It is always surprising when a business fails to keep accurate financial statements. I see a failure to prepare financial statements in a considerable number of businesses, especially smaller ones. As financial statements provide such valuable insight into your business, I thought it would be a useful exercise to recap on some of the benefits of keeping these financial records.
If you are running a business, financial statements are imperative for a number of reasons:
- Financial statements clearly indicate if your business is making a profit: For most, profit is the reason why you are running a business. It is therefore vital to consult financial statements to see an accurate reflection of the profit made.
- Financial statements aid in decision-making: This is one of the most valuable reasons financial statements should be prepared. These statements help you see a snapshot of your company’s financial position and assist in showing trends. This information is critical to have access to in order to make educated decisions.
- Financial statements are a legal requirement: If you have registered a close corporation (cc) or a company, you are required by law to keep financial statements that meet certain legal standards. You are also required to keep these records for a number of years, in case SARS requests them.
- Financial statements are used in acquiring funding: Your goal should be to grow your business and a key part of this usually involves funding from potential investors or a loan from a bank. With financial statements, banking institutions or investors can view an accurate picture of your finances and see how profitable your business is and has been.
- Financial statements are critical for acquisitions or mergers: For larger business, it is always worth being prepared for potential acquisitions or mergers and any potential buyer will need immediate access to financial statements to aid in their decision.
Accountant prepared financial statements
There are many advantages to having an accounting professional prepare the financial statements for your business:
- Your time is valuable and may be better spent focused on your business, not on compiling financials.
- Your tax payments will always be accurate: As your tax is calculated from the financial statements, you can be assured that you won’t be liable for any penalties for underpaying and at the same time will not be wasting money by overpaying your tax liability.
- An accountant should be able to provide valuable insight into your business and developing trends in order to help you manage your business more effectively.
To benefit from accountant prepared financial statements today, call Dirmeik Consulting on the numbers below:
Cape Town: 021 421 4444,
Johannesburg: 010 007 3026,
Durban: 031 007 0881