Taxes and accounting form the foundational pillars on which the economy of any country rests. Tax is the money that individuals and businesses owe the governments in which they earn money. The tax liability varies depending on the size of the income, the nature of the income and the way in which the earned money is spent.
Accountancy means keeping an account of the incomes-expenditure, also known as the assets and liabilities of a firm. Accounting involves maintaining up-to-date balance sheets to keep a tab on the financial health of a venture.
People who are looking for professional tax and accountancy services can go to this page to find a solution for all their financial troubles.
Tax And Accounting Services Are Important For Companies And Individuals
Maintaining Clean And Correct Financial Records
Hiring a professional company for tax and accounting services helps maintain clean and error-free financial records. Some people might try to maintain their own accounts or fill the tax forms by themselves. However, good accounting needs professional knowledge.
Also, computing the tax liability, the tax deductions applicable etc., requires thorough knowledge of the latest happenings in the field. Such in-depth knowledge can be provided only by a professional who engages full-time in this field.
Maintaining clean and correct financial records is of utmost importance to avoid coming under the glare of government authorities. Hence, hiring tax professionals goes a long way in ridding company owners and individuals of legal hassles.
Maximizing Tax Benefits
The net profit of any company is the income that is left after the tax liability has been subtracted from the total profit. Thus, lowering this liability directly increases the net profit of any firm. A professional can give accurate advice about the best investment ventures which can improve the net profits of a company.
For instance, in many countries, money that is invested in purchasing infrastructure bonds is exempt from tax considerations. This is because infrastructure bonds reap profits over long gestation periods; hence people investing in them are considered for various kinds of relief. Likewise, donations to charitable organizations and disaster relief funds qualify for deductions.
A professional is the best person to provide information about deductions. For instance, women, minors and senior citizens are subjected to lower amounts of tax. Hence many individuals transfer company shares or property in the name of a lady (the spouse)in order to save money.
Incorporating Accounting Software
Currently, there are accounting software that are available in the market that helps keep a tab on complex accounting needs. Softwares like Microsoft Tally, QuickBooks, FreshBooks, NetSuite, Wave etc., help in a number of activities like invoicing, matching payments, generating financial statements etc.
Although a human can perform all these activities, using these software saves time and reduces the chances of man-made errors. Thus, this software has become essential for almost all firms. A professional who regularly uses these software is the best person to advise on which software will be the best fit for a particular company.
Keeping Up With The Changing Laws
Accounting practices and taxation laws keep evolving with the changing times. For instance, taxes on cross-border sales and e-commerce-based sales are increasingly coming under the scanner of governments all over the world. Hence if a company is involved in e-commerce-based services or has subsidiary offices in other countries, then a professional will be the best person to give these updates.
Helps Keeping Track Of Business Growth
Accounts help keep a tab on business growth and efficiency. The balance sheets can be used to compute metrics like return on investment (ROI), margins of profit, gross income before tax etc. These metrics are helpful in analyzing a company’s growth trajectory.
A company can use these metrics to analyze the performance of its ventures and investments over a specific time period. Post analysis, profit-making ventures can be continued, and loss-making ones are to be discontinued.
Representation Before Government Authorities
Companies might make honest mistakes while filing forms, or there might be some delay in filing the papers before the government agencies. In such cases, the government agencies might want to conduct a thorough audit, or the matter may be made to the courts.
Professionals understand the legal jargon and technicalities better than a person from the general public. Hence, in such cases, a professional company is best suited to rescue a company from troubled waters.
Raising Finances For The Company
Books of accounts are required every time an organization wants to raise finances for its new projects. If a bank or a non-banking financial company is to approve loans for a company, they will go through the past year’s accounts to check for the organization’s ability to repay the loans. Likewise, even angel investors would like to look into the books of accounts before investing their money in any new venture.
Thus, correct and up-to-date balance sheets are the best indicator of an organization’s work. Hence, these are the most crucial documents if an organization is to raise money as a loan or sell its shares.
Smooth Transfer Of Shares
If an organization undergoes a merger, some shares might need to be transferred; and ownerships might need to be changed. In such situations, well-maintained balance sheets help in smooth transitions.
Even individuals who want to transfer wealth or property need professional help if they want to minimize legal hassles and get the transfers done efficiently.
A business organization might think that hiring professional tax and accounting services will increase the expenditure; however, it is quite cost-effective in the long run. When the balance sheets are being taken care of, then the company employees can channel their efforts into other productive activities.
When each person does what he is best suited to do, then the overall productivity of a company increases. This, in turn, increases the profit margins and boosts business growth. Thus, hiring tax and accounting services can make life easy for individuals, small enterprises and also large companies having cross-border transactions.