- Mr. Wasim Firoz
Importance Of Accounting For Business
In today's busy world, It’s very difficult for business owners to manage business and business accounts simultaneously. In every kind of business, Accounting plays a vital role. Accounting provides the business financial reports along with revenue, expenditures, assets, etc. Business financial reports present how the business is going and helps in making effective decisions for business future growth. It is used by the management, stakeholders, shareholders, Government, Tax’s authorities, etc. Business financial report for business is essential to fix the financial problems and issues and also helps in making strategic and tactical decisions. Creating a financial report for a business is easy but analyzing the data and communicating with data for better decisions is the hard part. If business owners have good accounting information then they can make effective decisions otherwise only the same industry-experienced accountants can help in taking an effectively tailor-made decision or strategy. Hiring accounting services is essential for each business.
Before the Importance of accounting let’s go through the basics of accounting
What Is accounting?
Accounting refers to the recording of each business financial transaction systematically.You can assume the accounting is a big machine, put raw financial repost, and get a well-maintained and organized business accounting report. Accounting reports show how many assets we have, how many liabilities we have, How much we are generating revenue on a particular product or service, or project. Helps in determining the current financial position of the company and also aid in taking a step for what will be the financial position for the selected particular time. It provides a company balance sheet, profit and loss accounts, company cash flow statement, etc. In short, Accounting helps companies to run a business effectively and efficiently and drive a business towards growth., etc
Importance Of Accounting
The business needs to record each business financial transaction to create financial reports and other financial sheets and accounts for communication with business finance. Recording each transaction is a key of business and helps in driving business smoothly.
Everyone in this world runs a business to earn money. An accounting report is made to ascertain that the business is generating profit or loss and how much. It helps in making a strategy for business growth. It doesn’t matter, How much is the business size?
Helps In Planning The Budget.
Every business owner runs their business along with a selected budget. It saves money and helps in taking drastic strategies and with the help of budget business owners keep observation on the expenses, Sometimes due to some expenses business owners have to exceed the budget. To select the best budget for business growth, businesses should have maintained previous accounting records.
If you need a loan to expand your business from banks and other financial institutes. Business owners have to give them accounting statements. To make a financial statement business should have a proper accounting system and proper balance sheet, profit and loss account, etc. Every bank and financier wants to check the accounting statement before proceeding with the loan processes.
Taking Any Decision
Accounting plays a very important role in making decisions. Because accounting shows the full insight of finance such as monthly earning, expenditures, current assets, and liabilities. If the business does not have financial reports it would be difficult for the management in making decisions in any regard and may be impossible to achieve a business objective. To achieve business objectives businesses should maintain proper financial records.
There is no investor in this world who doesn’t ask for the financial statement of the business. Investors always want to check the statement, current working status, No. of employees and customers, and government taxes before investing. If an organization doesn’t have a proper accounting system investors go away and invest their money in other companies.
Proper and well-maintained accounts help the business to keep an eye on cash flow. Businesses easily define monthly expenses and how much we can save from expenses and generate more revenue.
Accounting determines the liabilities of the business and the paid time of the liabilities such as pension of retired employees, government taxes, provident fund, etc.
Detection and Prevention of Fraud
If a company doesn’t record each financial transaction they can’t detect and prevent fraud inside of the company. If in a company a proper accounting system takes place then the owner can easily detect and prevent the frauds because accounts provide the full details about each financial transaction. With help of the property accounting system owner can see each transaction information like with whom the transaction has been made, how much it’s cost, etc. accounting is the best way of Detection and prevention fraud.
Stock Exchange and Tax Authorities
Companies must submit their business accounting details to list in the stock exchange and fill both direct and indirect taxes to tax authorities.
Forecasting And Planning
Every Business Owner wants to expand their business, to expand the business they need some funds. The accounting Statement provides the exact information like, how much to be paid to the investor, debtors, other regular expenses, and how much funds we have, and how much funds will be received by the creditors. Accountant statement plays an important role in making a decision, owners can easily consider how many funds we need for a particular part for expanding business.
It’s another important reason for a proper accounting system in the organization or company. We can easily monitor the cash flow such as how much and when we are receiving and giving.
Accounting keeps and clears business finance for easy to understand financial health that helps the stakeholders in making decisions. Via the accounting system, stakeholders can monitor all financial transactions such as profit, daily wages, Taxes, profit, and loss, etc. These kinds of information keep transparency among the stakeholders of the company.
If you have any doubt and queries related feel free to contact one of the best leading accounting firms in Dubai.