Accounting is the backbone of every industry. It allows businesses to track their money flows and maintain adequate profits. Accounting influences decisions regarding where to invest for maximum returns, how to minimize costs, attracting investors and creditors for raising finance, etc. Of all the economic sectors in a country, the advertising industry plays a distinct role. It involves creating campaigns and handling projects for other sectors to promote their brand, operations, goods, services, etc. The advertising industry provides vast services. It creates challenges in accounting for advertising agencies.
The advertising and marketing industry holds massive potential. It can unfold this by focusing on its numbers and keeping them aligned with its goals and objectives. The accounting for advertising agencies provides businesses with costs, feasibility checks, and financial returns from each project and lets them know how all of them perform. Accounting for advertising agencies is as important as it is for other industries. The accounting and bookkeeping activities essential for advertising agencies include:
Payroll:
The marketing and advertising agencies hire different-natured employees. While some are permanent, others work on a freelance, part-time or full-time independent basis. These differences can complicate the payroll management process. Several tax forms need to get filled out and submitted along with accurately calculated amounts.
Accounts payables:
The marketing industry purchases goods and equipment on credit, giving rise to accounts payable. It is crucial to honor these short-term obligations on time. Poor payables management can cause significant losses to firms, including severed relations with suppliers, late payment penalties, unfavorable future-term terms, etc. Therefore, accounting for advertising agencies must ensure adequate accounts payable management services.
Managing liabilities:
The advertising and marketing agencies hold general and media liabilities. They need to maintain a proper balance between the two for balanced growth. These companies receive funds from clients and other institutions. Each fund of a particular party needs separate management and should not get commingled. Moreover, it also involves hedging against interest rate fluctuations and limiting the maturity gap between assets and liabilities.
Trial balance preparation:
The accounting for advertising agencies involves preparing a trial balance. It summarizes final credit or debit balances from all the accounts with closing balances. Like an accounting calendar, it ensures verifying amounts and identifying discrepancies that need to be corrected. The adjustments within the trial balance help check the accuracy of books and accounts.
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