Do you know what the language of modern-day business is? You guessed it; it’s accounting.
The prime function of accounting is to provide essential information to managers, shareholders, and investors for assessing the organization’s financial performance. We can judge a business by Warren Buffet’s advice to investors about learning as much its accounting as possible.
Accountants are responsible for recording and analyzing company transactions, providing sound financial advice, preparing financial statements, and creating annual reports. Moreover, they may also counsel regarding investment opportunities, tax regulations and establish accounting processes within the company.
Accountants may choose to work as a partner in accounting firms or an employee in organizations. They can make this choice according to their specialized field, e.g., financial and management.
Management accounting focuses on the accurate recording and monitoring of an organization’s operational and economic activities. It also ensures that the administration has the necessary information to make sound business decisions.
On the other hand, corporate accountants are pivotal to the day-to-day running of a business. They can help a business be more compliant with statutory regulations and keep track of revenues and expenses. They ascertain the transparency and orderliness of all financial information of the company.
They also offer the management and investors valuable insights to utilize in decision-making and strategic planning. Although there are numerous types of accounting jobs, we’ll focus on management or corporate accounting in this article.
Keep Track Of Tax Payments and Refunds
Tax is a thorny subject for most small businesses as well as corporations. You pay less than the required amount, and you’ll be in trouble with the authorities.
You pay more, and your savings will be in trouble. So, it’s best to approach matters of business tax returns with due diligence.
A professional accountant can determine your allowances, expenses, and tax payments with greater ease and confidence. Consequently, they’ll generate significant savings and returns for the organization while simultaneously steering clear of any costly errors.
Help In Budgeting and Forecasts
A business’ growth and downfall rely heavily on its current budget and future projections. The financial records of a company are crucial to its budgeting. The accuracy of this data is higher when generated by an organized accounting process.
An essential feature of corporate accounting is budget creation. So, why does a small business need a budget?
Budgets provide a framework for different organizational needs, such as human resources, marketing, logistics, or material acquisition. Also, budgets can help an organization avoid unnecessary costs/expenses since it only focuses on specific financial goals for the year.
Increase Profitability Through Cash Flow
An often neglected part of a business is cash flow management. Cash flow can make or break a business, so entrepreneurs shouldn’t leave it unnoticed.
We know from recent economic downturns that it doesn’t take a while for things to go downhill in the free market. So, no matter how big the annual profits are, smart businesses realize the importance of having liquid cash to conduct daily operations and pay creditors.
A corporate accountant can help in this regard. Accountants can ensure your organization has a steady cash flow, stable enough to protect you from contingencies and risks. A good accountant can also help boost stakeholders’ and investors’ confidence and faith, resulting in more profit and business funds.
Advice In Business Decision-Making
Occasionally, corporate accountants will also provide a business adviser’s services and provide counsel for strategic decisions. Many people overlook this function of accountants but keep in mind that a professional accountant has worked with individuals and organizations from diverse backgrounds.
So, a senior accountant will already know the ins-and-outs of the issues you may come across as a budding organization. Hence, an accountant can act as an impartial counsel, notify you about opportunities, and alert you of possible risks.
Moreover, corporate accountants can offer essential business data to organizations. For instance, they can indicate a company’s break-even point, inventory turnover, debt-to-asset ratio, and net profit margin.
The break-even point lets your company know the profits it needs to earn on an annual/monthly basis to break-even its cost and revenue. These analyses can underline any shortcomings in your current profits.
All the ratios and margins mentioned above are key performance indicators of a business, so you should carefully observe them. With an accountant’s help, you can align your business’ goals and objectives with your financial progress trajectory.
It’s a common fact that the bigger your business’s size, the higher the regulations’ level. Different countries impose varying laws and regulations on local businesses.
Compliance with these laws is mandatory in most cases, and failure to do so leads to penalties, including imprisonment. A corporate accountant and well-structured accounting processes and systems can help assure statutory compliance when it comes to your organization. Your accountant can check if you’re handling liabilities like income tax, sales tax, and pension funds appropriately.
Dealing with statutory requirements demands extensive time and effort, and even the slightest mistake can be potentially disastrous. So, it’s better to leave it to the professionals, aka corporate accountants.
Bookkeeping And Financial Reporting
Want to know the key to better managing your business’s finances? Bookkeeping. Bookkeeping by an accountant helps you record business transactions, including receipts and payments of assets and inventory.
Accurate and clean books of account can help organizations chart their progress and identify any obstacles in the way. Another indispensable part of business finance is financial reporting. Preparing and publishing these financial reports to the relevant authorities is a legal obligation.
Public limited companies may be required to file these reports with stock exchanges for tax filing purposes. In contrast, a business must file its financial statement with the Registrar of Companies. A corporate accountant can provide these functions as part of their job.
A Brief Account
Indeed, we can’t measure all businesses on the same scale, and the same holds for accountants. Each accountant possesses their specialization and unique strengths.
The above article discussed some roles of corporate accountants and how they factor into a company’s operations. A management accountant’s primary duties include, but aren’t limited to, handling taxes, preparing financial documents, providing business counsel, maximizing profits, and ensuring statutory compliance.