Running a business may look easy but it is tough. If you were about to open your very own company, your passion will not be enough to make sure that your business will run smoothly. Yes, it is the foundation of your business however; you still have to know every aspect of handling a business like human resource, marketing, operations, and more, but one of the most important thing you need to be knowledgeable is how to handle the finances of your business. If the finances of a company are not handled well and monitoring is poor, other aspects of your business may fail, for the roots of their operations rely on the budget rendered for them.
Accounting Function in Business
Basically, the finance department grasps everything related to money. It focuses on auditing and accounting for the finances of the company. Accounting, bookkeeping and auditing has a huge role on every business. For the company rely their planning and organizing on the figures that the data releases.
This measurement can be gathered in the balance sheet, income statements and other financial statements by the magic of accounting.
1. It serves as a measurement on how well the business did for a specific year.
Does your business gained profit? How much did it increase compared to last year? Did it lose income? If so, how come?
2. It can also forecast sales.
The business can create the budget and analyze the expenses throughout the given year. According to the sales report, if a certain product had gaining a lot of demand and the allocated budget is not enough. Maybe it is time to increase the budget on the cost of goods for the following month.
3. It can also help the management on how they will allocate resources for each department.
How much can we spend on producing a certain product or service, office supplies, equipment, and research? Can we increase the salary of our staff? Or do we have to cut expenses?
The Absence of Accounting in Business
After breaking down the function of accounting, how will a business survive without it? It can be a disaster and it may cause an inevitable downfall. Allocation of money and resources to the different sectors of the business may not be as accurate. Sales cannot be forecast well and expenditures for the succeeding years may not be planned ahead. And if a business fails to plan, they would be walking blindfolded in the dark.
Importance of Accounting
At first when you think of small businesses, it only focuses on simply mathematical equations but it doesn’t stop there. Mathematics and accounting goes hand and hand. It is important for you to study and apply accounting in their monitoring of your day to day income and expenses. The size of your business operations is not relative to the need of Accounting in any given scenario, because as long as you want to keep your business running, you’ll need Accounting.
TrendStatic Business Solutions is also an Accounting Training Provider located in Ortigas Centre, Pasig Philippines.
We are happy to meet with you for us to assess your company’s payroll requirements.
For more detailed information about this topic or you want assessment for your company, please feel free to contact us by filling up the blue form, and we will contact you as soon as we read your message.Â
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Accounting Services (Bookkeeping, Tax, FS Analysis, Business Process Review)
