Updated at 17/08/2022 - 05:32 pm
You need to identify the tasks that your accounting system needs to fulfill, it will be of great help to you in managing your business. Here are detailed instructions.
Without an accountant, your business would be obscured in its day-to-day operations without ever understanding the business landscape. Accounting information explains how you made a profit or loss, providing clues as to where your company is succeeding and failing.
It also gives you the digital tools to collect amounts owed to you by your customers and pay your financial obligations to employees, tax authorities and suppliers.
These are the things that the accounting department in a business takes care of #
1. Ensure business cash flow of the business #
Your accounting department ensures that you have enough cash to operate by tracking and reminding customers of how much they owe and when payments are due. It also keeps track of the payments you owe to vendors, service providers, and other vendors and keeps these payments up to date.
The accounting department oversees these payments to make sure there is enough money in your account from customer payments for your business to pay its bills.
2. Ensure cash flow for salary #
Your employees keep your business running, and you have a moral, legal, and financial obligation to pay them fairly and on time. Your accounting department calculates your gross pay as well as withholding income tax, social insurance, health insurance, unemployment insurance, and other contributions.
Payroll accounting also involves tracking tax deductions and total payroll expenses over time, allowing you to assess whether payroll costs are a good fit for your industry or if you need them. evaluate effectiveness or not.
3. Taxes #
Your business must periodically pay value-added tax, corporate income tax, and personal income tax to the local tax office. Your accounting department is responsible for gathering and organizing the information needed to fill out these tax forms, including payroll information, sales figures, and operating expenses to calculate net income. (taxable profit).
Accountants keep track of your tax obligations over time and make sure your business has set aside enough to pay its obligations.
4. Provide the basis for business strategy formulation #
The numbers your accounting department put together can provide insight into which aspects of your business are most profitable and where operating costs are too high. This information can help you decide whether to focus on a particular business, such as wholesale or retail, or it can motivate you to experiment with new approaches, such as like introducing new products that expand your strengths.
Accounting also tells you whether your cash flow is sufficient to make the changes you're planning.
5. Provide business scalability (M&A) #
A good accounting system provides reliable financial information to the shareholders of the business, it shows the existing figures on the revenue, profit, assets and business expansion.
Refer to the procedure: Setup accounting system
The accounting system provides important parameters for investment decisions such as: Return on share, return on sales, return on invested capital, return on investment assets...
Accounting provides you with a “certificate” of the business situation of your business and opens you up to many opportunities for expansion and cooperation.