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Accounting is the language of business, and without it no one understands how it’s performing.

How would you feel or act with someone who doesn’t speak your language? Probably impatient, confused, and wasting their time. The same goes for accounting or understanding the language of business. Luckily for everyone, it is a lot easier to learn than Chinese, Arabic or Finnish. Accounting not only allows you to evaluate how a business is performing, but also brings other benefits you will find worthwhile.

Taxes

One of the biggest goals for every business is to avoid the IRS. Reports thrown together at year-end and struggling to meet deadlines only bring unneeded stress and risk. Proper accounting provides records and order of all your business operations, making taxes not a year-round worry.

Should your worries or needs not be met, you should consult with tax professionals. They can help tackle any complex situation you may have. The money is worth the time and peace of mind.

Revenue & Expenses

Constant and growing revenue does not equal success. Many businesses make millions or grow at an amazing rate, but it means nothing with overwhelming expenses or costs. Constant and growing profit is how to measure success.

Accounting helps in recognizing revenue and matching expenses, creating the value of why numbers are important. Along with recognizing revenues and matching expenses, one is able to make improvements, such as smoothing out expenses, paying bills on time, and collecting revenues faster.

External Communication

Speaking the language of business connects you to the outside world. Communicating with investors, employees, shareholders, and other external parties creates trust and opportunity. Without such trust how will you obtain a loan or attract investors? Without opportunity how will you support business growth or current operations?

Because accounting is standardized everyone shares a global language. Yes, there is variety of methods and rules, whether simple or complex, yet this provides the benefit of personal preference and customization. No matter where or how you do business, accounting will fit to your needs.

Financial Analysis

From the picture that accounting paints of your business, you can easily carry out a financial analysis. Financial statements, consisting of the Balance Sheet, Income Statement, Statement of Cash Flows, and company budgets are key reports that will strengthen the long-term life of your business.

Whether you have questions about future revenues, expanding business operations, large capital expenditures, cash flows, making investments, or when to obtain a loan, a financial analysis provides the answers. Patterns, trends, strategies, practices, and forecasts are financial information you should look for. Doing so will help you make better short or long-term decisions.

Wrapping Up

So there you have it. Speaking and communicating the language of business is essential, as you can now understand. Not only will it create financial order and make everything balance (if it’s doesn’t, then there’s a problem!) but it will also change the way you see things.

Short and long-term goals can be made, issues and problems can be discovered, controls can be implemented, and you will understand your business and its potential.

I hope understanding the benefits of accounting for small businesses has helped you see your business in a different way, and hopefully this has also helped shed a light on why proper accounting is so important.

Now, it’s your turn. Do you have any comments, questions, or anything else you’d to add? Please let me know in the comments below.


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