What is the role of accounting in business? (With jobs)

By Indeed Editorial Team

Published 13 July 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Accountants provide valuable services to businesses, contributing to organisations' financial health and prospects. If you have an interest in working with finance or enjoy a highly organised working environment, training as an accountant may be an ideal choice. Depending on your employer, accountants fulfil various tasks, from advising upper management to handling day-to-day accounts and operations. In this article, we look at the role of accounting in business, define what accountants are responsible for and cover why accounting is vital in the workplace.

What is the role of accounting in business?

The role of accounting in a business is to ensure the statements and documents the company produces are accurate and up-to-date. Businesses have legal responsibilities for maintaining their internal accounting to a high standard, with specific compliance guidelines to follow depending on the industry. A trained accountant uses their skills to maintain business finance, provide reports and find and swiftly resolve any financial issues.

The size and requirements of a company can determine the role of an accountant. For example, in a small business, an accountant may handle compliance, bookkeeping, tax reporting and submissions independently. In a larger company, this responsibility may be divided among multiple specialists to account for the higher volume of financial information. While the specifications of accountancy roles can change, the fundamental duties for financial clarification or reporting remain the same.

Related: 12 types of accountants and different areas of accountancy

Why is accounting important?

Accounting is vital for businesses to stay within regulatory guidelines and ensure sound financial health. As a role that involves directly working with finances daily, accountants have the insight to provide accurate, clear financial information and reporting. A good understanding of financial processes, business strategy and analysis is critical for this role. Some reasons why accounting is important for businesses typically include:

Evaluating business health and performance

A trained accountant can quickly evaluate the financial health of a business, providing stakeholders and upper management with insight into how a company has performed. For example, an accountant may create a report comparing the outgoings of the previous year to the money spent during the current year to see if costs have improved. Such insights help businesses make important decisions and provide the necessary information to adjust strategies and processes in line with their current financial situation.

Ensuring compliance with regulatory bodies

Businesses comply with strict regulations for handling company finances, which can change depending on the industry. An experienced accountant has the knowledge and skills to understand all guidelines, keep up-to-date on changes and advise how to comply. For example, accountants can prepare annual financial statements for the business, which are requirements for compliance alongside other tax submissions. Compliance is a crucial requirement to avoid fines and penalties.

Creating viable plans and strategies for business activities

Accountants contribute directly to the planning and development of a business over time. As the financial specialist in a company, this role can include forecasting and advising how to spend business funds safely and effectively. For example, an accountant may work with a sales director to create a budget for the upcoming year's sales activities based on the business's current financial health. Understanding how different plans and growth can impact the finances of a company is a vital component of successful business planning.

Filling in financial statements accurately and on time

One of the most important tasks the accountants fulfil is maintaining financial statements and up-to-date information for the use of different business purposes. For example, an accountant prepares finances in detail before the tax season for fast submission, preventing late fees or fines for inaccuracy. These statements can also be necessary for different processes, such as audits, mergers or the purchasing process, making it essential to have access to up-to-date financial information. Regular financial statements provide an easy way to gauge the health of a business over time.

Providing a financial overview for other departments

As accountants work alongside sales, support and marketing departments, their role allows for an overall view of business finances at the top level. This perspective is helpful for individual departments and upper management in budgetary planning and deciding on money allocation. For example, the CEO or director may work with accountants and CFOs to determine the allocation for individual departments, which then enables the accountant to implement the agreed budgets throughout the business.

Related: What is basic accounting (principles, jobs and education)

What is an accountant responsible for?

Accountants are responsible for many different financial tasks in a business. With a focus on analytical skills and numerical understanding, this career is primarily focused on responsibility for financial information. Accurate, up-to-date and consistent financial details are necessary for all business actions and activities.

Accountants use their knowledge to communicate that information, producing reports and conducting meetings to determine the financial health of a business. In larger companies, accountants may work together on specific tasks and individually on others. For example, one accountant may work with upper management on forecasting and business growth, while another supports large departments in financial reporting and budgeting. In small businesses, accountants may also handle bookkeeping responsibilities, recording money that comes in and out of a company from purchases and sales.

Related: A guide to accounting standards (UK GAAP and IFRS)

Accounting career options

Some career options you can pursue within the field of accounting include:

1. External auditor

National average salary: £30,784 per year

Primary duties: External auditors work as trained specialists in the guidelines and regulations businesses follow. This role may involve travelling to different organisations across the country to analyse different companies' finances in detail, providing recommendations and issuing warnings as required. Some auditors work for governing bodies while others are independent, helping businesses get their finances in order before audits.

2. Chartered accountant

National average salary: £35,451 per year

Primary duties: Chartered accountants are fully qualified professionals working in a wide range of accountancy positions, either as employed professionals or self-employed specialists. Typically, a chartered accountant offers traditional accountancy services to businesses and individuals. For example, they may choose to work as an outsourced accountant for construction businesses or find a job in a large accountancy firm providing services to a wide range of companies and people.

3. Management accountant

National average salary: £36,105 per year

Primary duties: Management accountants use their skills in business strategy and management techniques to support decision-making processes within a business. For example, management accountants may work with the management team to decide how to grow a company based on their financial insight. Unlike most accounting positions, management accountants may not have involvement with the data recording and bookkeeping that forms part of other roles.

Related: What does an accounting manager do?

4. Chartered public finance accountant

National average salary: £42,199 per year

Primary duties: Chartered public accountants work in organisations that use public funds, such as the Home Office or charities. These specialised accountants may complete extra training, such as a CIPFA programme, to qualify for these roles, which have special requirements for the recording and spending of public money. For example, they may work in a local council creating budgets and monitoring funds for road repair, fleet vehicles or disposal services.

5. Tax advisor

Average salary: £42,712 per year

National average salary: Tax advisors are financial experts who provide services to businesses and individuals to help them understand their tax obligations. For example, a small business may hire a tax advisor to explain how tax works in their industry within its first year of operation. Tax advisors may provide information or be directly involved in helping businesses complete their tax obligations by managing the accounting function for them.

6. Forensic accountant

National average salary: £51,800 per year

Primary duties: Forensic accountants are specialist professionals investigating financial situations where money is missing or fraud has occurred. For example, when a business hires a forensic consultant to uncover missing money, the consultant works to gather evidence for its recovery or to begin a court case. Forensic accountants may testify in court as expert witnesses and submit proof of their findings during the case.

7. Financial controller

National average salary: £56,465 per year

Primary duties: Financial controllers are high-level professionals in businesses who handle many aspects of financial management including corporate accounting, financial reporting and forecasting. In large businesses, financial controllers may have a team of accountants working for them to provide the information required for reporting. Many financial controllers oversee activities such as month-end and year-end closing, focusing on accuracy and quality control.

Salary figures reflect data listed on Indeed Salaries at time of writing. Salaries may vary depending on the hiring organisation and a candidate's experience, academic background and location.

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