Financial management involves the efficient management of money with the aim of accomplishing an organization’s objectives. This concept is a vital part of overall management and concerns the responsibilities of financial managers in a business. The major goals of financial management include generating cash and wealth for your business. The three major elements to the financial management process are financial planning, control, and decision-making.
In terms of financial planning, management needs to ensure the availability of sufficient funding to meet a business’s needs. Financial control on the other hand, is a crucially important activity that helps ensure your business is fulfilling its objectives. The major elements of financial decision-making include investment, dividends and financing. Financial managers are responsible for offering support and financial advice to support colleagues and clients, permitting them to make logical business decisions.
Importance of Financial Management When Starting a Business
When starting a business, it is imperative to incorporate and understand financial management. This is because this concept serves vital functions in every business. For instance, bookkeeping is a function that each business has. Without this knowledge, you would not recognize, track, or manage your income and expenditures. Reports from your bookkeeping can provide insight for your business, enabling you to make financial decisions.
Financial management will also help you lower expenses. In this regard, you will request lower prices from potential vendors and decrease the number of employees. Another benefit of financial management is tax planning. When starting a business, you will ensure that you have cash to make approximated tax payments every quarter. Moreover, you will gain cash flow management skills. Cash flow management will ensure you have enough cash to pay for utilities, rent, insurance and supplies. You can ensure cash flow management by renegotiating dates with vendors. Inefficient cash flow management will impede your ability to pay expenses and hamper your business’s operations.
A Chartered Accountant or CA is a term given to accounting experts in numerous parts of the world. A Chartered Accountant designation typically demonstrates the holder has the qualifications to audit business practices and financial statements. They can also provide advisory services to clients. A Chartered Accountant works in every field of finance and business, including taxation, audit and general management. While some of these professionals are involved in public practice, others are in the private sectors while government bodies hire some of these experts. A Chartered Accountant displays exceptional thinking and has a superior business grasp that distinguishes him or her in the marketplace.
Why You Need a Chartered Accountant When Starting a Business
It is advisable to solicit the services of a Chartered Accountant when starting a business due to the numerous benefits these professionals provide to your business. For instance, this professional will guide you through a suitable trading structure. When forming your business, you have to decide whether it will operate under a limited company, sole trader, or partnership.
A wrong decision regarding a trading structure could result in dramatic implications. Such a decision could affect how you hold contracts and property besides affecting the tax rate you pay. A Chartered Accountant will also provide you with financial advice. This is crucial because nearly every young business requires funding at some point. These professionals could suggest various alternative options ranging from venture capital to government grants.
Roles of a Chartered Accountant
The functions of a CA can encompass numerous activities depending on the size and type of organization. These experts are responsible for devising financial systems, checking accounting procedures, and ensuring legal compliance. They also deal with various financial and accounting matters on behalf of organizations and individuals. Additionally, they play a strategic function by offering expert advice with the aim of maximizing profitability on behalf of their employer or client. These professionals also offer information regarding financial records. This might cover financial reporting, forensic accounting, taxation, or business insolvency and recovery.
Small business Chartered Accountant
A small business Chartered Accountant describes a professional that specializes in assisting individual taxpayers and small businesses. A small business Chartered Accountant provides small businesses with a wide range of accountancy services as well as tax advice. A small business can benefit from the services of a CA in various areas such as asset management, tax assistance, and business planning. It is also beneficial to hire a small business accountant that could help you track your business’s financial growth while forecasting possible financial risks. A small business accountant could also offer valuable advice on strategic planning and financial structure.