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The commerce and chartered accounting students may mock and laugh at the title question as their entire life is revolved against this idea. Some students and aspirants spend their entire young age and student life in realising the above fact and getting acquainted about the skills needed for the above. So, there’s no doubt that there are so many advantages associated with financial accounting. The question is what are those advantages of financial accounting in a common man’s perspective. Do a daily job person or a government job person or a person on a fixed salary need to have financial accounting? This blog is trying to address the question discussed above. What are the advantages of financial accounting for a common man? Let’s list out the basic advantages of financial accounting.
Track Expense & Revenue
Any man of earning needs to have a look into his earnings and spending. No man can spend more money than he earns unless he goes for obtaining loan credit. It’s a wise financial habit to check the revenue and spendings all the time to have better financial stability. The financial stability is always depended upon the financial accounting ours regarding the spending and earning. For a fixed salary person, it is easy to account for the earnings as he may not have earned from different sources. But for a business man who often rolls the money and earns from different sources needs to have accounting to check out the earnings. The spending is also the same logic. We often spend our money on different sources for different purposes. Not always the spending will be through the bank. So we need to have a better understanding about the spendings and the financial accounting will help you for the same.
According to the tax laws in India, there are two kinds of tax. One is direct tax and other is indirect tax. The indirect tax is paid by all the people unknowingly when they purchase a product. No need to worry about paying indirect taxes. It will be automatically collected. But in case of direct taxes, we need to pay them directly according to their qualifications. Most important among them is income tax. The income tax is a tax that is levied on the persons according to their income earnings. The tax is regulated by the Income tax Act of 1961. There are a lot more complications while calculating the income taxes. Some of the earnings may be taxable and some may not be. And some of our spendings is directly deductible against the income tax and interest of some liabilities are deductible against the income tax. There are tax consultants around us to calculate the tax we ought to pay in a financial year. In order to formulate the tax we need to pay, we need to have better financial accounting to check out the earning, spendings, liability and assets. Financial accounting will be more and more helpful for tax calculation. Tax payment is important as tax evading is a crime before the law.
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Make the Transaction More Legal
The habit of having financial accounting is more and more helpful in terms of making our economy save from black money. The accounting will help us to include all the money we transact to have in a legal accounting manner. If the government or law enforcing agencies take any actions or allegations or bring any schemes to quash the black money in the market, you can make yourself free from those encumbrances using this financial accounting as your entire financial statements have been accounted for. Some of the leading celebrities have undergone raids due to the allegations of tax evading and have proven obedient before the law just because they have proper financial accounting. Keep your financial accounting up to date and inclusive of all transactions to get a clean chit from the rule of law.
Formulate Better Future or Plans
A proper financial accounting for a person who wishes to grow will help him to formulate better plans for the future. If a person who is obtaining the income from different sources can have the details about the investment return and extra margin he acquired and he can evaluate the weak businesses and strong business and opportunities left and fund which is unutilised and everything about his financial horoscope. This will help him to formulate better financial plans for the future and help him to grow. A successful business man will learn from his failure and inspire from his success. And this learning and inspiration will be quantified through financial accounting.
This is one of the last and probably the non-layman benefits or advantages of financial accounting. The financial accounting known person may be recruited by companies’ organizations or NGOs or any entity like that to do their financial accounting. This can make you earn money. The professional persons like chartered accountants, commerce persons all of them are doing the same job with different gravities, different modes of employment etc. This can also be considered as a benefit of financial accounting. Thus, financial accounting can open the doors of employment and earn money.
Thus, financial accounting is one of the most beneficial courses of action or employment in your day-to-day life or business. These all may not be the comprehensive advantages of financial accounting. There are a lot more advantages of financial accounting which are unexplored. If you are a person who is fed up with tracking the transaction of yours make sure you do financial accounting to achieve the above goals. If you don’t know financial accounting try to study it according to your needs. If your needs are so professional, try to recruit a professional accountant to do financial accounting. Keep studying, keep winning.