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Too many businesses go through bankruptcy and liquidation because of their improper accounting practices. An accountant plays a vital role in an organization as money management is one of their major roles apart from keeping proper accounting records for each and every activity. There are many reasons why a business needs an accountant and the following are some of them:
Accountants ensure that the financial statements comply with International Accepted Standards (IAS). The preparation and presentation of financial statements follows several accounting standards that are accepted worldwide. An accountant ensures that these standards are followed while preparing and presenting financial statements. It ensures that the figures presented in the financial statements give the accurate financial position of the business.
Controlling the use of funds is another function of accountants in business. The development of a system for internal control is the responsibility of the accountant. The system will prevent and control embezzlement or misuse of funds in a business. It lays down guidelines on how to control transactions so that any avenues that can be used for misappropriation of funds are closed. Internal controls basically help businesses to achieve certain goals, objectives and tasks. Cash control systems are important controls that businesses need to develop. The accountant plays a vital role in the realization of this undertaking.
Another important reason a business needs an accountant is for taxation purposes. Tax planning allows a business to develop a plan for anticipated revenue in the coming years. Plans can assist in managing money in a way that maximizes the businesses tax benefits. Its benefits include spending less time in taxation procedures and using the free time to focus on other income generating activities. Filing tax returns on time helps the business to avoid penalties on late payments which saves some money for the business. The business will also be able to avoid paying more tax which means they will not have money that is tied up in tax refunds.
The business is able to forecast revenue as well as budget properly prepared by accountants. This is due to the fact that accountants have a vast knowledge of operating costs as well as the flow of business revenue. The above processes of forecasting and budgeting allow businesses to prepare estimates of revenue in the near future. In addition to planning for any anticipated disruptions to cash flow that may occur, these formulations can help the business establish its growth predictions. This practice is generally founded on the going concern concept which is part of the generally accepted accounting principles that every accountant is required to follow in the accounting profession.
The above discussion shows that an accountant is important in any business as they ensure that the cash flow is closely monitored. It is believed that the person who controls the money usually controls the entire business. This is understandable as profit maximization is the prime goal of most businesses and without an accountant to control the funds it can be difficult to achieve. As a result, successful businesses are those that have an accountant.
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