Starting a business is not an easy task. And managing one is an even tougher task. As a founder, we have so many responsibilities to handle. Although it’s not compulsory, almost every business owner hires a chartered accountant. Why?
Because, as an owner, your main goal for the business is to grow it and make it reach new heights. And with that, if you take on the responsibility of managing finances, oh god, that becomes stressful. You will not be able to focus on the primary goal of your business. So hiring a professional like CA can make your life easier, and you can be stress-free about who will handle your finances.
Whether your business is small or large, there is always going to be a need for a chartered accountant. Tax legislation, cash flow control, accounting, budgeting investments, and accounts payable—there are so many things that no other person can handle better than a CA. As an owner, it is important for you to know that your balance sheet must always align with the goals your business wants to achieve, and a chartered accountant can be your best ally in performing this task.
In this blog, let’s understand why every business needs CAs in detail.
Role Of CAs In Business
Financial Compliance
One of the most significant roles that a CA can play is to make sure that your business follows through on compliance with financial regulations. This includes the likes of meeting the requirements set out by bodies such as the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI), and the Ministry of Corporate Affairs (MCA).
Suppose you are managing a startup; your CA can help you understand and meet all requirements so you never fall into penalties and operate your business smoothly. There are tons of requirements you have to fulfil before and after setting up a business. Your CA can very well guide ou in completing those requirements while adhering to laws and regulations.
Auditing and Assurance Services
CAs perform audits to affirm the accuracy and reliability of the financial information that your business furnishes. These may include a statutory audit, which is mandated by law, an internal audit to cross-check your methods, or a special audit to suit specific requirements.
Chartered accountants possess a thorough knowledge of auditing standards and techniques, which are used to conduct independent audits and provide assurance to business owners, investors, and other stakeholders.
For example, if you’re in the business that manufactures machinery, a CA can conduct a statutory audit to ensure your financial statements comply with legal requirements, an internal audit to verify the accuracy of your inventory records, and a special audit to assess the financial impact of a new production line. This will help you in maintaining transparency, improve internal controls, and build trust with your investors and clients.
Tax Planning and Compliance
A CA helps you manage your taxes efficiently. They advise on tax-saving strategies, ensure you are tax-compliant and represent you in the event of tax assessments or disputes. Think about how your CA, a tax expert, helps you save money from grappling with these complex and complicated tax laws.
For example, the very famous CA G.P. Kapadia has advised many businesses on their tax planning strategies that have saved them handsome money on their taxes.
Providing Financial Advisory Services
CAs provide an essential financial advisory service to help budget, forecast, and make investment decisions. They analyse economic data and turn it into understandable information, pointing you in the right direction for your business decisions. They also help you decide whether or not to expand your business or invest in new projects.
For example, if you consider opening a new store, a CA can evaluate your current financial situation, predict potential profits and costs, and advise you on whether this expansion is a good idea. They can also help you figure out how to fund the new store, whether through savings, loans, or investors. They will make sure that your decision is well-informed and sound.
Financial Risk Management
CAs help in identifying and managing financial risks such as liquidity problems, credit risks, or market fluctuations. They develop strategies to protect your business from these risks. Think about the situation wherein your business is facing a probable cash crisis. A chartered accountant can assist you in planning and managing your finances to avoid this crisis from occurring altogether.
CAs at KPMG have assisted many large organisations in managing their risks by identifying financial challenges and guiding them to stay afloat
Promotion of Good Corporate Governance
Good corporate governance guarantees that your business will operate transparently and ethically. CAs also play a vital role in establishing and maintaining such practices. For example, if your business is expanding to other countries, a CA can help you set up strong financial reporting systems to follow both local and international rules. This improves transparency and builds trust with stakeholders.
Valuing Your Business
CAs are experts at determining business valuation for any purpose, such as mergers or acquisitions or some financial reporting reason. They follow different methods to find the fair value of your business or asset. If you want to sell your business, a CA can help determine its worth.
For example, if you want to sell your family-owned retail store, a CA can help determine its worth by assessing the market value, assets, and future earnings potential.
Supporting Strategic Decision Making
A CA will provide insights and advice that will help you make significant and strategic decisions for your business. They analyse financial data and help you plan the future and set goals. For instance, if you own a tech startup, a CA can analyse your financial statements and market trends to help you decide whether to expand your product line or enter a new market.
Navigate Economic Changes
CAs help you adapt to economic changes and uncertainties. They advise on handling market fluctuations, economic downturns, and changes in financial regulations. Imagine you are heading towards an economic recession. Your CA can help you realign your strategies for the tough times by suggesting cost-cutting measures and identifying opportunities for financial stability.
Also read: Transforming Raw Data Into Actionable Insights Using Data Visualisation
Conclusion
By reading the above write-up, I really hope you understand how crucial it is to have a chartered accountant for our business. Their expertise covers everything from making sure we follow tax rules correctly to giving us financial advice that helps our business grow.
Hiring a chartered accountant is like making a smart investment that pays off in the long term. They protect our business from financial risks and help us make more money. Whether you’re just starting out or have a big company, having a chartered accountant on board can make a huge difference. They not only save us time and money but also give us peace of mind so we can focus on making our business successful.
Frequently Asked Questions (FAQs)
Why should I hire a chartered accountant for my business?
Hiring a chartered accountant (CA) can ease your financial responsibilities, allowing you to focus on growing your business. They handle complex tasks like tax compliance, financial planning, and risk management, ensuring your business stays on track.
How can a chartered accountant help in decision-making?
CAs analyse your business’s financial data and market trends to provide insights. They help you make informed decisions about expanding your business, entering new markets, or managing finances during economic changes.
What role does a chartered accountant play in corporate governance?
CAs promote transparency and ethical practices within your business. They set up strong financial reporting systems to comply with regulations, which builds trust with stakeholders and supports long-term business growth.
How does a chartered accountant determine the value of my business?
CAs are experts in business valuation methods. Whether for selling your business or financial reporting, they assess factors like market value, assets, and future earnings potential to determine a fair value.