A business can be identified as any financial activity or a collection of activities and can be done in various sizes. There are so many different business activities that take place within an organization such as Human resource management, Marketing, Accounting and etc. Regardless of the nature or the size of the business, it is important that company accounts are maintained in a proper manner. This is something common to all types of businesses but is mandatory for companies. Usually, companies tend to have different professionals from the field of accounting to maintain their accounts. Sometimes, companies even tend to hire outside parties such as business support service providers in order to check their accounts and calculate their taxes. However, maintaining proper accounts is important for a few reasons.
To know your return
The main motive of any business would be to earn profits on the invested amount. It is in our nature as human beings to expect a return on what we give. Therefore, accounting in businesses help us find the profits through the profit and loss statement. If you get a professional to do the calculations for you, they will be more efficient in the process since they have a n excellent knowledge in accounts, Singapore corporate tax rate and the economy as well.
Know the position
It is very important to know where your organization stands in terms of assets, liabilities and etc. You will not be able to know the accurate details regarding that without having proper details regarding your accounts. Therefore, it is important to maintain accounts and to have the statement of financial position at hand. There will be parties such as employees, general public and shareholders who will be interested in the information. Usually, even organizations providing company formation services in Singapore also provide accounting services for their clients.
Taxation is something that is mandatory for companies. Therefore, proper tax calculation is essential to maintain the company without any issues. This is crucial since payments are done based on the calculations. And, any mishaps can lead to unexpected situations and even result in penalties. Additionally, these issues can also be a threat to the business since so many outside parties such as potential investors keep a constant eye on the company’s performance.
The above are the main reasons as to why accounting is important for an organization. Additionally, it is also mandatory that accounts are maintained for the reference of government officials and for the references of the owners while taking important business decisions regarding the organization’s future