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The Importance of Accounting Services in a Business

 

Accounting is nothing but a systematic and detailed record of the financial transactions of a business. It gives you a complete overview of your business and helps you with the necessary steps that need to be taken for a positive outlook of your business.

Accounting comes in different types as well. It plays a very important role in the business as it helps to track the income and expenditure of a firm and also help in major decision making.

The importance of accounting services in a business

Accounting is nothing but a systematic and detailed record of the financial transactions of a business. It gives you a complete overview of your business and helps you with the necessary steps that need to be taken for a positive outlook of your business.

Accounting comes in different types as well. It plays a very important role in the business as it helps to track the income and expenditure of a firm and also help in major decision making.

There are three key statements that are generated

  • Income statement- that provides information about the profit and loss of a company. The profitability of your company can be calculated using the income statement.
  • Balance sheet- that gives a clear picture of the financial status of the company. It helps investors to gain a complete insight into the operations of your business.
  • Cash flow statement- that builds a bridge between the balance sheet and the income statement and provides the report of the cash spent during that particular period.

What is the importance of accounting?

It is important to keep your financial records updated to ensure smooth functioning of your business.

Helps in evaluating the performance of the business

The financial records give a clear picture of operations as well as the financial position of small business or corporation. It helps in better understanding the financial status of your business. Accounting not only helps you maintain a track of your expenses, gross margin and income but also helps in allocating the budget properly by comparing the previous data.

Ensures statutory compliances

Proper accounting will help maintain statutory compliances when it comes to your business. Liabilities such as GST, income tax, pension funds and others will be properly addressed.

Non-maintenance of books and accounts is an offence punishable by law. If a company fails to abide by the statutory compliances, the company will be liable to a huge penalty.

Creating a proper budget and future projections

A businesses financial record plays a crucial role when it comes to budgeting and futuristic projections. Previous financial data is used to provide the base of business trends. With proper financial records, it is possible to make business decisions concerning budgetary and the onset of future projects.

Filing financial statements

Accounting plays a critical role while filing financial statements with the Registrar of companies. Financial statements are required for stock exchange and also for direct and indirect tax filing purposes.

Financial statements build trust in a company. A company’s financial statements act as a base for investors to decide on whether to invest their hard-earned money in the company.

Te balance sheet of a company can have a huge impact on the company. The value of assets varies from the time they were purchased. A certain number of revenue earned will be stated by the company. But how much of that amount is actual cash and how much of it amount receivable should be accurately stated.

Conclusion

To efficiently run a business, you need accurate information, data, reports, analysis about a company’s liabilities, assets, debts and profits and accounting plays a vital role in maintaining such information

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