Accounting and finance play an important role in the management of any business. Be it small family-owned business or a multinational company, proper management and tracking of money are one of the most important things to do for sustainability. Business is operated on money so it is very important to control money in order to have a hold on the business. An accountant of a company helps to manage income and expenses and also track the flow of money and thereby helping owners move in the correct direction.
In developed countries, Small business owners and Entrepreneurs admit that Accounting is one of the most important departments in running a business successfully. It is compulsory to do regular accounting to stay compliant and most businesses do seem to comply to the regulations. But in Nepal, many small business owners are not seen as being serious and conscious about the Accounting part. Accounting department or personal is seen as an unnecessary expense and treated as the same.
Small and medium-sized business owners give huge importance to filing taxes at the end of the year but don’t see value in analyzing financial matters on a daily basis. That’s why they keep losing money and run out of funds.
Small business owners approach the Audit firm at the time of filing taxes with some bank statements and an excel document that they claim contains all of the necessary information. And the auditors (Registered Auditors) seem to prepare the financial statements based on that information. The irony is RAs are also not well aware of the accounting rules and regulations.
What problems or challenges business owners have been facing in their Accounting part or what is stopping them from outsourcing their accounting responsibilities?
Here are a few of the problems/reasons for SMEs not taking the accounting seriously:
1. Most are unknown about the benefits of accounting in business. And they think this financial and management accounting is not adding value to the business. They follow their own knowledge and traditional ways.
2. The general attitude towards the government. If my government make sure the tax money collected from businesses is used for nation development then businesses would try my best to comply with the tax law but if my taxes are only used to fill corrupt politicians pocket then this is a serious concern everyone should look into to hold everyone accountable. This attitude of business owners towards the also plays an important role in their attitudes towards taxation and other legal obligations.
3. Lot of them don’t know they can outsource the accounting function to companies like BizSewa. Also, small businesses don’t start up a proper business plan so they don’t plan/know what to do or who to hire.
Those who can not afford or need a full-time accountant, they can hire part-time accountants or even freelancers. But due to lack of information, many small business owners don’t know how and where to find such professionals. Part-time freelancers can be paid only for the work done.