Why do Companies need to Hire an Accounting Agency?

Accounting is the complete transcript of your company’s business transactions, such as a complete record of revenue and expenditure, arranged according to facts and time. With the help of accounting, you can document and analyze all business transactions that occur in your company. These include services, wage costs, purchasing materials, impairment losses for the wear and tear of assets, sales and much more. All the records of your accounts form the basis for determining your profit, for your quarterly financial statements or for the annual financial statements, which form the basis of the tax return. 

The role of accounting 

The main task of accounting is to record expenses and income, as well as to present the financial and asset position of your company. These measures are used to determine the success within the company. In doing so, the accounting department also has special tasks to perform. This includes monitoring internal processes in terms of turnover, capital and debt relationships or risk management. It forms the basis of taxation and can be divided into two areas. This is, on the one hand, business and balance sheet accounting. It provides the figures for the annual accounts and also for the tax return. The second area is the business accountancy, to which the calculation belongs. It includes the cost calculation and the performance calculation, i. e. the operating accounting is responsible for recording and dividing costs and services in your company. 

With accounting, you can pursue different goals. On the one hand, it gives an overview of the current asset position. All transactions within the company that have an impact on the assets of an enterprise are recorded and thus comprehensible. At the end of the year, you can use the accounting to determine the company’s success, i.e. profit and loss. In addition, accounting forms the basis for the taxation of your company. 

What accounting systems are there?  

There are two ways to do the accounting. Simple accounting records only entries and departures in chronological order. A cash register is required for cash transactions. To determine business success, you compare initial and final assets of a period, such as a financial year. It is not clear how the values come about. Dual accounting is the second accounting system. There are two bookings for each business transaction, namely a debit and a hold booking. At the end of the financial year, the balance sheet and profit and loss statement are drawn up from all these data. The obligation to keep records is enshrined in the HGB and the tax laws. For freelancers, the simplified rules of Section 18 of the Income Tax Act usually apply. You can calculate your profit using the simple income surplus invoice and prove it to the tax office. 

According to the above, companies need to hire an accounting agency for plenty of reasons. It is not only about counting incomes, provide tax services and tracking expenses but also to have a solid business structure and financial analysis.