Introduction
Whether you own a multinational company or an MSME unit in India, you must understand that the success of your business depends solely on its relevant financial reports. Accordingly, you must possess and produce accurate, measurable, and comparable figures to your company’s stakeholders and collaborators. In other words, financial reporting lets your business stay on the right track of its goals and milestones. Financial reporting uses relevant financial statements and reports to highlight your business’ financial data for a particular period.
Types of Financial Reports for a Company/Business
Whether you own an MSME unit or a big company, you must provide the following financial reports-
Profit and Loss Statements
A profit and loss statement financial report refers to an income statement used primarily to evaluate your present financial condition and your company’s prospective growth in the upcoming years. The P&L of a company/business also summarizes its generated revenues and expenses for a specific period.
Cash Flow Statement
The cash flow statement of a company is analogous to its budget. It forecasts the outgoing expenses and incoming revenues for a particular period. The statement highlights the cash obtained from financing, investments, and operations. Every business has fixed and variable costs, which it pays from the income it generates. Your cash flow statement will highlight your ability to perform this efficiently.
Tax/GST Returns
The GST registration forms you submit or the GST return you file depend solely on your business entity and its operations. Even though your business has tax experts to file your taxes you must review the returns properly. GST returns or tax returns contain information that may help your financial team or you create certain growth strategies for your enterprise.
Also Read: GST Return Filing-Types Of Returns And Process Of Filing
Balance Sheet
The balance sheet highlights the performance of your business at a specific period, which may be year to year or quarter to quarter. It says that your business assets must be equal to the combination of your equity and other business liabilities. Assets may be short-term, like inventories with a faster turnaround time or money in the business checking account.
However, long-term assets are available as real estate and other equipment. Likewise, liabilities consist of short-term debts, like the costs involved in producing existing goods. Also, the liabilities consist of business loans and related long-term debts. Business equity is the cash invested by your investors or your stakeholders with the retained earnings.
Evolution of Financial Reporting
| Financial Report Formats | Features |
| Manual ledgers | Maintenance of transaction records in physical books |
| Software Solutions replaced Ledgers | Use of spreadsheets to achieve faster data entry |
| GST software for tax calculations and finance reports | Automated several aspects of finance reports |
| Cloud computing and data analytics equipped GST software | Real-time financial report generation directed toward data-driven decisions |
Financial Reporting in Manual Ledgers
Financial reporting has continued to be a vital part of every business right from the days of preparing manual ledgers. Before the introduction of computers and technology, businesses maintain their transaction-related records in physical books and the process is prone to many errors and consume many hours. At that time, ledgers were the primary source of business financial information and data analysis demanded a huge effort with multiple resources.
Replacement of Ledgers with Software Solutions
Financial reporting has undergone a drastic transformation with the advent of innovative software solutions and computer systems. In other words, the launch of computerized software solutions has a drastic impact on technology in financial management or reporting for businesses. Accordingly, spreadsheets replaced business ledgers to allow faster data entry by eliminating or minimizing the risk of wrong entries and errors. The shift has allowed business ventures to generate their accounting and finance reports efficiently and provided a better understanding of their current financial positions.
The GST Software-Dedicated Software Solution for GST Calculations
Another drastic change associated with the financial reporting evolution is the development and launch of a few dedicated software solutions, including the latest GST software. Such software solutions automated several aspects related to financial reporting. These include data entry related to GST registration and tax filing, tax calculations, and report generation. The tools have further helped businesses by saving their valuable time and available resources. Simultaneously, they ensured the accuracy of the company’s financial data.
GST Software Equipped with Data Analytics and Cloud Computing Tools
Other than that, today advanced technology has brought GST software solutions equipped with cloud computing and data analytics tools. These solutions have revolutionized the way an organization may track or analyze its financial details. Such tools let companies and ventures generate reports in real time and analyze the latest trends to come up with data-driven decisions.
How the Launch of GST Has Affected Financial Reporting
The introduction of GST and its obligations related to interstate and intrastate transactions have created certain complexities while preparing financial statements/reports needed for the right decisions for the company’s financial stability, profitability, and future. In this situation, individuals must use innovative GST software for the financial reporting preparation of their companies and business organizations.
Understanding GST Software
GST software has now become a vital tool for every business. Almost every type of business today gets the opportunity for streamlining tax filing with GST software. The reason is that the software automates tasks and simplifies the complex GST management process. It also helps in efficient return filing to make sure of timely GST form submission and strict adherence to the updated tax regulations.
Moreover, your business may generate invoices accurately and prepare invoices seamlessly without any hassle. If this is not enough, companies and ventures may use GST software to match their input and output taxes appropriately and automate reconciliation.
Also Read: How Does Unique GST Software Fit The Unique Needs Of Your Business?
Benefits of Implementing GST Software in Financial Reporting
The main objective of GST software is to help business transactions easily by digitizing the taxation system. When business owners use intelligent software, they can compute GST for their transactions without any difficulty. It further simplifies the financial accounting procedure for filing taxes. The software also lets users generate the necessary GST invoices and reports without any problem to make sure of GST compliance.
Companies and businesses may file taxes and generate reports effortlessly and on time during the entire financial year. Indeed. Depending on the software you use, it does much more than only automated GSTR preparations and timely submissions.
Accordingly, the GST software identifies irregularities in ITC to reconcile invoices and helps in repair. Besides, the tool stores files and acknowledges everything in the cloud to avoid the risk of any data loss. The key benefits of GST Software in business are as follows-
Simplifies Billing
Automated GST software lets companies and business ventures overcome their manual tax calculations and related challenges by completing the entire process automatically. In this way, businesses may save their money and valuable time.
Data Filing Makes Easy
Many businesses today buy accounting software to manage their finances and inventories, prepare invoices, and bill. Exporting such data is tedious and ineffective before manual filing and reconciling the GST returns. In contrast, automated GST software provides hassle-free GST registration, reconciles timely and accurate GST filing, and migrates business accounting data.
Reduces the Overall GST Filing Expenses
Uploading data and reconciling it to the GST system and computing tax requires a manual effort. Each of these activities leads to massive business expenses. Luckily, automated GST software saves money for a company or business. It primarily cuts the expense of hiring valuable resources for diverse financial requirements. Furthermore, the software eliminates the costs associated with license fees for diverse software.
Customized Software
Convenient GST software solutions always offer readymade templates, which you may incorporate into your existing tech procedures while filing the GST returns.
Records Reconciliation
Improper GST filing may lead to certain difficulties. Luckily, you may now use GST software to ensure error-free invoicing and billing. The automated GST software has a reconciliation function or feature to provide compliance even by saving you valuable time.
Data Storage and Security
GST software saves your billing details, accounting, and financial records, along with sensitive data digitally. Furthermore, it encrypts the billing and other records with passwords and mandates authentication requirements for its access. In this way, GST Software for Financial Reporting handles your business data securely.
Also Read: The Future Of GST Software: How It Could Bring Revolution In Finance?
Impact on Compliance and Regulation
Once you learn the benefits of GST software in business, you must learn its impact on certain GST compliance tasks and regulations. Accordingly, GST software may automate several GST compliance tasks. These include e-way billing, invoice generation, and return filing. Moreover, the tool provides valuable insights into various GST compliance data so that businesses may identify and address the involved risks.
Conclusion
Financial reporting offers tons of benefits to your business when your business team does it properly. It has a vital role in providing information and insight to business owners, stakeholders, partners, and other involved members. The involved parties use the valuable insights obtained from financial reporting to make future investments in their businesses. Furthermore, modern businesses have witnessed a significant impact of technology on financial reporting. Everything has become digitized in today’s world, which makes people more reliant on software solutions to achieve accurate and improved business results.
Companies and businesses have specifically become reliant on software solutions to meet their deadlines related to the timely filing of GST returns every year. Also, businesses need to get the necessary tax documents timely. Luckily, the advent of technology has provided innovative GST software solutions to speed up the entire process and to ensure tax filings at fixed timelines.
Therefore, GST software serves as a comprehensive solution to allow proprietors, organizations, and business owners to track, file, and manage their regular GST returns. The software also informs you when you need to file tax returns, pay the taxes timely to avoid any penalty and comply with the latest GST regulations.
Frequently Asked Questions
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What refers to financial reporting?
Financial reporting involves an activity, by which businesses and finance teams track or analyze cash outflows and inflows to check the present cash flow and identify any financial risk for the future.
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What are the types of financial reporting?
Every business produces five different types of financial reports. These are cash flow statements, GST/tax returns, balance sheets, accounts payable/receivable, and profit-loss statements.
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How does technology help in the preparation of business financial reports?
Technological advancements have increased the accuracy, speed, and precision of financial reports. It also has reduced manual data entry errors, automated duplicated operations, and lots more.
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What is the role of GST software in financial reporting?
Every business must produce a GST return financial report compulsorily and before the stipulated period. Hence, GST billing software helps companies and entities generate the latest GST-compliant tax invoices, calculate GST appropriately on purchases, and file GST returns.
