Running a business without financial information is like finding a location without maps and GPS. Nobody would know its health and the direction it is moving to. This is the reason professional accountants enjoy a unique and pivotal position in companies. Various aspects related to financial reporting and setting standards make their roles necessary, and organizations spend extraordinary resources on them.
Let’s look at the importance of accountants in running a successful business.
Accountants are insightful and have a deep understanding of business resources. They do not give any creative inputs in strategy formulation. However, they understand the implications it will have on the business and the existing resources. For instance, they can give clarity if a new marketing or expansion plan can stress the current capital and depreciate profits. They also help in budgeting and saving costs for such new ideas. They raise early warning triggers if the expenditure is unusually high and ensure the top line is not impacted.
One of the primary reasons why accounting is important in business is because of the accurate collection and maintenance of financial data. They ensure that the data complies with the prevailing laws and also as mandated within the organization. More often than not, they also have to build sophisticated database systems for capturing and storing this data. Besides, they have to establish internal controls to minimize risks. These are internal policies and procedures that safeguard a firm’s interests while also ensuring operational efficiency.
Preparing Financial Reports
Accountants are responsible for making monthly and annual financial statements. This is a rather painstaking aspect of their jobs as there is no scope of error when it comes to preparing financial statements. They have to prepare quarter-end and year-end closing documents to give a realistic view of the company’s performance. Secondly, these reports are essential for forecasting and budgeting activities and advantages of an accountant.
Liaising with the External World
One of the main advantages of an accountant is that business owners can focus on the day-to-day functioning of their business. Accountants shoulder the responsibility of affiliating with different entities. For instance, they work closely with management, government accounting agencies and internal auditors. Secondly, their work is crucial in presenting the company financials to banks, lenders and investors.
Before extending a loan to any organization, banks study the profit and loss statements. Accountants provide further records of taxes paid, assets and liabilities as required. Lastly, the financial records are used by the investors and customers before they invest in a company’s shares.
Accountants have to prepare timely data so that the company is in agreement with both regulatory as well as internal compliance. Regulatory compliances have tax implications, and this is why accounting is important in business. Flouting these timelines can lead to severe repercussions. In some organizations, accountants are also responsible for doing taxes. In any case, statutory taxes depend on the profits and accountants are responsible for ascertaining the benefits made in a financial year.
Apart from pointing out loopholes and reducing operating costs, accountants also help with statutory deductions. An experienced accountant can identify potential tax deductions throughout the year and make the most of such opportunities.
These are some of the reasons why accounting is important in business. Accountants can evolve and become tactical business advisors. Contact accountingmississauga.ca in if you are looking for accountants in Etobicoke or Mississauga. Our experts have an exceptional eye for detail and can simplify your financial statements for you.