To most people, the work of an accountant is to simply do business math. As a business owner, hiring the services of an accountant can drastically improve the fortunes of your business. The accountant helps you get an accurate picture of your business's financial position, which is critical in decision making. Below are several other reasons why you should have an accountant in your organisation.
Calculate profit and loss
The primary reason why people start up businesses is to make profits. However, it is possible to have losses from time to time. An accountant will help you understand how much profit or loss the business has made. He or she will tell you which of the business revenue streams is performing poorly and which one is performing well. The accountant will also inform you why the business is making losses. For instance, maybe too much was spent on repairs or utility bills.
Financial planning and budgeting
An accountant will help determine which departments have spent the most money and whether there are any results to show. Accountants will assist in the preparation of budgets for the various departments. In such a way, you know how much you expect to spend during a specific period. Depending on the business environment, the accountant can recommend that you make budget changes to ensure the business meets its goals.
Calculate business risk
The accountant can help you understand how much financial risk the business can take at a given time. For instance, if the company needs credit to purchase a particular asset, the accountant evaluates if it is in a position to take up the loan and remain profitable during the repayment period.
The accountant evaluates the performance of the business over a specified period to understand the business cycle. Armed with such information, he or she can predict which months the firm makes the most profit, and when is the best time to make big investments, staffing adjustments or changes in production. A forecast will also help create long term and short term goals for your business.
Filing taxes is quite tiresome. Accountants have requisite knowledge on the various types of taxes the business has to file. Besides, they know how the organisation can reduce the amount of taxes it pays by reclaiming taxes.
The primary reasons that a business needs to hire an accountant are to calculate profit and loss, help out in budgeting, forecasting, calculation of business risk and filing taxes.