Whether you’re preparing for tax season or simply seeking better insight into your finances, an accounting audit offers a highly effective way to analyse and report your finances. Audits can also be a great way to determine what is working and what is not, helping you identify areas for improvement. You will also be able to streamline your financial processes in a way that not only saves you time but also money. Whatever the nature and size of your business, an accounting audit is highly recommended at least once a year.
This process is generally done by an experienced accounting firm, such as MJ Chartered Accountants. Your accountant will work with you, conducting interviews, analysing your processes, reviewing your accounting information and going over your records to gain insight into your accounts on a deeper level.
How an Accounting Audit Helps You Thrive
Accounting audits offer a unique of unique benefits to businesses of all sizes. Some of the top advantages of an external audit include the following:
One of the biggest advantages of external audits is that they offer an objective insight into the accounting processes of your business. Many small businesses are highly skilled in their area of speciality while lacking a comprehensive understanding of accounting. This means that processes are not always the same as those of an experienced accountant. When you are trying to secure financing or planning investments, it is essential to have all of your accounts in order in a way that is transparent and organised. An auditor will help you prepare your books so that they meet the often stringent requirements of investors, stakeholders and lenders.
Reduced room for error.
Another major advantage offered by audits is the ability to pick up any potential errors that are found anywhere within your accounting processes. Even the smallest error can be easily overlooked, with devastating consequences that are far-reaching and serious. As a business owner, it can be harder to notice trends and review finances if any errors are in place. An auditor will ensure that your processes are done in a way that is accepted by local authorities, to be sure that you are always on track, with far fewer risk of mistakes or oversights.
Fewer legal and tax issues.
You can also enjoy far less chance of legal and tax issues when you schedule regular audits. Legal problems happen when there is missing or incorrect accounting information that is sent to investors, lenders and the public. Businesses are usually held liable for any inaccuracies, which is never ideal. Incorrect information can increase your risk of tax liability and also put you at greater risk of legal issues. Whether it is overstating income, providing incorrect inventory value or missing crucial information, the impact of such omissions can include higher taxes along with other legal issues. Businesses that operate as sole proprietors will especially require highly accurate accounting information as income is reported on your personal tax returns. Incorrect information can therefore even push your personal tax liability up significantly.
Audits also offer a way to gain valuable insight into your processes, which, in turn, helps you perfect and improve your processes. This is not only important for day to day operations but also for long-term growth.
To find out more about getting started with accounting audits in KZN, get in touch with our team of friendly, passionate MJ Accountants today!