India observes Chartered Accountants’ Day (CA Day) on the 1st of July every year. In the current society, there is a high demand for qualified accountants.
This is the result of the economic reforms of 1991. After the implementation of those remarks, India saw landmark growth in businesses.
Several MNCs followed the boom and set up offices and manufacturing units in India. With the growth of these industries, the need for professionals like accountants grew.
To put it in simple terms, an accountant is a practitioner of accounting. They provide accounting services such as financial statement analysis and auditing. But modern accountants have to do much more.
With new businesses and startups emerging, the demand for accountants is high.
The growing businesses usually hire accounting firms instead of a sole practitioner. The advantages of that include more attention and consolidation of assorted services.
Accounting firms offer many services under one roof. This consolidation of services has become an attractive feature for businesses.
What services an accounting firm can offer depends on who the client is. Accounting firms provide many services, from preparing accounting statements to developing accounting software.
Services Offered by an Accounting Firm:
- Accounting services:
This is a no-brainer. Accounting firms offer accounting services. They provide all the services from start to end, from bookkeeping to the preparation of financial statements. The process starts with bookkeeping. Bookkeeping is the process of recording the company's financial transactions. They should then be categorized into organized accounts. This happens every working day throughout the year. The next procedure is preparing the financial statements. Financial statements include profit and loss statements, balance sheets, and cash flow statements. Profit and loss statements show the expenses and incomes of the business. The balance sheet displays the assets and liabilities of the company. And cash flow statement shows the movement of cash in the company. Accounting firms prepare all these for the company. They also do monthly, quarterly, and annual reporting. Accounting is one of the most regular tasks of a company. It varies based on the size of the company and its operations, but it is a necessary procedure. While preparing these statements, there should be compliance with accounting standards. They should also follow the accepted accounting principles. Accounting firms assure compliance. Individuals with incomes can also hire the services of accounting firms.
- Taxation services:
The major source of revenue for our government is from collecting taxes. There are direct taxes and indirect taxes. There are distinct laws governing both of them. Income tax is a form of direct tax. It is governed by the Income Tax Act of 1961. It is levied on individuals as well as businesses that have taxable income. Businesses do a lot of financial transactions. So, hiring an accounting firm to deal with taxes is prudent. Accounting firms help calculate taxes, file income returns, and other procedures. Accounting firms can also help in saving taxes. Businesses pay a large amount in taxes. So, it is prudent to have an expert look into legal ways of reducing this burden. Businesses also own many properties and may have to pay taxes on them. Hiring an accounting firm will help, as it negates the pressure of having to deal with multiple taxes. Businesses operating globally may have to pay taxes in other countries. Having an accounting firm to deal with international taxes can be a help to businesses. The accounting firms will have to make sure that they have followed all the regulations. Individuals with high incomes can also hire the services of accounting firms.
There are different laws governing indirect taxes. And the burden of indirect taxes is transferable. GST is an indirect tax. It gets levied on goods and service providers, who pass the burden to the buyers. An accounting firm can assist businesses in evaluating and paying GST.
Taxes are the leading source of revenue for the government. So, the government regulates them. Having an accounting firm will ensure the payment of taxes without any violations.
- Cost and Management Accounting:
Businesses incur a lot of expenses in the course of their activities. Manufacturing goods and providing services cost them money. So, they concentrate on cutting costs and maximizing their profits. The management needs information to enhance their profits. Cost accounting assists the management in cost control. Management accounting provides information that can be useful in key decision-making. Accounting firms can use financial accounting data to control costs. Management accounting uses data from financial and cost accounting. Cost accounting audit is mandatory for certain companies. But it will be a useful tool for management. Findings from management accounting help the management in decision-making. There might be less legal basis for cost and management accounting. But they are useful tools that can help a business focus on its goals and grow.
Auditing is an independent review of financial accounts and statements. The result of the review and the audit report will get shared with the shareholders. It will also get shared with the government, banks, etc. There are several types of audits. Here is a list of some of them-
- External Audit
- Internal Audit
- Statutory Audit
- Financial Audit
- Tax Audit
- Compliance Audit
The external audit is independent auditors' audit of the company's financials. They examine the statements for completeness and accuracy of financial statements. Publicly traded companies have to get their records externally audited. This also applies to companies selling shares to the public.
An internal audit is an independent consulting done within the company. The company asks the auditor to perform this audit. They are used to review internal matters. They are useful for enhancing value addition and improvement of the business.
A statutory audit is the audit of financial statements done because of legal requirements. The auditors review the financial statements and report them to the concerned authorities. A compliance audit is like a statutory audit. Here the auditor checks compliance with certain regulations.
A tax audit is the audit of the finances done by or on behalf of the government's tax department.
Accounting firms perform external, internal, statutory, tax, financial, and compliance audits. Auditing is a legal obligation. Having a competent accounting firm do the audits will ensure legal compliance. It also ensures internal competence.
- Financial advice:
Accounting firms can do much more than financial statements, tax support, and audits. Accounting has evolved as a need-based service. Modern accounting professionals are capable of providing several new services. Accounting firms that started with these new ideas are proving valuable to businesses. Accounting firms provide services like financial forecasting. They can be helpful as management consultants and financial planners. Many accounting firms also provide valuation services. This will be helpful in cases of mergers and acquisitions. Accounting firms also provide CFO services. CFOs can advise businesses on various matters.
The firms are experts in management accounting. They can use this data to help the business.
Some firms also provide services related to bankruptcy and insolvency.
With these new services from accounting firms, the business can operate with confidence. They can look at new avenues and opportunities with some guidance. Accounting firms can provide this guidance to the companies.
- Other Services:
The corporate world has grown by leaps and bounds. New businesses are coming up every day. Venture capitalists provide funding to startups. With this emergence, the scope for services has also increased. Accounting firms have started to provide several new services. Many accounting firms have started to develop their own accounting software. In the internet age, accounting software is a huge help to businesses. They save time, money and manpower. They should also train people to use the new software.
Accounting firms are now widening their scope. Large accounting firms with global clients are expanding their services. They have now started to offer services like legal consulting and wealth management. Some accounting firms offer investment and portfolio management services. These may seem far away from their initial services. But in the corporate world, there is a connection. Accounting firms are learning to recognize these connections. It will help them to grow. It will also help their clients to get consolidated services under one roof.
Accounting firms also help the job market. They are growing and are on the lookout for fresh talents. Through campus placements and job fairs, they look for new talent. This will reduce unemployment among youth. Apart from hiring, they also encourage their hires if they wish to study further. Many firms have helped students to clear exams while working for them.
Accounting firms play a pivotal role in our society. They are helping the government, companies, and individuals. The professionals in the accounting field have to keep upgrading their knowledge. Accounting firms find new ways to serve their clients. They come up with innovative solutions for modern problems. They're also acquiring new talent to work for them. Accounting firms are good at upgrading themselves to face new challenges. Companies should hire an able accounting firm to face the hurdles of modern business.
We know the benefits a good accounting firm can provide. Contact Especia for the best accounting and financial services!
1. How are accounting firms helpful to modern businesses?
Businesses have to deal with a lot of rules and regulations. Accounting firms are making it easy for them by providing service and assistance. They are also ensuring that they adhere to the rules and regulations.
2. What are some services offered by accounting firms?
Accounting firms offer several services. They provide accounting and taxation services. They assist in financial decisions and provide auditing services. They also provide cost and management accounting services. They are also expanding to new services like legal consulting and wealth management.
3. How have accounting firms helped new businesses?
New businesses require a lot of attention. They have to deal with competition and find customers. They have to follow several rules. Accounting firms work closely with these businesses. They provide the necessary assistance to them. They also help them to follow the rules and regulations. They provide helpful advice to businesses. They strive to use innovative ways to solve the problems faced by the new companies.