Revenue Recognition Standard for Small Businesses in 2021

 



 

The new revenue recognition standard, ASC 606, as stated by Accounting Today, "is one of the biggest changes to accounting standards in the last 100 years." That being said, every business is preparing for the new changes brought by the latest revenue recognition standards. The new standards are impacting small businesses in different ways, based on the industry they are operating in. While some businesses are yet to prepare their company for the new changes, small business accounting services are being increasingly demanded to adapt to the latest changes.

 

While an accounting partner is extremely necessary to deal with the latest revenue recognition standards that is set jointly by the FASB as ASC 606 and IASB as IFRS 15, it is also crucial to know about every essential detail and crucial factors that are likely to affect small businesses in 2021. Pertaining to the new revenue recognition standards, auditors and finance managers of various businesses are preparing the financial statements for filing since early 2020.

 

The role of accounting partners: How useful can small business accounting services be?

 

It has been over five years that the FASB adopted its landmark guidance in Accounting Standards Update No. 2014-09, Revenue From Contracts With Customers (Topic 606). Both public sector and private sector companies have been preparing and filing their financial statements within the effective dates and the firms include both enterprise-level as well as small businesses.

 

While public companies have already started complying with the latest standards with their regulatory filings since the first quarter of 2018, the focus is now on private companies that include both small, medium as well as large businesses operating all across the U.S and Canada. All of these companies are going to file their annual financial statements under the new revenue recognition standards in less than 6 months of time.

 

An independent study by Morgan Franklin of accounting and finance managers at over 70 emerging and middle market U.S. companies showed that only a meagre 9% completed the implementation of the new revenue standard and over 72% are yet to make any progress. That being said, small business accounting services are  increasingly demanded and many small businesses are looking for accounting partners and financial managers to file financial statements in accordance to the new standards.

 

While in some cases the new standards may not at all affect the reported revenue of businesses, a lot of small businesses are even opting for part-time controller nte for foolproof accounting and filing of financial statements.

 

That being said, let us take a look at the key ways of how small business accounting services can help clients and small businesses to match the new revenue recognition standards.

 

●     Assessing the preparation of the client or the business in the field of implementing the new revenue recognition standards for small businesses by 2021.

●     They help businesses adhere to the five step process as ascertained by the FASB ASC Topic 606.

●     An efficient accounting partner will essentially help businesses understand the new recognition standard documentation requirements.

●     Meeting with clients constantly evaluating their progress in meeting with the new standards.

●     Part time controller nte can also ensure that the business' financial notes are in order and suitable for the new revenue recognition standard for small businesses in 2021.

 

All that being said, while it is mandatory for businesses to file financial statements in accordance to the new revenue recognition standards, small business accounting services can be the perfect solutions for such needs as such services will help in foolproof and systematic documentation and filing of all financial statements in accordance to the new mandates.

 

small business bookkeeping services || Accounting Partner || Part Time CFO Services || Contract CFO || Tax services Canada || Part Time Controller


Source:- https://accountingpartner.wordpress.com/2020/10/02/revenue-recognition-standard-for-small-businesses-in-2021/

 

 

 

 

 

 

 

 

 

 

 

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