What is Accounting and Why Is It Needed for a Company?

If you’re venturing into starting a new business, you’re most likely to hear the terms accounting. Accounting can be a difficult task and a stressful task, especially for start-ups.

What is accounting?

The process of keeping a record of your business’s financial transactions is termed as accounting. The process of accounting includes a series of steps like summarizing, analysing and reporting the financial statements to tax collecting agencies.

Accounting is one of the most essential parts of a business. Accounting is usually done by a professional accountant for a small business entity or by a couple of accountants when it comes to a larger business entity.

Why are small business accounting services important?

Opinions that are unbiased

When you own a start-up, you need opinions that are unbiased to get a clearer futuristic view of your business. This unbiased opinion can be given to you by external accountants. They are capable of giving you both positive and negative feedback that will help your business in the near future.

Lowers The Cost Incurred On Your Company

When you outsource your company’s accounting services, you will be saving a lot of your company’s cost. Outsourcing your accounting services will definitely work out to be cheaper than hiring a full-time accountant.

Cost-Effectiveness 

A lot of your company’s operational cost can be saved up when you outsource your company’s accounting services. This will help in raising funds for your company’s future requirements.

Controlling Risks Associated With Fraud

Outsourced accounting services will reduce  fraud risks which are bound to happen when you have an internal team taking care of your accounting services. Professional accountants will ensure to render good quality work and are responsible for the transaction processes.

What is the importance of accounting?

It is important to keep your financial records updated to ensure smooth functioning of your business.

Helps in evaluating the performance of the business 

The financial records give a clear picture of operations as well as the financial position of small business or corporation. It helps in better understanding the financial status of your business. Accounting not only helps you maintain a track of your expenses, gross margins and income but also helps allocate the budget properly by comparing the previous data.

Ensures statutory compliances 

Proper accounting will help maintain statutory complaints when it comes to your business. Liabilities such as GST, income tax, pension funds and others will be properly Addressed.

Non-maintenance of books and accounts is an offense punishable by law. If a company fails to abide by the statutory compliances, the company will be liable to a huge penalty.

Creating a proper budget and future projections

A businesses financial record plays a crucial role when it comes to budgeting and futuristic projects. Previous financial data is used to provide the basis of business trends. With proper financial records, it is possible to make business decisions concerning budgetary and the onset of future projects.

Filing financial statements

Accounting plays a critical role while filing financial statements with the Registrar of companies. Financial statements are required for stock exchange and also for direct and indirect tax filing purposes.

Financial statements build trust in a company. A company's financial statements act as a base for investors to decide on whether to invest their hard-earned money in the company.

The balance sheet of a company can have a huge impact on the company. The value of assets varies from the time they were purchased. A certain number of revenues earned will be stated by the company. But how much of that amount is actual cash and how much of it is receivable amounts should be accurately stated.

Conclusion

Proper accounting outsourcing services will help you deal better with financial issues. Accounting requires accuracy and good quality work. When you decide to outsource your accounting services, you'll find more time to work on the growth opportunities of your business.

At Aavana, we have a team of dedicated professionals who will work with your business's accounting needs. You can count on us for rendering quality services that will best suit your needs. We also do online accounting services.

Get your Startup accounting services & LLP Registration India today !!