Accounting is one of the most important aspects of any business. The accounting department is responsible for recording all transactions conducted by the company. The accounting department doesn’t just record transactions made by the company with external entities, but also money transferred from one department to another. This makes it easy for the accountants to know whether the company is utilising its funds in the right way or not. In the UK, every business is required to maintain books of accounts due to tax purposes.
This creates a minor problem: how else do you manage your books of accounts if you can’t afford to hire an accountant? One of the best options available to small business owners is to outsource their accounting services to another company. Here are just some of the many benefits of outsourcing your whole accounting services.
You can easily look up South Yorkshire accountants that offer cost-effective, real-time accounting solutions to businesses of all sizes within the county. Rather than hiring an accountant, which requires allocating office space for a separate accounting department, why not hire an external company to handle the job for you? All you have to do is pay a small fee on a monthly or quarterly basis for the company to handle your accounts.
Accounting transactions are generally recorded on accrual basis. This means that the transaction is recorded when a sale is made or when a service is provided, not when the money is received. When the financial statements are produced, the profits mentioned on the income statement haven’t been fully realised. However, the government doesn’t tax local businesses on the accrual basis. Only those transactions that have realised at the end of the fiscal year are taxed.
This leads to a difference between the calculations made by the tax accountant and the company’s accountant. Ultimately, a deferred tax liability or a deferred tax income needs to be recorded by the company. You need an experienced accountant who knows how to create deferred tax liabilities and record the income properly. If you decide to outsource the accounting services to a reputable company, they will reconcile the bank statements and create the deferred tax statements. This can help you save a lot of money in tax payments over the course of the year.
About Author: Content curated by Mauneel Desai, a financial expert providing investment advice across globe. Follow him on Mauneel Desai to know more tips.