Quite a lot of businesses go through bankruptcy and liquidation attributable to their improper accounting practices. An accountant performs an important function in a corporation since money administration is certainly one of their key roles in addition to keeping proper accounting records for every activity. The reasons why a company needs an accountant are lots and the next are a few of them:
Accountants ensure that financial statements comply with Generally Accepted Accounting Principles (GAAP). Preparation and presentation of financial statements follow many accounting standards that are accepted worldwide. An accountant makes certain that these standards are adhered to while preparation and presentation of the financial statements are being done. This ensures that the figures which might be presented in the financial statements give the accurate financial snapshot of the business.
Controlling of cash utilization is another task of the accountants in a business. The development of a system for internal control is the accountability of the accountant. The system will forestall and control the embezzlement or misuse of cash in a business. It provides the guidelines on how transactions are to be handled thereby locking out any avenue that may be used for fund misappropriation. Inside controls basically help companies to achieve sure goals, aims, and tasks. Cash management systems are crucial controls that companies must develop. The accountant plays an important role in the attainment of this undertaking.
The other essential reason why a business needs an accountant is for taxation purposes. Tax planning permits the Company to develop a plan for anticipated income in the years that follow. The plans might assist in the administration of money in a way that maximizes the companies tax benefits. The benefits of this embody spending less time in taxation processes and utilizing the spare time in concentrating on other revenue-generating activities. Well-timed filing of tax returns also assists the Company in avoidance of penalties on late payment which saves some money for the business. The business may even be able to avoid overpayment of tax which signifies that they will not have cash that is tied in tax refunds.
Budgeting along with forecasting of business revenues is capable of being prepared properly by an accountant. This is attributed to the actuality that the accountant has vast information on operational costs as well because of the flow of Company revenues. The above processes of forecasting plus budgeting allow the businesses to formulate projections of revenues into the close to future. These formulations can help the Company to institute its progress predictions in addition to planning for whichever anticipated disruptions that will occur in money flows. This practice is normally based on the concept of going concerned which is part of the Usually Accepted Accounting Rules that each accountant is required to observe in the accounting profession.