Business accounting is not just about tax returns and compliance. Business accounting is about recording all aspects of your business that can have a financial impact in a structured manner that enables analysis and decision-making. Below, this article takes a look at some of the benefits of organising business accounting for your business.
One cannot end a race without knowing the starting point. Similarly, to achieve long-term financial goals, a business must have a starting base of numbers that enables target setting to achieve those goals.
Accurate and structured record keeping will allow for analysis of past events and throw light upon the shortcomings of certain business decisions. This allows for mistakes to be corrected and better directional guidance towards future business decision-making.
Setting your business well defined and realistic goals allows for greater discipline and well-informed financial decision-making. It is a proactive approach towards keeping your spending habits and ambitions in check, and it’s an area where the right business accountant can be invaluable.
If you have a team who operates independently, then setting a budget allows them to spend within the desired parameters. This in return will allow for greater cost control and greater flexibility in future.
Tax compliance is compulsory and requires absolute accuracy. The implications of poor record-keeping or poor controls can be severe in terms of penalties. For example, GST, PAYG or Super Liability in the balance sheet is key to understanding your short-term cashflow commitments. Unfortunately, most smaller and medium-sized businesses don’t have this up to date on their financials.
Similarly, without a realistic Balance Sheet or Profit & Loss Statement, mapping out an effective Tax Strategy has its limitations because the basis (the starting point) would be incorrect.
A key question for a mature or growing business owner is the succession of their business beyond a timeframe. However, most don’t know where to start without the guidance of a business accountant. Business valuation is one of those first steps required to draw some expectations. However, a professional business valuer will require key financials to compute a valuation.
A qualified valuation and a good set of financials will also help the business to present a case to lenders and investors for additional funding in order to invest in working capital and the growth of the business. This is often when a business scrambles last minute to generate financials and misses out on the opportunities of getting the right finance or investors for their business.
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