Accounting is the process of keeping records of the financial transactions which got completed and updating the same from time to time. Accounting gives you reports like how much money is invested in your business, how much your business owes and shall receive, how much your business is earning and so on.
You will be lost without Accounting
Accounting tracks performance of business at each bend and turn of operations. Without tracking business performance, the companies are left adrift at sea in the night without lighthouses or channel markers to guide them. Detailed accounting reports allow businesses to see what’s working for them and what isn’t so that the businesses can decide how to move forward.
One of the most important reasons to study history is to avoid repeating the past mistakes. This works exactly the same in case of accounting. Accounting reports makes it possible for businesses to look at the performance of yesteryears in relation to changes in the business strategies or market fluctuations and empowers the businesses to avoid repeating mistakes and lead to success. In short, Accounting enables business to learn from the past.
You will pay higher taxes without Accounting
Timely and efficient accounting can save lot of money by claiming all allowable deductions on time and filing the monthly, quarterly and annual compliance before time. Accounting of smallest expense is very important to the business. If your business do not account for all the expenses incurred during the month it actually ends up paying more taxes every month. Your tax reconciliations will not match and at the end of the year you will waste your valuable time to reconcile your accounts. Above all you will miss the chance of analyzing your business expenses every month. Therefore accounting should not be treated as just one of the compliance as it saves a lot of money which you otherwise end up paying as higher tax, penalty or interest on late payments.
Your bank won’t lend you without accounting
Loan options become very scares for businesses that don’t maintain accounting diligently because banks would want to check your current financial health or your past performance. Startups also find it difficult to find investors if the accounts are not updated as the investors won’t understand their financial position as on date.
You won’t get paid without accounting
Debtors and Creditors are two of the most important things to be checked by all the businesses. Failing to track your debtors and collecting payments on time may result in your business working for free. If you do not collect your payments on time, how would you pay your creditors on time? You may end up paying interest on late payments if you miss payment deadline or your creditors might not want to work with you if your payments are always late.
Most important, as an owner of the business how would you pay yourself on time if you do not track how much profit did you make.
Yes, accounting is very important
Detailed accounting reports help businesses in every facet of operations. Without diligent accounting, businesses will find it difficult, if not impossible, to take informed decisions about the future of the organization. Accounting makes sure that the business has enough money in hand to pay to its creditors, employees and most importantly to pay taxes.
The only problem is many business owners don’t have knowledge about importance of accounting or time needed to keep their accounting up to date. Accounting may not be everyone’s favorite task but there are services available out there which can ease the burden or even take the whole load off altogether of the organizations.
Ofin can help you
While accounting may not be everyone’s favorite, but accounting is a passion for everyone at Ofin. We regularly add blogs on our website, which has information on every facet of accounting and taxation ready for you to pursue. We have made it our goal to help every small business in India get the information and help them to find financial success. In pursuit of this goal we provide accounting services to help the businesses to get on top of their finances once and for all.
You can get in touch with us today with any questions about accounting. We are always ready to get started on bringing your books up to date so that your business can get most of its finances.