Finances of any organization are very important to be kept safe and up to date in order to make the company stable in the market. It is not a child play to make your company financially sound among the various competitors in the market. It requires a lot of work and an understanding of finance.. That is why it is important to have a CA for your startup or company. Many times startups think that they can do all these things on their own which drags them into heavy fines and penalties, because they lack the knowledge that is required to maintain all these things. Current blog will give a better understanding regarding why it is important to have a CA in a company or startup, hence keep reading the current blog.
Who is a Chartered Accountant?
A CA, also known as a chartered Accountant is a person who manages all financial aspects of a company or startup. He looks into all the finances of the company or startups like compliances, accounting and bookkeeping, budget preparation, sales, profit, loss etc. Hence, to start a company or a startup, the makers hire CA’s. Some companies prefer hiring them after it is established, however, some hire them before the establishments. A CA must not be confused with an Accountant because both of them are completely different professionals. CA can handle the work of the accountant but an accountant cannot replace the CA.
Institute of Chartered Accountants of India
Chartered Accountants are responsible for handling all the finances of the company. Everything related to money is looked after by the CA. They must handle each and everything properly. They have to mandatorily work according to the ICAI. ICAI holds the exams of CA’s. Those who pass this exam are officially called Chartered Accountants. The Chartered Accountants have to follow all rules and regulations of the ICAI. If anyone goes against these rules, then they can be punished. Hence, it is the duty of the CA to maintain finances of the company along with being careful of not breaking the rules of the ICAI.
Accountant v/s Chartered Accountants
Accountants are way different from that of CA’s. CA’s have more knowledge as compared to that of Accountants. Any person who has done courses on Accounts can become an Accountant. However, to become a CA, one has to pass an examination conducted by the ICAI. This is considered as one of the most difficult exams of all. No one else can understand financial issues better than CA’s. It is very beneficial to hire a CA at the very beginning of a company to avoid financial crises or losses later on. Hence, CA’s are very essential.
Why CA is needed for a Company or Startup?
Because of the following reasons it is important to have a CA in a startup or a company:
- CAs bring specialized financial skills vital for managing finances effectively.
- They ensure companies adhere to laws and regulations, avoiding penalties.
- CAs offer strategies to minimize tax liabilities while complying with laws.
- They verify financial accuracy, boosting stakeholder confidence.
- CAs help devise plans aligned with business objectives.
- They provide insights on investment decisions and restructuring.
- CAs ensure accurate and transparent financial statements.
- They identify and mitigate financial risks effectively.
- CAs promote ethical standards and accountability mechanisms.
- They support informed decisions for sustainable growth.
What is the Right Time to Hire a CA for a Startup or Company?
There are many aspects of business due to which it is important to have a CA in a startup or a company. Many companies think it is better to hire Chartered Accountants after the business has started to progress, however, it is not so. CA’s are also hired when the business has not even started. He can guide companies better before its start. He can recommend the amount of capital, saving taxes etc. Imagine a company has reached heights of success, however unfortunately took some bad decisions affecting the finances. Regretting at this stage makes no sense. As it would have been better to consult a CA beforehand and take his guidance. Therefore CA’s are hired by a company which has just started.
What is the Role of a CA in a Startup or a Company?
Because of the following things it is important to have a CA in a startup or a company:
Financial Planning
The Chartered Accountants make a financial plan. The plan consists of budgeting. Making budgets of the expenses, profits and loss of the business is a must. By this the company can keep record of all the money. As it is very important for the businesses to keep a check on where its money is going and coming from.
Deciding the Correct Entity
CA advises the startup or the companies on the type of business they should form. There are many types of entities available under the law, hence it is important to choose the best suitable one. If the company takes the advice of the CA while incorporation it is really fruitful for the growth and development of the business.
Taxation of the Business
There are many types of taxes and exemptions given under the tax laws of India, which is not easy to understand by a lay man. That is why it is important to have a CA for the startup or company because he is the one who can manage all the tax payments of the company. He also files tax returns on a time to time basis. CA’s also use tactics by which they can save money on certain kinds of taxes.
Compliance with Laws
There are various laws which the company has to follow which includes but is not limited to the Companies Act of 2013, but also includes finance law, and tax law. Chartered Accountants guide the companies in direction to complying with these laws. Following the CA’s directions, the company can be saved from punishments and penalties which are enough to collapse the business. Hence it is important to have a CA for your startups or companies.
Reduces Financial Risks
Chartered Accountants make the company aware of various financial risks. This helps them from getting caught up in unnecessary financial issues. CA’s also make the companies implement some management policies. Following these policies, companies can reduce their risks and focus on their progress.
Helps in Determining Market Position
Chartered Accountants keep close watch on the market’s trends. Depending on these they advise the company to invest. As keeping a check on the market position is a must for the companies to succeed, it is important to have a CA for your newly established startup or a company.
Maintaining Confidentiality by Chartered Accountants
When a company hires a CA, it means that it trusts the CA with all the financial matters. Hence, it is the duty of the Chartered Accountant to not leak any financial or internal facts of the company to a third person. This is very beneficial as it reduces the chances of creating a rivalry. The Indian Institute of Chartered Accountants too ordered the CA’s to be trustworthy and not leak any information of the company to anyone outside. Therefore, CA’s are trusted persons. And companies can put faith in the CA’s with closed eyes.
Why Should one Hire a Chartered Account?
The Chartered Accountants main work is to maintain accounts of the company and file returns regularly. However, other than these things, they are very good guides for the companies. They guide the companies to make important decisions such as where to make investments or how much to invest etc. By following the CA’s guidance, the companies can gain a lot of profits. CA’s are able to guide companies because they are trained in the ICAI.
Which Businesses Need Chartered Accountants?
Chartered Accountant services help the new formed businesses to grow in future. Many people think that only big businesses need CA’s or only businesses which have a large capital need CA’s. However, this thought is absolutely wrong. Businesses, be it small or big need CA’s. CA’s only function is not just filing tax and tax returns. Their functions include lots and lots of important things. Following the guidance of the CA’s help the company keep growing in the future. This is because CA’s are people who have great knowledge of finance. And taking their advice is always beneficial. As no other person can understand the financial positions of a business better than Chartered Accountants.
Conclusion
It is important to have a CA services for startup or a company, because having a CA saves money on tax and makes better investments. While making investments it is very essential to be aware of the market position. All these things are always preserved in the brains of Chartered Accountants. In order to make your company different among the various competitors, CAs helps you. Hence must hire them in the very beginning of the business so the foundation of your business can become strong and your business can easily survive among the highly competitive market.
