5 Reason why your business needs accounting

5 Reason why your business needs accounting

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Created By Admin Last Updated Tue, 08-Dec-2020

Accounting involves preparing and analysing financial reports, taxes, and other reports. It’s almost like bookkeeping. You'll be able to find bookkeepers in smaller businesses while larger organizations usually use accountants. Accountants have certain credentials and knowledge that bookkeepers often lack. Accountants typically handle more complex systems, but both bookkeepers and accountants serve an important role in a corporation. Why does accounting matter so much? Accounting and business go together, you can’t imagine to own an honest business without accounting.
Take a glance at the five reasons why you would like accounting:

1. Accounting keeps your business organized

If you're running a business then this become a foremost important thing to create your business well organised and maintained; for that accounting plays a crucial role for you There are many groups inquisitive about an organization’s financial records, including investors, lenders, and employees. Certain varieties of organizations (like non-profits) like being as transparent as possible about their finances. If your records are messy, it can have a negative impact on your reputation and therefore the health of your business. A method of accounting keeps these often-complex records organized, so they’re easier to access and provides to the interested groups.

2. It helps you in decision making
Should you buy that brand new and luxurious system or accessories for the office? Well, that depends on whether you'll be able to afford it or not, for this you would like to seem at data—your accounting records, to be exact. Accounting can help guide the decision you make so you avoid common business mistakes, like:
• Overspending
• Underspending
• Plateauing

3. It’s necessary for getting investment or loans

Obviously if someone want to invest in your business, they'll be Investors and lenders they want to learn a little bit about your business before they invest or lend you money. which means poking and prodding into your business’s accounting books.
Generally, you need to show investors and lenders your business’s financial statements. That way, they will easily obtain information about your profitability.
And this will be possible once you have a organised accounting book without organized accounting books, your financial statements, financial forecasts, and profitability claims won’t be accurate or have any backing.

4. Accounting holds you accountable.
If you've got shareholders in your small business, without any doubt you know how important it's to show rather than tell. Accounting does just that for any business.
Your shareholders hold you accountable for the success of your business. They will observe your business’s growth and success by your accounting records.
On another note, accounting can even facilitate your hold your employees accountable. Keep up-to-date on things like reconciling bank statements and performing trial balances. That way, you'll be able to catch fraudulent activity before it takes an excessive amount of of a toll on your business.

5. Accounting helps you to remain within the law

For running a legal business, you want to be familiars with the law of business.
Having good accounting systems and processes helps keep your business in good legal standing. One of the most duties of an accountant is to handle the organization’s financial matters according to various laws and regulations. At any time, an organization’s business can be reviewed, therefore the financial records must be accessible, accurate, and arranged. Not having good records can get your business in serious trouble.