Many business people, especially small businessmen, sometimes ask themselves: "Why do I have to spend my time writing down and calculating figures that are not going to be of any use to me, if it is not to calculate the tax that I will have to pay, When I have so many things to do and what are they waiting for me to do?
It is true that legal regulations increase administrative work to a certain extent, both for data recording and archiving, but it is a mistake to believe that data recording and archiving is a useless obligation, wasted time or a waste of resources.
For those entrepreneurs who still believe that historical data is only used to record past success or failure, but not to predict the future, accounting records may indeed be a waste of resources, but not for those who They believe that <<history is the teacher of life>>.
The accounting records are not only used to calculate the tax that must be paid, or to demonstrate the solvency of the individual entrepreneur or the commercial company that banks require when granting a loan. They also serve to know aspects such as:
- The patrimonial and financial situation of the company, either at a given moment, or in a broader temporal perspective.
- The increases and decreases in equity, that is, the losses and gains. The employer does not obtain this information through the balance sheet, but from the income statement.
- The evolution of the company, which can be known by writing down in an orderly and daily way all the events that occur in it. This updated information will help the employer to make more efficient and rational decisions, that is, decisions based on facts and not on simple hypotheses.
- The trends of the main variables of the exploitation of own resources.
In order for the accounting system to achieve the levels of usefulness and effectiveness that are expected of it, it must meet the following conditions:
- Adjust to the information needs of the company.
- Be manageable and easy to interpret.
- Be accurate in reflecting reality, as well as coherent and reliable.
- Provide updated information that serves as a basis for making rational decisions.
The public administration of all countries strives to achieve the unification of the accounting systems of all companies in general or at least by sector, to facilitate their statistics and tax collection.
For many, however, this policy violates the principle of the independence of the company, which is specified here in the preparation of the system that each one deems most appropriate to their needs and possibilities.
We verified that, once again, the criteria of the administration and the company do not always coincide.
If the individual entrepreneur does not have time, or does not have sufficient accounting training to take charge of the accounting himself, he must entrust this function to a specialist hired by the company or to an outside expert (accounting firm, individual collaborator, etc.)