Why Is Professional Accounting Important for Your Business?
- Written by NewsServices.com
Accounting is an integral part of any business. While recording numbers and calculating sums can seem less exciting than meeting clients and closing deals, proper accounting is essential to business success. While many small business owners prefer to undertake accounting duties on their own, professional accountants have knowledge and skills that are indispensable. Here are some reasons why professional accounting is important for your business.
Accounting helps you choose the right business structure
Accounting can help you before you even start your business. With so many different business structures from corporations to LLCs, it can be hard to choose the right one for your business. With their in-depth knowledge of tax filings and requirements, a professional accounting firm such as TaxFig Canberra accountants can recommend the best business structure for your business needs and goals. This can save you money in taxes and prevent problems with future expansion.
Accounting saves you time
Many small business owners take care of their company’s accounting personally. But as the business grows, the time and effort required for bookkeeping and accounting can become overwhelming. As a key decision-maker in the business, your time is valuable. By hiring a professional accountant, you can free up your schedule and focus on the important things such as researching a new product or planning your business strategy.
Accounting shows you the health of your business
You may have a general sense of the expenses and revenue associated with your business but mental estimates can be far from the truth. Professional bookkeepers and accountants can help you to have a more accurate picture of your business’s financial health. Through cash flow statements, balance sheets, and revenue statements, you can keep tabs on your business performance and find ways to increase revenue or reduce avoidable expenses.
Accounting allows growth
Accounting information helps you to set realistic goals for business growth. With financial statements, you can evaluate if your business is achieving steady growth and how much you can expect it to develop over the coming years. You will also have an overall view of how certain aspects of your business are influencing your bottom line. For instance, if one of your key supplies is consistently increasing in price and shrinking profit margins, you can look for an alternative.
Accounting keeps your cash flowing
Cash flow is king in any business. To prevent your business from running aground or having to take out loans due to cash flow issues, you need a strong record-keeping system. By having accounts receivable (AR) sheets, you can keep track of outstanding customer invoices. On your balance sheet, you can have a clear idea of how much AR has been paid on time. This can help you to chase up your clients or improve your payment collection processes.
Accounting is needed for loans and investors
If you want to secure a bank loan, you will need to provide several years of up-to-date financial statements to support your application. Most banks will also require a business plan and a cash flow projection. Without a professional accountant, it can be difficult to deliver these documents. Similarly, if you are seeking investors or hoping to sell your business, they will expect CPA-verified accounting records that show the track record and profitability of the business.
Accounting helps you pay your taxes correctly
Tax reporting obligations can get increasingly complicated as your business gets larger. Mistakes and errors in your financial reports or tax filings can lead to serious consequences. False reporting on taxes—intentional or otherwise—is against the law and can result in hefty fines and your business being audited. A professional accountant can ensure that your taxes are filed correctly and on time. They can additionally make sure that you apply for all the applicable rebates and refunds.
Accounting pays your bills on time
Businesses often have a variety of active monthly payment commitments such as accounts payable, bank loans, credit cards, hire purchase vehicles, and property rental. Having to keep up with your monthly payments on multiple accounts is an unnecessary hassle. A late or missed payment can result in interests and penalties that end up costing you even more. With an integrated balance sheet, you can review everything that you owe at once and ensure that all your bills are paid before the due date.
Accounting allows for automation
Are you still doing your record-keeping by hand? With powerful accounting software available, the days of human error and unintelligible handwriting are over. You can even integrate your POS (point of sale) system to automatically send information to your accounting software and provide access to your professional accounting team so they can produce sophisticated and detailed reports with minimal hassle.
Professional accounting is important for business as it provides crucial information on the financial health of the business. Owners and decision-makers can gain a thorough understanding of assets and liabilities, profit and loss, and the daily ins and outs of the business. This forms a strong foundation for making calculated choices and strategies for business growth.