Importance of Accounting for Businesses
Accounting plays a crucial role in operating a business because it helps track income & expenditures, ensure statutory compliance, & provide investors, management, & government with quantitative financial information which is later used to make business decisions.
Accounting assists the management in establishing the financial position of the organization. The financial report helps them to know the current position of a business & also depicts the position of a company in a specific time. Accounting supports the organization in planning, decision making, & controlling processes in an organization. This helps in running the business efficiently & effectively.
Accounting also helps enterprises in recording, classifying, & then reviewing all the transactions in an organization. This allows the company to report a well-assessed financial document such as a balance sheet, statement of profit & loss, statement of cash flows, & trail balance when all the transactions are been properly accounted for.
Benefits of accounting include:
- Accounting keeps you organized. The management is aware of their revenue & expenditures distinctly.
- Accounting provides a backup for your tax return claims (if any). Proper documented financial reports are a must if tax returns are to be filed by the company.
- Accounting lets the shareholders observe the growth of the business through the maintained accounting records.
- Business decision-making & budgeting is made to move in the right direction when your books of accounts are maintained accurately.
- Accounting helps to avoid common mistakes like overspending, underspending & plateauing.
- It will help the management conduct a proper risk analysis for your business. You will be able to venture into new business strategies depending on your incomes & outcomes.
- Properly maintained accounts can help you apply for loans or investments.
- A proper accounting system guarantees timely recording of obligations that are to be paid within the time frame. This may comprise of a pension fund, provident fund, VAT. Timely payment of these liabilities helps companies to the statutory complaint.
MIS Reporting & it’s Importance
MIS stands for Management Information Systems. This is a collective report on people, organizations, technology & relationships among people & organizations affecting the company. The primary objective of the MIS reporting system is to provide critical business information to the management for complex decision-making. Since it is necessary for the administration to have trustworthy information related to the current market trend & significant business data for making quick & advised decisions.
Furthermore, management reporting helps to identify the functional areas of an organization. Ensure that employee operations & performance are regulated & controlled. The future decision can be taken with precautions. Can distribute responsibilities to individuals & make their target is clear.
The Management information system includes:
- Collection of applicable data from various dependable sources.
- Administering this data to extract pertinent & useful information.
- Delivering this information to the respective department.
Advantages of MIS Reporting
- Data Management: MIS helps in maintaining & managing crucial business data for assisting in complex decision-making by the management. This critical information is stored in an organized manner, & it can be retrieved by the management as & when required.
- Trend Analysis: The management is required to prepare estimates for strategic planning & futuristic goals. To generate such a strategy, it is necessary to have accurate reports on existing market trends. MIS uses several mathematical tools for analyzing the current market trend & predicting future trends.
- Strategic Planning: MIS reporting plays a significant role in the strategic planning for the company. It helps in determining the future requirements of the company & supports in devising goals & strategies based on such information. The MIS report is also valuable in identifying resources expected to meet the company’s objective. Thus, it is vital that the information provided by MIS is accurate & reliable.
- Identifying problems: MIS report offers information related to every aspect of activities taking place in the company. Hence, in case there is a problem, MIS reports are presented as a backup in identifying the source of the problem.
- Increases Efficiency: Information documented by MIS & reporting is employed in inventing goals & future strategies for the company. Also, the performance of the business can be assessed with the help of MIS reports. Hence, MIS plays a very important role in enhancing the efficiency of the company.
How can we help?
By unlocking the potential & creating opportunities for growth for our clients, we contribute to their business achievements. With a dedicated team, we provide experts who understand key businesses & provide their expertise in terms of accounting, taxation, MIS reporting & consultancy. Contact us today to help you with all your accountancy & bookkeeping requirements!