5 reasons why businesses need to keep accounting

When doing business, The first thing you need to do is “an accountant,” as a business owner, we must know how to make an account to know the business’s financial status because “Accounting is the language of doing business. It is information in business, it is the cornerstone of all business decisions in finance, and it helps as a fundamental business strategy.

Accounts make an entity more profitable, cost less, and most importantly: Businesses with accounting skills have a sustainable future. In this article, I will introduce 5 reasons why businesses need to set up an account.

# 1 Accounts will force your business to grow. 

Bookkeeping will allow us to see the movement of the business. Know the financial status of the business better. This allows us to see a clear picture of profit and loss; for example, it makes it easy to know unnecessary expenses and easily monitor all departments and processes.

Business owners can use this information to make many decisions. Such as reducing inventory Analysis of the cost of marketing Or shipping costs Because the heart of growth lies in knowing the big picture first

Also, Accounts make the business more profitable, like australianonlinecasinosites.com. It is an advantage that results exponentially.

# 2 The account calculates the profit. Unnecessary expenses to be automated.

Too often our business spends too much on sales as a small business Finding new customers is easy and expensive. For this purpose, indicators indicate whether the customer brings profits or not: “Acquisition Cost,”   which is used to acquire a customer.

Most entrepreneurs often understand that if they buy 60 and sell at 100, there will be 30-40% profit of every sale… but when considering the small expenses From the account to the statement of financial position at the end of the month or the end of the year to know that the business is losing Because they do not charge the cost of placing products for sale Shipping cost Storage expenses, etc. Bookkeeping is the profit classification. It is profitable only when enough money is left in the bank account after all expenses are paid.

These expenses can also be deeper into Variable Cost, Fixed Cost (variable cost and fixed cost), or the income statement can be converted to Cost of Goods Sold and Operating Expenses (cost of goods sold and operating costs). Jobs), and businesses that know themselves this well will become more profitable.

And if the business can control its own accounts well, What follows is ‘Lower costs,’ which will give a clear competitive advantage—the lower the cost, the better its price than the competition. And prevent newcomers from entering the race as well. It is considered the original business strategy that has been around for a hundred years, but it still works.

# 3 Manage corporate liabilities Make business wealthy

The account is directly related to trading, as mentioned on the site of leroijohnny. If we have this knowledge, it is definitely advantageous to those who do not know. For trading, that account is “Business language” because accounting is the medium of communication between the company and those who want to use the financial statements.

For example:

– Management wants to use financial statements to analyze business performance.
– Debtors and creditors want to use financial statements to analyze trading partners whether they are reliable or not.
– Investors want to use financial statements to analyze the business To decide whether to buy, sell, or keep holding.
– Securities analyst. Want to use financial statements to analyze the business To issue analysis to investors.

By the bookkeeping, the components of the financial statements are divided into the entity. It is divided into main sections as follows.

  1. A statement of financial position (or balance sheet)  is a statement that shows the financial position of a company at a specific point in time.
  2. An income statement is a statement that shows results. The performance of the company over a specific period of time
  3.  Statement of cash flows – These statements show the company’s cash flow over a specific period of time.

And this information is useful in many ways, such as

  1. SME businesses can use account information as evidence for bank borrowing.
  2. Businesses use it to submit documents to the government, such as tax matters.
  3. For large companies in the stock exchange, they will use this information to submit to their holders. Watch stock too.

# 4 Accounts Create Data for Data Analytics Entities. 

Accounts help to save and build a database on our past businesses. This information in the future will become a valuable asset to our organization and business.

But to make good use of this property, The business has to go through several forms of analytical processes. Most modern businesses can easily do this through a variety of programs and tools.

Accounting is another type of job where technology has become more automated. It is working with data To evaluate the performance within that entity’s framework, And accounting is the primary method of every business in making management decisions. This requires numerical references, bookkeeping statements, and big data driving this business.

An obvious example in this era is Digital Transformation. Organizations have to bring all of their information online to make it easier for everyone to access and make the organization move faster… Most of the information comes from the accounting department.

# 5 tax advantages

Another benefit of bookkeeping that we have to mention is the tax. Businesses can analyze this information to find ways to cut taxes or reduce the amount of tax they pay according to government-approved regulations.

First of all, we need to understand that taxes are what businesses have to pay. After considering the company’s profit (at the rate of 20% of net profit), the business can control expense reports’ timing. Or finding additional investment methods each year To make their own net profit less is a legal tax reduction.

For example, Managing billing time each year, Suppose that in the last quarter of the year, Businesses know that there are already many expenses this year. I cannot do an account to deduct expenses anymore. Instead, businesses can speak to their suppliers to postpone the billing for the next year. (A few months postponed) next year, the business notes that these expenses Net profit will be less. And businesses will pay less in taxes that year.

One more thing is a long-term investment, which we can often see in startups in America. For example, the online company Amazon chose to invest in warehouses. Building more and more backyard website systems Although there is a gross profit from the sale, it doesn’t have much net profit. It is both a way to reduce the need to pay taxes and build a great business empire through investing in competitive businesses.

There are many legal tax relief techniques. What we can often see is donating money, Business restructuring, Or even understanding new government policies. The business that can collect these tax benefits has a good understanding of their own accounts.

Finally, about the benefits of bookkeeping.

If you want your business to be successful, We should take time to learn to account. Often, doing business is a matter of computing because the numbers tell us what the real problem is. And which solution should be the correct one.

Numbers can be used in many businesses and occupations, from price calculations. (Calculate profit and loss, investment results) or even calculate various stocks. As long as we focus on ‘money (sales and profit), people who do well calculations and bookkeeping will generate a lot of profit. People who can’t calculate will lose their business. As for doing business, just by knowing ‘addition, subtraction, multiplication, division, and bookkeeping,’ you can maintain a stable and sustainable business that everyone can follow.

All you need is to know simple math; you can make your business rich by doing real accounting and calculations. When we were young, we used to do income – expense = balance, a children’s account.