Accounting provides essential information for businesses about profits and losses to determine taxes owed. It helps ensure financial records are accurate to avoid penalties from faulty tax returns. Accounting also gives owners a better understanding of profitable and costly areas of the business to improve year-over-year performance. Accurate financial records through accounting are crucial for businesses to properly track spending and cash flow to avoid unexpected problems.

2. Businesses need to provide information
about profits and losses to determine
the tax payable.
Discrepancies in your records will end
up in faulty tax returns, which in turn
will lead to fines and penalties.
Accounting will help business owners to
ensure the information is accurate and
presented in a professional manner.

4. Accounting is the predominant way a company determines
its profitability.
High Revenue High Profits
Accounting will provide a greater understanding of areas
where the business makes profit and where costs can be
cut.
It will also give business owners a better grasp of the
progress that they make from year to year.

5. It is absolutely important for businesses to track the
spending and it can only be done with accurate financial
records.
There are plenty of businesses which work hard at growing
the business but fail to track the cash flow, leading to an
unexpected halt in its operations.

6. A budget outlines the expenditures needed for various
aspects of the business such as employment and
marketing.
Accounting information will allow us to provide a
more accurate estimate in the budget.
Sticking to a budget will help businesses to avoid
wasting capital on non-essential items.

7. Banks, lenders and investors usually require financial
forecasts relating to the new venture, especially if it is a
young venture.
The accounting information is heavily relied upon by lenders
or investors to ensure the entrepreneur has an accurate and
reliable picture of financial expectations.
A financial forecast is needed by entrepreneurs
who are seeking for external financing.

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