Most businesses make the mistake of handling everything themselves. Despite being intelligent and good at business operations, you have an area of expertise. This may mean that you need help with the rest of the regions.
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Accounting is one section of your business that needs professional involvement. There is a lot you must learn about the process of accounting. Any slight mistakes in bookkeeping and calculations can lead to errors and cause losses.
Therefore, you must consider getting an accountant to support your financial business and personal goals to avoid such instances. But what exactly is accounting all about? Find out about basic accounting details below.
Differentiating Between Company Secretarial Services and Accounting
More often than not, company secretarial service has nothing to do with regular secretary services. It involves administrative functions that ensure excellent corporate governance, legal compliance, and efficient business administration. Functions may include filing annual tax returns with the local authorities and drafting customary legal documents.
However, these professionals should not be confused with accountants. Accounting involves financial processes. It is the process of systematically analyzing, taking records, and interpreting the information gathered earlier. With accounting processes, the business stands a good chance of excelling financially.
The corporate secretary focuses more on the legal aspect of the business, while the accountant dwells on the financial bit by handling taxation, audits, and account management.
Defining Business Accounting
Just as you hire experts to handle all your different business needs, you need a competent accountant to support your accounting needs. It starts by understanding what accounting is and knowing its significance.
Accounting is a process that involves accurate collection and recording of accounting data. It is more than collecting receipts or dealing with numbers. Reports made after completing the accounting process are interpreted to communicate cash flows, performance, and financial positions that help stakeholders make key business decisions.
If you want to understand accounting, you should start with getting the guiding principles and definitions of terms right. Accounting practices are built on principles and guidelines that define operations in the profession.
Roles and Responsibilities of an Accountant
Accountants are responsible for overseeing financial records for businesses to ensure all data is correct. Once the data is collected, they create budgets, reports, and financial documents to help businesses progress.
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Some documents created using the data gathered include cash flow statements and income statements that the board may need. These same details help give financial direction to the business.
The following are some common day-to-day responsibilities of an accountant:
- New financial data collection
- Updating and reviewing past data
- Collection of evidence to be used for audits and other related legal proceedings
- Tax computation
- Confirming and verifying legal compliance
- Ensuring timely tax payments
- Risk assessment and forecasting
What Skills Do Accountants Need to Excel in Business?
Like it is with all other tasks and careers, accounts need to be equipped and adequately skilled to perform their functions. Some of the important skills include but are not limited to the following:
- Excellent time management skills
- Great listening skills
- Critical thinking
- Good organizational skills
These skills are instrumental in ensuring accountants collect the right information to communicate with stakeholders. It is not enough for an accountant to have math and data analysis skills. Financial data is important in contextualizing the progress of a business financially.
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The accountant should also serve as a financial investigator that points out weaknesses in the business’s financial chain.
Basic Accounting Rules Every Business Must Understand
Every business must understand a few golden accounting rules crucial for overall business success. These accounting rules can be summarized in the following categories:
- Revenue Recognition – This involves recognizing revenue through the business’s income statement. The process is time-bound and is often calculated and recorded on an accrual basis.
- Cost – This involves recording all expenses incurred in the business. It could be a product, service, or asset attached to the business. Such records are important as they help keep the company’s expenditures organized. It helps ensure that business money is spent appropriately.
- The Matching Rule – Expenses must match the revenues released in a specific accounting period.
- Full Disclosure Rule – This requires information on financial statements to be factual, accurate, and complete. All the relevant information captured shouldn’t be misleading.
- Objectivity Rule – The accounting data should be consistent and free from personal opinions. Make sure all information is supported by evidence. Receipts and vouchers should be attached to communicate objectivity in reporting.
Accountants’ role is to direct business owners and entrepreneurs on tax, growth, and legal concerns. With the information delivered by an accountant, businesses can make decisions regarding the future progress of their company.
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Usually, the insights gathered from the accounting processes can help propel the business to the next level. Some of the basic accounting roles performed are:
- Opening a bank account
- Tracking expenses, liabilities, equity, and assets
- Creating financial statement
- Creating payroll systems
- Coming up with a record-keeping systems
- Understanding the tax payment and regulation systems
Final Thoughts
Accounting is integral to any business that intends to grow and expand. No matter how complex the accounting systems seem, the good news is that many processes are easy to learn. You must master the basic accounting principles and outsource the professional services you cannot handle. Do not ignore accounting processes in business, as this could cost you.
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