Accounting is one of the oldest yet one of the most important functions which a business should perform. It is so important that no matter the size or the nature of the business is, each and every Business should avail accounting services for the Business.
The accounting function of a business is one of the most crucial functions which should be performed by all businesses irrespective of the size and nature of the Business. It is so important that it is considered as the language of the Business as the management can understand the complete financial picture of the Business.
Accounting can be defined as a process in which all the financial transactions of the Business are recorded, summarized and analyzed. This will allow a lot of benefits to the management of the company, such as understanding the present financial condition of the company, setting up a budget and will also help in setting a path for the future of the Business.
Till now we have seen the necessity of accounting and bookkeeping services in a business organization. Now let’s have a look at the benefits that can be derived from these services:
1. Decision Making
Accountancy and bookkeeping services help an organization to take decisions regarding purchase, expansion, promotion, demotion, budget preparation, etc. It helps to take decisions considering both the internal and external environment.
2. Legal Requirement
Accounting books are to be maintained in a transparent and clear way so that it eases out the audit process and suffices the legal requirements. According to the legal requirements of the OMAN, proper accounting records are to be maintained, and failure to do so will have legal implications for the company.
A clear book of accounting records helps a business to sustain in the competitive market. As mentioned above, it helps in decision making. Proper decision making can help the business to grow and sustain in this competitive market.
4. Tracking Malpractice
It becomes easier for any firm to track any financial malpractice that takes place in an organization. Moreover, they can be rectified and redirected.
5. Budget Preparation
Well maintained book of records helps an organization to keep a continuous check on their budget. It provides a flexibility to increase or decrease the budget as per their company requirement. Old and new budgets can be prepared, maintained and controlled anytime.
6. Averting Financial Crises
Since these recorded statements are recorded and evaluated continuously, they reduce the risk of the financial crisis for the organization.
There are many advantages of accounting to a business. The main objective of Accounting is to record, summarize and analyze all the financial transactions of a business. It helps both the management of the company as well as the investors of the company. Accounting is a necessity for companies of all shapes and sizes. Some of the benefits of availing Accounting Services are:
- It helps maintain all the records of the company, and these records can be used at any point of time.
- The Analysis of all the transaction records helps in understanding the current financial standing of the company.
- All the different records will help the company to keep track of the finances of the company. These records can also be used when the company is looking to arrange for loans and can also be presented in a court of law.
- The records of the company will also tell us about the compliance situation of the Business. Having the knowledge of compliance is very important for the management as non-compliance can lead to various penalties and other problems for a business.
There are many more advantages which can be availed by a business if the management opts to avail the accounting services. The management should take care that the accounting services are imparted only by professionals who will take care of all the financial aspects of the Business.
When we talk about Accounting, the term bookkeeping is also thrown around. Many people have the notion that Accounting services are equivalent to Bookkeeping service, which is a completely wrong assumption. Some of the differences between them are :
- The process of Accounting includes Recording, Summarizing and analyzing all the financial transactions of the company, whereas the act of bookkeeping includes recording all the financial transactions of the company. There is no analysis involved in the process of bookkeeping.
- The process of Accounting is associated with the analysis of the financial transactions of the company and then taking decisions for the future of the Business, whereas bookkeeping is associated only with the recording of all the transactions of the Business.
- We can say that the process of Accounting is inclusive of the Bookkeeping process, but Bookkeeping is a step in the complete procedure of Accounting and forms the basis for the Accounting process so that the Accountant can help the management in taking decisions.
There are various other differences between Accounting and Bookkeeping, and this is why it is required to conduct the necessary research by the management so that there will be no problem for the Business in future.
Availing the services of a professional in the field of Accounting is a very important decision for a business and can change the financial condition of the business for better or for worse. Choosing the accounting department of a business has to be done with the utmost care as this will not only help the workings of the Business but will also allow the company to enhance its goodwill among the present and potential investors.
Here are some important points to keep in mind before evaluating a business.
- The fees charged by an accounting firm should be well within limits. If the firm is charging more, then the Business will have to think hard whether the services provided by the firm are really necessary for the Business or not.
- The number of services provided by a firm is very important to know by the management. There are firms that will also provide services related to accounting which will save time. They will be already having all the accounting data of the company, and this will make it less time for these firms to process the information.
- The certifications of the firm are very important criteria to check with great care by the management. The Certifications will help the management to understand which are the different areas in which the firm is comfortable for providing its services. The management can also check the reviews of the firm to make a better and informed decision.
Outsourcing is a business practice in which some of the business activities of the Business are allocated to a third party or a different company. With the help of outsourcing, it will be possible for the companies to focus the maximum energy and resources of the company on where is the Business activity most required. Outsourcing can be conducted by a business as a measure for cost-cutting.
There are a number of advantages of outsourcing the accounting services of a company. Those are:
- This practice will save the essential resources of a company, such as money and will also help the management to properly focus on the core product or services and make it better.
- The firms to which the accounting is outsourced will be having all the latest technologies and will also be updated with the latest iteration of the rules and regulations of the jurisdiction, which will, in turn, help the business to fulfil all the compliance requirements.
- With the management being able to receive better and detailed information about the company, it will be able to make better decisions for the Business and will also be able to plan the future for the company.
- When an activity is outsourced to a third party, then the company is free from investing its resources in repetitive activity, and this provides the Business with flexibility which allows the Business to try out new product lines.
The last few years have seen a huge advancement in the technological field, and technology is now everywhere. Even the field of accounting has not been left untouched by technological advancements. Businesses nowadays can make use of the various accounting software, which will make the accounting of the businesses easier and will help the management to extract detailed information about the Business.
There are various ways by which the accounting software can assist the Business. These are:
- It can help monitor the company activities, record all the transactions and provide a small summary of the transaction and can also help the employees of the Business by monitoring their activities.
- The accounting software will track all the activities which are being performed in the Business, and this will allow the management to understand if any fraudulent activity is happening in the Business.
- Many software’s have the option of shoeing a live dashboard that will show the present condition of the Business. This can be very helpful for the management for quickly understanding the presence of the Business.
There is a huge contribution of technology in shaping the ways, businesses work today.
In recent years we have seen a rise in the numbers of Small and Medium Businesses in general. These are businesses which do not have huge funds, and this is why such Business might be inclined to remove the Accounting function altogether. They might feel that it is a repetitive activity and uses up a lot of resources of the company.
But this is a wrong thought, and there are a number of reasons which can help a Small and Medium Business require accounting function.
- The accounting process can provide all the necessary details about a business which will in turn, assist the management in understanding the present condition of the Business and make a future plan for it.
- The accounting process will also help the management in understanding the tax situation of the company and will provide help in filing the taxes of the company.
- Maintaining records of the Business at least for the last five years is the correct practice and should be followed by all the businesses.
. Such records include, but are not limited to, bank statements, sales and purchase invoices, payment and receipt vouchers, LPOs, contracts/agreements, etc.
Every company is required to keep its accounting books in its head office for a period of at least 5 years from the end of the financial year of the company.
Are electronic copies accepted?
A company may keep an electronic copy of the original documents & records kept.
A proper accounting software:
- Reduces the time spent on manual processes
- Provides greater accuracy, with minimal errors
- Generates real-time financial information
- Can create automated invoices, credit notes and receipts
- Employs innovative financial technology
- Saves money on resources
- Leads to faster record-keeping, which generates more business
At GSPU, we aim at streamlining our clients’ accounting and administrative system. We provide a wide range of services that include:
- Maintaining accounting records and secure database
- Preparing management reports
- Preparing and maintaining sales and purchase ledger
- Reconciling bank statements
- Generating creditor listings and inventory reports
Being a financial consultant, we understand the crux of the business establishment process. We assure our clients in providing reputation building, maximizing credibility, and standing out from their competitors. We follow the International Financial Reporting Standards (IFRS) to main professionalism in our deliverables that made us one of the top audit firms.