Making Sense of Numbers: What Good Accounting Can Do for Your Business
Dealing with numbers is a vital part of running a company, but for many business owners, it's a troublesome and tedious task. Thankfully, there are accountants who can do most of the work.
But of course, accounting is much more than just crunching numbers. In this article, we'll discuss how good accounting can benefit your business.
Avoid profit loss
Bryan Welker of Forbes said that a good accountant acts as a “legal loophole expert”, one who knows how to leverage the smallest factors, from labor liabilities to changes in currency rates. Proper knowledge of these components lets you avoid potential profit losses.
A tighter budget also allows you to make more accurate revenue forecasts. If you’re seeing a positive trend in your business (e.g. one of your products sees an increase in sales during a certain season like summer), the logical thing to do is to take advantage of this trend. Without accurate numbers to back them up, it will be more difficult to make the necessary adjustments.
In addition, good accounting helps in tracking expenditures. As discussed in a previous Scrubbed article, major expenditures can make or break your business. Documents such as financial reports give you an idea of which segments of your business have the highest costs.
Accounting is necessary for record keeping when dealing with financial institutions. If you’re planning on taking out a business loan, you need to prepare all the required documents. An accountant’s task is to keep your documents organized and ready when they are needed.
Protection from tax and audit issues
More importantly, having organized accounting data shields your business from damaging events, such as problems during a fiscal audit. In 2014, the New York times reported that the IRS audited 1.2 million tax returns, including those from sole proprietorship businesses. Only 13% emerged unscathed and free of tax adjustments. All in all, the agency collected $2.1 billion in civil penalties against business income tax filers. It's best not to take any risks, so make sure that your business is fully compliant in terms of taxes.
Holistic business growth
Growing a business requires a general understanding of finance. Unlike most entrepreneurs, accountants have been trained to understand every aspect of gathering, interpreting, and using numbers for the benefit of businesses. Some accountants even master certain niches of business, giving them more advanced skills that can be invaluable for a company. The different career opportunities in accounting were highlighted by Maryville University, and these include auditing, taxation, and forensic accounting. Aside from the first two, your business may also benefit from forensic accounting, as the Federal Rules of Evidence says that an expert opinion can testify in courtin dispute cases. This is crucial in the business arena, where lawsuits are not uncommon.
Numbers might be intimidating if they are not in your favor. Having good accountants can make numbers your friend, and our team are more than ready to assist. Head over to Scrubbed's free consultation page to see how our audit-ready solutions can address your business needs.