Why Accounting Firms Are Needed

Most businesses maintain their own accounting departments to prepare financial statements for executives and stockholders. Most individuals keep track of their own money using one or more accounting firms, even if it is simply keeping receipts in a shoe box. Yet, accountant firms continue to be among the most profitable and most widely used types of service providers. There are several reasons for this.

While a business may maintain its own books and perform internal audits on a regular basis, there are times when it is required by law that an outside agency audit the books and ensure that all financial reports are accurate. This is especially true with non-profit agencies and those receiving government funds. At times like this, only a professional firm that is completely independent from the business in question may legally perform such audits.

Most firms employ only CPA certified personnel. These individuals have spent more time in school studying the proper methods of systematically maintaining and auditing a company's books. They have also spent time working in the field to become familiar with accepted practices in the industry and have taken a written exam designed to test their knowledge of relevant practices and laws that affect them.

Even corporations that operate for profit have found that having regular outside audits performed increases their credibility with owners and stockholders. This practice creates a certain amount of transparency and accountability that would be missing if nobody outside the company were allowed to see the books.

Another reason these professional firms continue to be profitable is the proliferation of small to medium sized businesses. Many of these are operated by just one to a handful of people and do not have the resources or personnel to provide their own accounting departments. They find it more cost effective to pay a firm that specializes in accounting to keep their books and provide them with periodic financial statements that tell them how the company is faring.

A major need for accounting firms is seen each year from about the middle of February to the middle of April. This is the season when most individuals and businesses are filing their tax returns. While it is possible for an individual to fill out the forms and file on his own, it has been proven that accountants who are trained in the relevant tax laws can find ways to save them money and get their clients larger refunds than they would be able to get doing the job themselves. CPAs also ensure that the taxpayer does pay the correct amount by checking deductions and ensuring that all income is reported properly.

There are several reasons why accounting firms continue to flourish. One reason stems from the fact that they consistently hire professional accountants that have completed all CPA requirements in their respective state or territory. They also serve to help keep big corporations honest by auditing their books from time to time and ensuring that financial reports released to the public and stockholders do not reflect inflated earnings.

Accounting firms provide accounting services to individuals and small businesses that lack the knowledge and resources to properly maintain their own accounts and prepare financial reports that these persons are able to read and understand. Finally, they assist in the preparation and filing of tax returns to ensure that earners do not overpay the government or underpay.


Article Source: Grant N Sifers