There are several parties who have an interest in your accounts: you, other owners, creditors and banks, employees and not least the tax authorities. Your auditor's job is to certify your accounts on behalf of all the interested parties. He or she will check your books to certify that they give a "true and fair" representation of the state of affairs.

Sometimes it feels as if all this apparatus of reports and accounts is just too much trouble. Used in the right way, however, a good accounting system improves the control of the business. There are, indeed, more examples of companies that have failed because of bad accounting than of too good...

Practical use of accounting information
Accounting information is useful in many situations. You can use it as a foundation for your budgeting, when you want to find out if a certain deal is profitable or not or to monitor the performance of a department, a market segment etc.

Getting capital
From time to time you need to persuade banks or other financiers that your business is solid and profitable, e.g. when you need to borrow money for an investment. A good accounting system allows you to find the information they require quickly, and to make a credible presentation.

Tax returns
Your accounts provide all the information needed to produce the different types of tax returns.

VAT declaration
All VAT registered companies must produce a number of periodical reports, of which the VAT return is the most important. If you are above the threshold amount for trade within EU, there are some other reports that need to be made.

The VAT return comes from your accounts. It follows a prescribed format, and your accounts should reflect the VAT requirements, to make it easy to produce the report.

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