The takeoff of business has its own issues, however, business operations have much more issues than the takeoff. Business operations require a very good accounting function that makes information available for decision making to the management and also to other stakeholders like the government and tax authorities. A proper accounting function in a business is the powerhouse of ‘intelligence’ for business operations.
Most small businesses do not know this and as such are losing a lot of money unnecessarily. For example, a small business making credit sales without proper billing or invoicing would always be having a low collection of cash because there is no way he can recollect how much the business was owed. Even where he could identify some of its debtors. There will always be contention as to the amount at stake.
So today I want you to note and take action on some of these things. When a business is at its start-up stage, the owners and managers always ensure that certain things are put in place, such as perfecting the incorporation and other legal requirements, securing office space, renovation, and furnishing the workplace and others.
Setting up the administration and accounting system with the intention of providing a smooth take-off of the business operations. Some would even go as far as procuring software.
However, that’s not the issue today, the issue is that once your accounting system is set up you are ready to take off the ground. And these require knowing some things you are expected to do in order for the business the operation to run smoothly. So, I will be sharing with you five points of “Some Things You Need to Know About Your
1. Regular Preparation of Your Financial Statement: –
A business that wants to succeed must not joke with regular preparation of Financial Statement. This must be prepared at least on a monthly basis, this is to keep you abreast of events, to let you know the actual position of your business, and let you know the financial health of your business.
It is not just the preparation, after it is prepared, you need to read it and understand it. Of course, the accountant will do the preparation and the explanation of the statement. The accountant will have to explain the state of the business, the profit/loss made that month, your cash flow position among other things.
All these are critical as it enables you the business owner or manager to nip any danger in the bud and attack whatever issue is at stake.
2. You Need an Accountant to Oversee Payroll and Payment Processes: –
In reality, the human resources i.e., the employee is the only living resources apart from you the entrepreneur among the factors of production. They are the ones who apply their intellect to add value and as a result, their pay and payment should not be taken lightly.
What that means is that the payroll should specify the deduction, net pay, etc. so they can know their net earnings. This is necessary so as to avoid complaints from employees, which can cause a lot of distractions.
3. Whom and When to Pay Certain Taxes: –
You need an accountant to let you know what tax to pay, when to pay, and whom to pay it to. Once your business is up and running, you are expected to pay Value Added Tax
(VAT) which is an important tax that tax authorities don’t joke with. So, you must know when it is meant to be paid and whom to pay to. Of course, the payroll has its own tax that is P.AY.E. (Pay As You Earn) which is paid to the State Internal Revenue Service which the accountant will help with as well as other issues tied with the P.A.Y.E., such as Pension and insurance.
4. Closing Books and Preparation of Financial Report: –
This concerns the end of the year. It allows you to have an overview of what exactly is the position of the company at the end of the year. What profit was the company able to generate, the cash flow, and others are things you need to know.
Apart from that, a statutory audit has to be carried out i.e., an external auditor will come and check your books. So, an accountant at this stage can help you prepare for your audit in such a way that the money to pay will be less because if an accountant prepares the books properly and the auditors get what they are asking for on time, then your bill won’t be high, because the auditors will spend less time with you in carrying out the audit.
5. Compiling and Submission of Taxes to the Tax Authorities: –
Your accountant will help you in compiling all the necessary documents you need to file for your various taxes. With the help of an accountant, who will help you with the financial report and other paperwork. There are various taxes to be filed at the year-end apart from company income tax. Also, it is required by law to file employment tax returns.
The whole point of this write-up was to awaken the micro, small and medium enterprises to the fact that without the role of accounting in business operations it might be difficult to make a success.
Indeed, you started out thinking that business operations are only concerned with production and marketing of your product or services, I hope by now that you’ve come to realize that you cannot underrate accounting for a successful business operations.
I don’t necessarily expect you to immediately go and employed just any accountant in order for you to execute the above. Rather, it would be helpful if you consult an experienced accountant preferably a chartered accountant who would help you look at your accounting and bookkeeping system. And you may also want to learn how to read and understand financial statements or reports.
Go ahead and try it – you may just get some unexpected results.