Many business people believe that conquering new clients, generating sales and registering a good profit margin are more important objectives than taking accountancy and taxes into account. Many need to be aware of the importance of accounting and think that hiring an accounting professional will not increase business revenue.
Accounting is an essential part of business management, as it tracks income and expenses, maintains legal compliance and provides valuable financial information for business decisions.
Here are the seven main factors for you to understand the importance of accounting for your business:
#1 – Organization
If it weren’t for accounting, you wouldn’t know how much your company made or how much you spent in a given period. Constantly remembering your profit or loss compared to quarters is also a loss.
How do you know which debts have already been paid off and what still needs to be paid? Which customers failed to deliver? All questions are answered by the work of an accountant in your business, keeping you up to date with the company’s finances in an organized and prepared way to solve all questions related to income tax.
#2 – Income Tax
Did you know that a small slip, such as a typing error or incorrectly filled information, is enough for you to fall into the fine mesh and have to be accountable to the Tax Authorities or even pay hefty fines?
The income tax return is complicated and detailed; the person responsible must have experience and knowledge of what he is doing. This gives the manager more peace of mind, as they know that their finances will be in the hands of an expert who understands tax laws and regulations and will spare them this responsibility.
#3 – Responsibility
Accounting gives you a demonstration of your success. If your company has shareholders, the accounting results will show its growth and success.
Likewise, accounting provides you with the necessary reports so that you can detect fraudulent activities before they affect your business.
#4 – Decisions
What is the main criterion you should consider before making a purchase? If you have enough capital for it.
If you need to save on some expenses to get better results, what will show you where your costs are and how often you spend precisely the accountant’s work?
#5 – Basement
Before making any changes to your business, you will likely need to do a risk analysis. Thus, you can determine whether this risk can benefit or harm your company.
Accounting can help you analyze the after-effects of taking such risks. For example, you can make a numerical comparison between the company’s expenses and revenues before and after this change, effectively visualizing whether the strategy helped you or not.
#6 – Investments
If you’re looking for an investor for your company, you certainly will only be able to do it with the help of an accounting professional. Lenders need to know a little more about your business before making contributions. For that, you must present your financial statements, forecasts, and profitability statements, all based on factual information.
Only then will you be able to convey security to future shareholders, allowing them to be more particular about the business they are investing in.
#7 – Mandatory
Finally, suppose you’ve come this far and still think that accounting is optional in your business. In that case, every company must follow an accounting system and carry out an annual survey of its Balance Sheet.
According to the Civil Code, your company’s bookkeeping must be under the responsibility of a legally qualified accountant registered with the Regional Accounting Council.
This service does not necessarily need an accountant hired by the company and can be performed by outsourced accounting offices. But the fact is, if you have a CNPJ (except an MEI), you need accounting jobs.
Without competent accounting work, your company may suffer from debts, become irregular for not meeting the requirements of public bodies and still have low growth due to not having the best information available during decision-making.