The role of Accounting for small businesses

the role of accounting for small businesses

Accounting helps small business owners keep track of assets, liabilities, income, and cash flow. This is highly beneficial as it allows owners, managers, investors, and other stakeholders to keep track of the business’s financial performance, enabling them to make much more informed decisions. As extracted from this page, let’s explore further why accounting is essential. 

Accounting is also essential for tax reporting agencies. Any small business owner in Canada must keep a record of all income and expenditure for tax purposes. Failing to comply with these Accounting standards can result in legal issues and heavy tax penalties. Accounting is the language of business. Understanding accounting involves a logical way of thinking. After all, numbers don’t lie! They help paint the most accurate picture of the current state of any business. Using accounting principles and standards such as the ones set by the IFRS and GAAP can help business owners achieve many of their business objectives. 

Maintaining accurate record-keeping can help serve different business purposes, including:

  1. The Recording Of Business Transactions

The primary and most important of all accounting objectives is to maintain an accurate and systematic record of all financial transactions taking place at the business on a day-to-day basis.

2. Decision Making

Maintaining accurate accounting records can also greatly assist in a wide range of decision-making processes for owners, managers, and other stakeholders. 

3. Meeting Legal Regulations & Requirements

Canadian law mandates that all small businesses maintain accurate financial records of all business transactions.

4. Accessing Business & Financial Performance

One of the most significant benefits of accounting for any business owner is that when compiled into a financial statement, these numbers help determine how well the business performs.

5. Control & Accountability

By adhering to Generally Accepted Accounting Principles (GAAP), a business owner can instill routine accounting checks and controls that help identify anything out of the ordinary.

6. Tracks Cash Flow

As a business owner, you should always know how much cash you have at any given time. 

Enroll in our Diploma in Computerized Accounting with Office Administrator in less than a year! You may be eligible for up to $28,000 in funding if you are a resident of Ontario. Please email us at [email protected] to get you started.  

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