7 Reasons Why Accounting is Important for Every Business

Accounting is a process of recording, summarizing and analyzing financial transactions of a company. It gives the management, stakeholders, and government vital information regarding the financial position of the company. Listed below are 7 reasons why accounting is important for every business:

1. Helps in planning and making wise decisions based on the situation

Accounting provides detailed information regarding cost and earnings, profit and loss, liabilities and assets for decision making, planning and controlling processes within a business.

2. Keeps track of your cash flow

According to a U.S. Bank study, 82 percent of business failures happen due to poor cash flow management. Just like the saying, cut your coat according to the length, it is essential for every business to plan the expenditure according to the income. Accounting helps keep track of cash flow and avoid any unnecessary expenses.

3. Helps in creating a precise budget

Accounting will help you in creating a precise budget that acts like a solid foundation for the smooth operation of your business. If you are able to successfully execute the budget, then it can help you save money for future expansions.

4. Avoiding unwanted penalties

Every business should mandatorily keep a record of all the economic activities and make it readily available at the end of every fiscal year for avoiding any unwanted fines from regulatory authorities.

5. Ensures  transparency for stakeholders

Your financial records will represent your business in front of stakeholders and help them determine where you stand in the market.

6. Helps in easy filing of financial statements

Law requires businesses to maintain an accurate financial record of their transactions and share the reports with the tax authorities and regulators. Accounting makes it easier for businesses to prepare and file financial statements at the end of every fiscal year.

7. Avoid  fraud and theft by customers, employees, and suppliers

Small and mid-sized businesses are more vulnerable to fraud than larger organizations, and the after-effects can be severe. Accounting helps in detecting frauds by performing an extensive review and audit of the business’ books.

Corpin Consultants offer a wide range of accounting and bookkeeping services tailored to your business needs. To know more about it, contact us at +971558432911 or ek@corpinconsultants.com.