Accounting and business go together hand-in-hand, it means if you own a business then you have to implement a proper accounting system and pay proper attention to it. Accounting gives you a clear picture of your business and whether you are doing good or not. And, later on you can take some important decisions with the help of these figures. In this blog, we will talk about why accounting is so much important for your business.
Following are some of the important reasons why accounting is important for your business:
- Accounting keeps your business organized: Accounts help you to keep your business organized because without accounting you would not know what are your real incomes and expenses. It gives you proper figures of how much you have to pay to your creditors and how much money you are supposed to receive from your debtors. In short, it tracks all your incomes and expenses of your business and gives you a clear picture of your business.
- Fulfilling tax obligations: With the help of accounting you get the correct financial records and these records are the first step of filling tax records. And, you haven’t taken the accounting seriously then it can also affect your tax returns and may invite some penalties too. So, it is better to give proper attention to accounting in your business.
- Helps in funding: If you require a loan for your business then the first place where you will go for it is banks, and banks demand financial statements to decide whether to give you a loan or not. Banks evaluate various things like whether the company has paid all its previous loans or not, what is the asset to liabilities ratio, etc. And when you go for investors then they look at the type of business, its profitability, competitors, etc. For all this financial accounting is important because accounting makes the process of getting loans & investments very easy for your business.
- Helps in decision-making: Accounting guides in decision-making of the business. Many important decisions are based on the accounting figures of the business. If the expenses of the business are seen high in the accounting reports, then the business can take the decision of cutting unnecessary expenses. Likewise, many other decisions can be taken on the basis of the accounting figures.
- Planning for the future of the business: Accounting statements also help you to know the current position of your company in terms of profitability. For e.g. the reserves & surplus account let you know how much funds are available with the company. This will help in knowing whether the company has enough funds for expansion or diversity. And, you will be easily planning about the expansion of the business and many other matters with the help of these accounting figures. Thus, accounting also helps in planning for the business.
These are some of the important reasons why accounting is so much important for your business. We at NUF Chartered accountants, based in Dubai, UAE can help you with any accountancy needs of your business, so feel free to Contact Us. We are helping businesses all around the world by providing our expert services.