Why is Accounting Necessary for your Business?
17

Jun 2020

Accountancy is a necessity for all types of business organizations. The following reasons can be cited for the need for accountancy. Human memory power cannot remember every transaction concerning business for a long time. So accounting becomes necessary to record all transactions. Accounting statements and documents can be used as evidence in case of disputes. With the accounting records, profit, or loss arising from operational activities at the end of the year can easily be found out. Properly managed accounts can provide sufficiently useful information for future planning of the business, which can be helpful for the progress of the company. 

There are two main accounting categories, namely, Financial Accounting and Administration Accounting. Financial accounting deals with details made public to shareholders, customers, creditors, and regulators. Managerial Accounting deals with more information that is not shared with the media, such as wages, income, and the expense of the manufactured goods.

Financial Accounting is aimed at helping business executives and supervisors make financial decisions. In contrast, the goal of Financial Accounting is to provide crucial financial information about your company to those outsides of the business. For most of the business owners, "Accounting" is managerial accounting.

Accounting Requirement For Startups

It is a good idea to start by consulting an accountant when establishing a company. There are many activities that you will have to complete and processes that you will have to set up to ensure that your company goes off without a hitch. Check out how your accountant will support your startup.

1. Selecting the appropriate corporate structure to register (single proprietorship, limited liability company, or a partnership). 

2. Create a business plan and evaluate financially. 

3. Enable you in selecting and setting up the accounting program. 

4. Provide advice on financing options for your company to raise capital. 

5. Ensure you abide by state and federal legislation. 

6. Provide information on how to keep track of expenses. 

7. Support your file projected business taxes.

Accountants Are Excellent For Daily Activities

After you have cut through all the red tape and establishment of your company, you'll still need to maintain a reliable accountant nearby. They will support you with daily operations because they contribute to the company's finances. Here's a look at some of the ways they can assist once you've set up your company.

1. Assist you with hiring either employees or independent contractors.

2. Help you review your financial statements and ensure that they match your records.

3. Monitor and administer payroll regularly. It helps you detect and avoid frauds and theft by customers, employees, and suppliers

4. Create end-of-the-year reports.

5.  It Ensures Statutory Compliance

6. Complete your taxes at the end of each year and gather the necessary information.

7. Aid you in deciphering financial lingo and terms on essential documents.

 

Accountants Are Great For Company Expansions

Once you're ready to develop your business, your accountant can be an essential resource who provides advice and help you to handle the process. An accountant can,

1. Help you assess growth areas by offering insight into cash flow trends, inventory management, pricing, and corporate finance. 

2. Include guidance on the leasing and purchase of property and equipment. 

3. Help you avoid getting audited by the IRS. 

4. If necessary, an accountant will prepare you for and direct you through an Audit process.

5. Creating Budget and Future Predictions 

6. Work with you to build an organizational budget that meets your company objectives. 

7. Provide advice and resources on how to help you sell your company.

Make Use of This COVID-19 Outbreak Period To Check Your Financial Statements

Each year's books must be kept for six years from the end of that year. You can also use Accounting Software to prepare accurate records and also to maintain records for a more extended period. When a company fails to keep or sustain correct accounting records, then they will have to pay fine10,000 AED for the first violation and AED 50,000 for repetition. It would be diligent to maintain books of accounts and keep a track of all your expenses and income systematically. If you are worried about the rules and regulations of bookkeeping, you can give this burden to our experts. Jaxa has professional charted accountants who can proficiently do your bookkeeping work and also help you in the auditing process or any other financial services. As an experienced consultancy firm, we advise you always to take the help of third-party consultants. Outsourcing has its advantage; don't miss out on reducing extra expenses. Feel free to contact us! We will be waiting for your call.