Importance of Accounting In Business
Accounting is important as it keeps a systematic record of the organization’s financial information. Business and accounting go hand in hand. It would be difficult for management to determine the financial position of the business if enterprises do not prioritize its functioning. They can determine the way the business is heading by analyzing its finances. It assists with documenting, compiling, and categorizing all business-related transactions.
Why is Accounting Important?
Accounting plays a vital role in running a business because it helps you track income and expenditures, ensure statutory compliance, and provide investors, management, and government with quantitative financial information which can be used in making business decisions.
There are three key financial statements generated by your records.
- The income statement provides you with information about the profit and loss
- The balance sheet gives you a clear picture of the financial position of your business on a particular date.
- The cash flow statement is a bridge between the income statement and balance sheet and reports the cash generated and spent during a specific period of time.
It is critical you keep your financial records clean and up to date if you want to keep your business afloat. These are just a few of the reasons why it is important for your business, big or small!
Read on to understand how accounting and bookkeeping will assist in the growth of your business!
Business cannot run without the records of accounting. Keeping business records accurate and up to date is important for the smooth running of a business.
Your financial records reflect the results of operations as well as the financial position of your small business or corporation. In other words, they help you to understand what’s going on with your business financially. Clean and up-to-date records help you keep track of expenses, gross margin, and possible debt. They will help you compare your current data with the previous accounting records and allocate your budget appropriately.
Laws and regulations vary from state to state, but proper accounting systems and processes will help you ensure statutory compliance when it comes to your business. The accounting function will ensure that liabilities such as sales tax, VAT, income tax, and pension funds, to name a few, are appropriately addressed. Assistance or advice from an accounting firm will be helpful if you need to maintain books of accounts and other financial documents as required by the prevailing laws and regulations. Accounting firms can also assist you with filing VAT returns, calculating your VAT obligations, and appealing fines to the Federal Tax Authority (FTA). You can avoid UAE VAT fines by keeping an organised accounting system. Qualified accountants offer bookkeeping and accounting services to ensure that a business complies with these regulations and avoids any potential legal issues.
Financial planning and budgeting
Budgeting and future projections can make or break a business, and your financial records will play a crucial role when it comes to it. Business trends and projections are based on historical financial data to keep your operations profitable. This financial data is most appropriate when provided by well-structured accounting processes. Highly qualified accountants from the best accounting firms in Dubai can help the company in the preparation of financial statements such as balance sheets, income statements, and cash flow statements.
Tips to improve your business accounting
One of the biggest mistakes companies make is failing to maintain proper accounting records, which can lead to accounting errors and cash flow problems. Accuracy in receipts, payments, and other firm transactions, would be ensured by maintaining adequate books of accounts. Additionally, it would aid businesses in managing their cash flow needs, preventing insolvency and bankruptcy, and planning and forecasting budgets that support efficient financial management and long-term company stability.
There should be a clear distinction between your personal and corporate finances. When businesses don’t distinguish between personal and private dealings, they frequently make blunders. Therefore, ensure that each business account is utilized solely for business-related expenses if you don’t want to make such costly errors.
Working with expert accounting services in Dubai
To keep their books of accounts up to date and compliant with regional rules and regulations as well as International Financial Reporting Standards (IFRS), businesses in the United Arab Emirates must take professional and advisory services from reputable firms to fulfil their accounting, bookkeeping and other related needs. This way you can concentrate more on your business operations and the accomplishment of your objectives.
At Zaidi, expert accountants provide monthly accounting, bookkeeping and account supervision services and generate monthly financial reports as per the requirements of each client. Reach out to our expert team at Zaidi Accountants to stay compliant with UAE laws through our professional services!