Accounting is a part of business and so every business should look forward to it. Bookkeeping falls under accounting and maintained by every enterprises. The size of business will determine the complexities involved in accounting processes, but to keep a track of profit and loss it is necessary to maintain accounts. Being updated on the basic accounting principles will definitely help to succeed in the world of business. Through proper record keeping and financial analysis it is convenient for any business to keep an eye on the expenses.
Accounting is not just limited to maintaining the credits and debits, but has other roles to play as well. While making any decisions in business, accounting comes into role and enables the entrepreneur to take the final call.
· Monitoring the accounts would actually help to understand the behavior of customer base and finally cut down the costs
· Accounting is the only way through which you can understand the actual financial position of the company which can influence many decisions
How accounting helps any business
Accounting is a system that keeps track of assets, liabilities and income of business. To make an informed decision in business it is vital to check the past performance and this can only be possible when you maintain proper accounts. Through sound accounting, it is also possible to satisfy customers and know the earnings and expenses of a company which will give a better understanding of how to maintain satisfaction level of customers.
Want to know more? Accounting also allows in proper tracking of profits and losses and manages payroll records. It is the best way to maintain any budget and also attract potential investors.
After collecting the financial information it is stored in accounting records which is finally compiled into financial statements. It includes certain documents like:
· Balance sheet
· Statement of retained earnings
· Income statement
· Cash flow statement
Responsibilities of an accountant
Professional accountants know how to maintain accounts and keep a track of financial transaction. Every business needs an accountant so that proper financial advice can be taken. An accountant is responsible for finding a way out through which a business can easily increase its capital and make wise use of it. An accountant will also help:
· Filling of taxes
· Prepare the VAT returns
· Help in computing tax and national insurance
· Keeps record of sales revenue
The other essential function performed through accounting is cost management. Though it is often overlooked by corporate houses, but certainly there are some advantages associated with cost management are:
1. Understanding the profitability
2. Financial structure of business
Through cost management it is possible to focus on different aspects of business that can finally help in boosting up profits.
The handling of company’s accounts depends on the size of business. In case of a public sector, Chief Financial Officer is appointed to manage the job. While a small business hires an external accountant on a part time basis to manage invoices and keep record of financial transactions. A large sized enterprise usually keeps an in-house accountant.