Accounting firms exist for the purpose of providing accounting services to businesses. This can mean payroll, financial statements, taxes, or financial planning. Financial statements highlight information about the company’s operations: profit and loss, net profit, and income. Bankruptcy is never the ultimate goal of a business. Finances are complicated. There are many loopholes, windows of opportunity, and ways to make mistakes. As a business owner, managing finances efficiently and accurately is important to avoid allegations of fraud, financial mismanagement, and jail time.

Regulations history

The accounting firm profession came under pressure to establish uniform accounting standards after the 1929 stock market crash. Some groups believe that insufficient and misleading information was a crucial factor that led to inflated stock prices and eventually the collapse of stocks. the stock market and the subsequent depression. The Securities Act of 1933 and the Stock Exchange Act of 1934 were designed to restore investor confidence. The 1934 Act also created the Securities and Exchange Commission (SEC).

The U.S. Securities and Exchange Commission (SEC) has primary responsibility for enforcing federal securities laws, proposing securities rules, and regulating the securities industry, stock and options exchanges, and other activities and organizations, including electronic securities markets in the US The SEC has delegated responsibility for establishing US financial reporting and accounting standards for public companies and accounting firms, among others, to the Financial Accounting Standards Board (FASB).

Scandals

There have been quite a few financial scandals, which serves to illustrate the importance of accounting firms, financial investors, and a strong system of checks and balances. One well-known incident is the Bernie Madoff scandal of 2008. Bernard L. Madoff Investment Securities LLC, a Wall Street investment firm founded by Madoff duped investors out of $ 64.8 billion through the largest Ponzi scheme in history . Instead of earnings, investors received earnings from their own money or from another investor’s cash. Fortunately in this case, Madoff bragged to his sons that they reported him to the SEC. He was arrested the next day, sentenced to 150 years in prison, and forced to pay $ 170 billion in restitution. This fraud came to light a few months after the 2008 US financial collapse.

Day to day

Companies do not run alone. A business is not passive. It does not respond to market activities and records its own financial activities. A company is dynamic and creative. Homeowners must plan, set goals, and adapt when situations change. If running a business and managing your financial statements seems overwhelming, it may be worth hiring an accounting firm to establish basic business functions.

Taxes are a reality that all business owners must face: city, state, and federal agencies will expect their share of the cash, including income, income, and payroll taxes. Additional penalties and interest will apply if these areas are neglected. Accounting firms help keep track of your tax return information and will make sure your tax is submitted on time and accurately. The details seem daunting, but doing everything right will pay dividends in the long run.