Adapting to changing tax regulations](#3-adapting-to-changing-tax-regulations) - [Secure your financial future with proactive actions](#secure-your-financial-future-with-proactive-actions) ## Prepare for success in accounting with smart tech choices and the right talent. Over the last few years, accounting has evolved from a mere number-crunching unit to a trusted advisor guiding small-business owners through fluctuating consumer demand, inflation, and high borrowing rates. Accounting is no longer a backroom operation; it has taken center stage in ensuring company profitability. As it morphs into a critical business partner, small and midsize business (SMB) owners need to be wary of three accounting challenges. In this article, we present the biggest accounting challenges facing SMBs today, paired with actions to minimize the risk they pose to your business. ## #1. Struggle to outsource accounting needs to specialized providers Small-business owners wear multiple hats. One of these is accounting. To manage it well, many seek specialized service providers, particularly during the startup phase. At this stage, businesses are setting up their financial systems while also striving to grow. Finding the right help ensures the business’s financial operations are sound and well-organized from the start. However, Capterra’s 2023 Accounting Shortage Survey shows that 64% of SMBs say they are struggling to find outside accounting firms that can support them.[\*](#methodology) Half of the respondents point to the rising costs of services as the biggest challenge in finding an outsourcing partner. This struggle is further exacerbated by the [account talent shortage in the U.S.](https://www.capterra.com/resources/outsourced-accounting/#:~:text=What%E2%80%99s%20causing%20America%E2%80%99s%20accounting%20shortage%3F) Talent scarcity has limited the ability for firms to provide services at a reasonable cost. For example, the fees of audits have risen to accommodate higher salaries where accountants are in short supply.[\[1\]](#sources) Outsourcing brings in a group of experts with a deep understanding of complex accounting and finance processes that a lone in-house accountant or bookkeeper may struggle to match. So, starting with outsourcing specialized and infrequent accounting tasks such as tax filing and financial reporting is a good idea. That said, 65% of businesses say they require full-time support from accounting agencies. ### How can you navigate this challenge? Nurture in-house talent This is a long-term strategy, but it's worth it. Having at least one person on your team who understands your business's basic accounting needs is vital. For example, if you're in manufacturing, an in-house cost accountant can be of great value. As your organization grows, this internal expertise will prove beneficial. Embrace automation with software solutions Fifty-two percent of firms adopted software to prevent delays in their accounting processes caused by issues, such as miscommunication, with service providers. While tech can’t replace accountants, it does make tasks like payroll processing and ledger maintenance simpler and more efficient. Further, choosing software with AI-powered analytics can provide valuable insights for your financial planning and management. Expand your search for accounting firms If you're only looking in a few places, try diversifying. Directories for accounting service providers can help you find qualified firms. They also show reviews from other clients, which can aid in your decision-making. ## #2. Regret over technology choices Smart investments in software can boost company profits, increase productivity, and free up employee time for strategic planning by simplifying their existing tasks. A poor choice of software, on the other hand, can lead to wasted resources and even dampen employee motivation. Capterra’s 2024 Tech Survey reveals that 70% of finance software buyers regret one or more software purchases within the last year.[\*\*](#methodology) This typically occurs when there’s a lack of understanding about what a business needs from its accounting software, or it struggles to discern value from newer technologies such as artificial intelligence (AI) and machine learning (ML). Some common signs of choosing the wrong technology include incompatibility with payment portals, banking, and other software systems and the total cost of owning software exceeding initial expectations. ### How can you navigate this challenge? Plan your software purchases strategically. Forty-one percent of buyers say identifying software during the planning phase is a big challenge for them. To scour through the mountain of available tech solutions, involve members from all teams affected by the purchase in thorough product research. Develop a list of desired features and potential vendors. However, avoid lengthy evaluation periods as they can lead to higher purchase regret. Streamline your planning by [consulting software advisors](https://www.capterra.com/our-story/#:~:text=in%20touch%20here.-,Contact%20us,-Reach%20out%20to) about your needs and comparing features on software review sites. Ask for a personalized demo. Security and integration are major challenges for buyers when buying finance and accounting software. Reach out to your shortlisted vendors for hands-on demos to see if their solutions mesh with your systems and assess their security features. Communicate openly with existing providers. If you’re unsatisfied with your purchase, don’t rush to replace it. Instead, communicate with your provider. Only 27% of buyers ask for a refund, according to our survey. Use this opportunity to renegotiate the contract and address issues. If you’re still in the purchasing phase, ensure the provider has dedicated staff to respond to your queries and provide training assistance to prevent future regret. Incorporate AI and ML technologies into routine functions. Rather than aiming for wide-scale AI integration in finance, start with more routine tasks where these technologies can add immediate value. A significant majority of SMB owners in Capterra's 2023 [Accounting and AI Survey](https://www.capterra.com/resources/finance-artificial-intelligence/) said they found it extremely beneficial to implement AI and ML in everyday tasks such as [expense](https://www.capterra.com/expense-report-software/#buyers-guide-content) (70%) and [payroll](https://www.capterra.com/payroll-software/#buyers-guide-content) (59%) management compared to more complex functions like tax compliance and financial reporting (24%).[\*\*\*](#methodology) Check out Capterra’s [accounting software directory](https://www.capterra.com/accounting-software/) for a software buyers guide, customer reviews, pricing estimation, and more information to streamline your technology selection process. ## #3. Adapting to changing tax regulations This challenge is prevalent among accounting firms but also resonates with SMBs concerned with annual tax filings and compliance. Keeping up with changes in tax laws is a constant challenge for accounting teams.[\[2\]](#sources) Effective navigation of these changes can result in substantial savings, helping businesses tackle other challenges and avoid hefty non-compliance fines. One of the most impactful pieces of legislation rolled out recently is The Inflation Reduction Act (IRA), which lowered costs for SMBs supporting energy-saving investments, doubled the research and development tax credit, and introduced a new alternative minimum tax for corporations. ### How can you navigate this challenge? Use software to do heavy lifting. Utilize [tax preparation software](https://www.capterra.com/tax-preparation-software/) to simplify filing tax returns. The software will do the math, flag common errors, and prompt you to add missing information, helping you reduce mistakes in your forms. This allows the software to shoulder the bulk of the work when adapting to new tax regulations. Make sure you maintain accurate digital records that are easy to access. Also, ensure the software automatically updates to keep up with changes in tax rates and deductions. Stay informed with newsletters and associations Keep abreast of pending bills in Congress aiming to extend tax breaks to small businesses. Join industry associations such as The Professional Association of Small Business Accountants and subscribe to their newsletters.[\[3\]](#sources) For additional guidance on compliance, refer to resources such as the AICPA's blog[\[4\]](#sources) and the IRS's small business tax center.[\[5\]](#sources) Hire dedicated tax experts To ensure you always file taxes accurately in accordance with the latest laws, enroll certified public accountants or reputable tax accounting agencies on your payroll. This will help you avoid mistakes causing processing delays in tax refunds, and avoid costly non-compliance fines. ## Secure your financial future with proactive actions Preparedness is key to effectively securing your financial future in an ever-changing economic landscape. Start by educating yourself on these accounting challenges commonly faced by SMBs and do the prep work to minimize the risk they pose to your business.    Consider hiring a competent accounting partner, making smart technology investments, and keeping your financial processes up-to-date with regulatory changes. These few steps will ensure your accounting works for you, fueling your business growth and giving you a competitive advantage. Capterra has a plethora of accounting and finance resources for business leaders, covering everything from budgeting to tech implementation. **Here are a few resources to check out:** - [8 Questions To Ask Before Hiring an Accountant for Your Small Business](https://www.capterra.com/resources/questions-to-ask-an-accountant/) - [Avoid a Failed Accounting Software Implementation by Learning From Buyers With Experience](https://www.capterra.com/resources/accounting-software-buyer-insights/) - [Adaptability Is Key for Small Businesses as They Navigate the Accountant Shortage](https://www.capterra.com/resources/outsourced-accounting/) - [Small Business Accounting Tips and Tricks](https://www.capterra.com/resources/small-business-accounting-tips/) ## Capterra's 2026 Software Buying Trends Report ### Download our 2026 Software Buying Trends Report to see how successful software adopters avoid disappointment and how your business can, too. * * * **Methodology** \*Capterra’s 2023 Accounting Shortage Survey was conducted in February 2023 among 297 respondents to learn more about how businesses have been affected by the nationwide shortage of accountants. All respondents were screened for involvement in managing accounting and finance functions within their organization. \*\*Capterra’s 2024 Tech Trends Survey was designed to understand the timeline, organizational challenges, adoption & budget, vendor research behaviors, ROI expectations, and satisfaction levels for software buyers, and how they relate to purchase regret. The survey was conducted online in July 2023 among 3,484 respondents from the U.S., U.K., Canada, Australia, France, India, Germany, Brazil, and Japan, with businesses across multiple industries and company sizes (five or more employees). Respondents were screened to ensure their involvement in software purchasing decisions. A subset of 542 respondents worked within the financial services industry. \*\*\*Capterra's Accounting and AI survey was conducted in April of 2023 among 317 business leaders within the U.S. to learn more about how they harness artificial intelligence (AI) or machine learning (ML) to assist with financial operations. Respondents were screened to ensure that they have relevant roles related to AI or ML functions within their organization. Sources 1. [Audit fees could be going up](https://www.cfobrew.com/stories/2023/08/08/audit-fees-could-be-going-up), CFO Brew 2. [2023 State of the Tax Professionals Report](https://www.thomsonreuters.com/en-us/posts/wp-content/uploads/sites/20/2023/02/Tax-Professional-Report-2023.pdf), Thomson Reuters Institute 3. [The Professional Association of Small Business Accountants](https://pasba.org/), PASBA 4. [AICPA & CIMA Insights Blog](https://www.aicpa-cima.com/blog), AICPA & CIMA 5. [Small Business and Self-Employed Tax Center](https://www.irs.gov/businesses/small-businesses-self-employed), IRS * * * Looking for Accounting software?Check out Capterra's list of the [best Accounting software](https://www.capterra.com/accounting-software/) solutions. ### Was this article helpful? * * * ## About the Author [### Amita Jain](https://www.capterra.com/resources/author/ajain/) Amita Jain is a senior writer for Capterra, covering finance technology with a focus on expense management and accounting solutions for small and midsize businesses. 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