Importance of accounting
Many parents advice their kids that they should think of getting employed so that their earnings will be stable and they don’t have to worry about the stability of their employer. They can always shift to another company whenever they want to. There are many parents who guide their kids this way, thinking that they are advising them for a secure future. Right on !!
However, very few dare to not listen to this advice. Many people want to be on their own. Start our own companies and be entrepreneurs. See our budding ideas bloom right in front of our eyes and be mentors for others who dare to take the unexplored path.
The very encouraging fact is that the number of such budding entrepreneurs is steadily on the rise. Many are developing the courage to start their own ventures, put their brilliant ideas into actions and prove to be successful. It is true that they struggle during the initial few months or years, but they ensure that they hold on to their courage and make the small idea a huge success.
We can witness numerous start-up companies getting incorporated every day in India. They are all bundles of energy with dreams of making it big in their field. However, we notice by experience that many make it big and when they look at their journey, they realize that their core business has developed well, but they have ignored a lot of back end processes such as accounting and statutory compliances.
Having a proper ‘accounting system’ is the only way to keep ourselves informed as to whether we are complying with statutory requirements or not and to avoid such shocking surprises.
Consequences of not having an accounting system:
a) Sudden notice from Government Departments such as PF / ESI / Income Tax, demanding to pay huge sum with penalty and fine for non-compliance of statutory norms.
b) Unable to track the income earned and expenditure incurred
c) Impractical to take financial decisions when books are not maintained
d) Difficult to pitch for investments, as it shows the indisciplinary practice of you of not having a proper and professional accounting system (it gives confidence for your investor about you only when the books are properly maintained and statutory compliances are neatly done).
Only few start-ups are aware of the importance of accounting from the very beginning. We have seen entrepreneurs who are prompt in accounting and statutory compliances (like filing their IT returns, remitting the labour dues etc) even during the period in which they weren’t earning big money. But this organized maintenance has helped them when they wanted to expand or get into joint ventures.
At any point in time these organizations will know where they stand, what their liquidity position is and how efficiently their funds are being managed. In short they will know at any point in time as to where they were, where they are and where they intend to go.
It is high time start-ups quit believing in the myth that accounting systems are only for the big companies. You are going to be big one day! So, why not start by being disciplined now so that your journey upwards is a lot easier?
Cogzidel has expertise in offering professional accounting services. Contact us firstname.lastname@example.org if you are really concerned about taking care of your organisation.