Accounting plays a crucial role in running a business. It assists the business in taking important decisions. The summary of all transactions made by the business in a year or a period of time, arranged in an orderly set of financial statements, can help you see what is going on in a business clearly.

1. WhyAccounting is
Important for Business
Growth?

2. Accounting plays a crucial role in running a business. It assists the
business in taking important decisions.The summary of all
transactions made by the business in a year or a period of time,
arranged in an orderly set of financial statements, can help you see
what is going on in a business clearly.

3. The financial statements can also help a business see the results of
previous decisions taken by the business owners and how these
decisions impacted the business.Thus, it is paramount to have a
basic understanding of accounting for growing your business. If you
want to learn the basics of accounting then it is recommended that
you sign up for an AccountingCertificate Course in Ahmedabad
from Super 20 Institute or any city of your choice.

4. Now, before we jump into why accounting is important for business
growth, let us first take a look at what accounting is.
Accounting is a detailed systematic recording of the financial
transactions of a business and financial statements are formal
written records of a business’ position and financial activities.

5. The three chief financial statements made by your records are:
1. The income statement that informs you about the profit and
loss.
2. The balance sheet gives you information about the financial
position of your business on a particular date.
3. The cash flow statement informs about the cash generated and
spent during a particular period of time.
Here are some reasons why accounting is important for the
growth of a business.

6. For EvaluatingYour Business’
Performance

7. Accounting maintains a record of expenses, gross margin, and
possible debt.This helps to give you a better understanding of the
result of operations of your business as well as your business’
financial standing. Simply put, it helps you to see a clear picture of
what is going on in your business from a financial point of view and
this allows you to evaluate the performance of your business by
comparing your current accounting records with your previous
accounting records.

8. Helps in Conforming to
Government’s Laws and
Regulations

9. There are various government laws and regulations that a business
has to comply with otherwise it can face penalties. Most of these
laws involve accurate reporting of financial transactions.Accounting
helps you to accurately record the financial information as it records
these transactions in a systematic manner.This makes it easier to
verify revenues, expenditure liabilities, and assets.Thus, in this way,
accounting helps in ensuring statutory compliance.

10. Budgeting and Future Projections

11. Accounting helps in budgeting and predicting the expected
revenues and expenses.You can compare your current accounting
records with your previous accounting records and allocate the
budget accordingly and this will also give you an estimate about
what revenues and expenses you can expect to incur in the future.
Business trends and projections are formed on previous financial
information to make your operations incur profits and this financial
data will only be appropriate if it is recorded in a systematic manner
through accounting.

12. Filing Financial Statements is only
possible through accounting

13. Accounting plays a major role in the filing of financial statements of
a business with the Registrar of companies as well as for direct tax
and indirect tax filing reasons.Thus, filing financial statements is
only possible through accounting.

14. Accounting is important for getting
loans and investments

15. Investors and lenders never invest in a business without having any
information about the profitability of a business.To obtain
knowledge about this, they require financial statements of your
business.
Thus, without maintaining accounting records of your business you
would not be able to find investors for your business and as a result,
your business will not grow.

16. Conclusion

17. Maintaining accounting records of the financial transactions of your
business is of utmost importance for the growth of your business. It
is crucial for big as well as small businesses to maintain a systematic
record of their financial activities so that they can evaluate their
performance and formulate profitable strategies for the future.
LearningAccounting or GST course in Ahmedabad from reputed
institute is important in order to comply with the government’s laws
and regulations.You might miss out on getting investors to invest in
your business if you do not have accurate accounting records of your
business.
Article Source
https://techashton.com/why-accounting-is-important-for-business-
growth/

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Opp. H K Commerce College,
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Ahmedabad – 380009