Many businesses run into bankruptcy and end up liquidating due to the lack of proper accounting practices. An accountant is a key individual in any organization as they are responsible for the management of money and the proper accounting of all activities in the business. There are many reasons why a business should have an accountant and they include the following:
Accountants make sure that financial statements comply with the International Accepted Standards (IAS). Preparation and presentation of financial statements follows a number of accounting standards which are accepted worldwide. An accountant makes sure that these standards are adhered to while preparation and presentation of the financial statements is being done. This ensures that the figures that are presented in the financial statements give the accurate financial position of the business.
The management as well as the control of funds within a business falls under the jurisdiction of the accountant. An internal control mechanism to control funds is developed by an accountant as well. The main task of the system is to stop or prevent the misuse as well as the embezzlement of funds in businesses. It offers guidelines on the modality in which transactions will be handled; this locks out any loopholes which might lead to funds embezzlement. These internal controls normally assist the business to attain certain objectives, tasks and goals. Systems of funds control are crucial for the long term survival of the business and thus they are a must for them to be developed by the accountant.
The other important reason why a business needs an accountant is for taxation purposes. Tax planning permits the business to develop a plan for anticipated revenue in the years that follow. The plans may assist in the management of money in a way that maximizes the businesses tax benefits. The benefits of this include spending less time in taxation processes and using the spare time in concentrating on other income generating activities. Timely filing of tax returns also assists the business in avoidance of penalties on late payment which saves some money for the business. The business will also be able to avoid overpayment of tax which means that they will not have money that is tied in tax refunds.
Budgeting and forecasting of the business revenues can be done properly by an accountant. This is due to the fact that they have knowledge of the costs of operations and the revenue flows. These two processes of budgeting and forecasting allow the business to make projections into the future. This can assist the business to establish its growth prospects and plan for any anticipated disruptions in cash flow. This is normally based on the going concern concept which is one of the Generally Accepted Accounting Principles which all accountants are required to apply in accounting.
As discussed above, an accountant is required in all businesses to ensure that the cash flow is closely monitored. It is rumored that the person who has control of the money in a business is the one who controls the business. This is true since all businesses have profit maximization as an objective and it would be difficult to achieve this goal without an accountant being present to control the use of money. Therefore, a business with an accountant will probably be a successful business.
Want to find out more about an experienced CPA in Tucson, then visit Flowers Rieger and Associates.
categories: Business,Accounting,Firms,Accountants,CPA,taxes,tax prep,tax service,income tax