We all have heard the term ‘Accounting’ in our day to day lives. Especially during tax season. Every business needs a process that stores all the records, accurate information, reports, inventory analysis, assets, liabilities, & profits. But, before we dive into ‘The Importance of Accounting for Every Business Organization’, let’s know the basic first, what is accounting?
What is Accounting?
Accounting refers to the process of recording financial transactions systematically in an efficient & effective way. However, There are many types including accounting for small businesses, forensic, government, management & for corporations. Whether it is about the decision making of the business or recording of financial transaction, accounting plays a vital role. Accounting is essential in the success of any business organization. Above all, ‘The Importance of Accounting for Every Business Organization’ is all about information consists of genuine facts & figures. And, for the decision making at every level of the business, accounting is essential.
Importance of Accounting in Business
1. Accounting in Planning
When it comes to the successful completion of various business management activities, systematic planning is crucial at every stage. The business planning holds cash planning, procurement planning, sales planning, inventory planning and fixing up target-profit. In other words, Business planning is all dependent on accounting information & data.
2. Accounting in Organization
Accounting is not only helpful in planning, it also plays a vital role in inappropriate execution of financial functions. It is also helpful in other important functions of the management. In addition, It widely helps the organization & management by providing the necessary information. The information included profit percentage, capital investment, controlling, management efficiency, its position, etc.
3. Accounting for Motivation
Motivation & rewards are some of the reasons for the success of an organization. Employees should be get motivated for the smooth & expected performance of the business. Therefore, Accounting helps the organization by providing essential information about the business. Moreover, Accounting helps for better decision making & motivation among the employees.
4. Accounting in Media of Communication & Taxation
Accounting is the process through which various organizational departments can communicate information including a plan of actions, & management decisions. Above all, In the present modern age, accounting is the best media for supplying information to the management. It is highly helpful when it comes to purchasing decisions, stock reports, sale price, cost of purchase, etc.
According to Advocate Amit Tiwari (President of Tax Bar Association Udaipur), ‘Nowadays it is impossible for any business organization to comply with the provisions of GST, Excise Duty, VAT or any other tax law without proper, timely and fair accounting.’
5. Accounting in Professional Advice & Decision Making
Accounting helps in planning, evaluating, managing & controlling the organization’s activities. In short, It is highly used in evaluating the organizational performance, operating policies & other compensations. On the other hand, one of the important function of management is to reach the final target of the organization by coordinating different activities for various departments in the business. So, Accounting helps in coordinating & also in the necessary adjustments within the organization.
According to CA Rakesh Porwal, ‘Every business needs an honest accountant which helps the organization with its professional & valuable advice for the development of the business. The efficiency of the management depends upon the use of accounting information & data.’ Hence, accounting is an essential tool for the management & success of the business.
Accounting With Tally
That is to say, Accounting is a process to identify the growth & profits of the business. We cannot have acknowledged business growth, sales, revenue without proper accounting. Moreover, for proper accounting, there is a lot of software available in the market including ACC, SAP, etc. But, if we talk about small to medium-sized business, there are effective accounting systems available namely as ‘Tally’ & ‘Marg’. Tally is an old & effective concept used in various organizations & businesses for proper accounting. If you want to compare two things like Profit & Loss, Debit & Credit, Tally is an effective software to be used.
According to Mr. Prince Choubisa (Founder of GAIT Computer Education), Tally is a crucial software today for every business to manage accounting information accurately & effectively. As the new govt. compliances, amendments in taxation, slabs & accounting formats comes every year, it is always required to stay updated within the business. The software Tally comes with every functionality from 4.5 version to GST version.
Conclusion
In conclusion, A business is always related to money, profit or loss which can be evaluated with Accounting. Proper accounting is the major key to the success of any organization. Most businesses fail because of the lacking of proper accounting information or a good accountant. Hence, The Importance of Accounting for Every Business Organization is the key for all your bookkeeping of business operations. It is a key to the record of where you spend & where your money comes from.
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