As an entrepreneur, you’ve probably thought of hiring personnel for answering calls, production, and sales. Although these seem to be among the most important personnel, most companies neglect hiring an accountant. A business may seem to do well but in a real sense, it’s running at a loss. This is where accounting comes in.
Accounting refers to the systematic and orderly way of recording and reporting financial transactions in a given company or business. Among the financial statements prepared during accounting are the income statement, cash flow statement, and balance sheet statement. It is through accounting that you know how your business is doing. Here are some of the major roles of accounting in a business.
To know the Financial Position of the Business
A balance sheet statement clearly gives a picture of the financial position of your business at a given date. This information is helpful to managers in making decisions. An accountant may also be consulted to advise the management on various issues pertaining to the report.
To Track Income and Expenditure
Is your company making a profit or loss? Some entrepreneurs depend on the number of sales to determine whether a business is achieving its goal. However, an accountant will help you know whether you are making a profit.
To Evaluate the Performance of your Business
Financial reports reflect the position of the business and the state of operations. This means that accounting helps you know what is going on in your company financially. An up-to-date report will show a possible debt and gross margin. Comparing the current accounting reports with previous reports will aid you in evaluating the company’s performance within a certain period of time.
There are statutory laws and regulations that businesses in Central London should meet. Some of the regulations are the filing of sales tax, income tax, VAT, and pension funds among others.
To Create a Budget and Future Strategic Plan
A good entrepreneur should have future goals for the business. These goals rely on past and present financial records. An accountant is crucial in this stage as the budget may break or make a business. A professional accountant will analyze the financial records determine the business capability and propose a strategic plan to meet your future goals.
Help in Filing Financial Reports
Businesses in Central London are required to file financial reports with the Registrar of Companies. These statements include stock exchange data which is crucial for direct and indirect tax filing purposes. One thing to note is that your compliance will depend on the expertise of the accountant. Failure to file the correct figures can result in hefty fines.
There are lots of professional accountants in Central London. As an entrepreneur, you need to carefully choose the right accountant for your business. Among the factors to consider are reputation, competence, experience, and cost. For a large business, it is recommended to hire an accounting firm. You can find professional and experienced accounting firms through social media or by searching online.