Importance of having a great Chartered Accountant

During our meetings, whenever we question our clients about their finances or anything that is related to their company’s accounts, most of them say “My CA will get in touch with you about the finances”. sell business

One of the main issues with over-dependence on Chartered Accountants is that often, they take business owners for a ride. It is of utmost importance for companies to choose an efficient and reliable Chartered Accountant, especially when you are running a startup or a small-scale company because your finances are extremely sensitive to fluctuations. Small scale companies’ finances are also the prime factors that decide the fate of the business.buy business.  sell business india . 

It is extremely important for companies to understand that the Government or their Chartered Accountants cannot be held responsible in case there is an error in the accounts or if their entity fails to comply with government laws or policies. The ICAI has a rule wherein a company needs a No Objection Certificate (NOC) from the previous auditor in case they decide to appoint another professional. To break this down further, if your company wants to appoint another CA, you can only do that if you get an NOC from your then (current) CA. buy business india

You might wonder why we say that you must be involved in your company’s financials, as opposed to handing it all over to your CA. Here are some incidents that I have personally seen, reinforcing my belief that business owners must have a hold on their own financials. sell my company 

  • A company that we were working with, had appointed a CA who would look after all their taxes and the general finances. Their CA, Rohan* had collected the total service charge amount from the company on the pretext of paying it off to the Government. After two whole years of signing off the service tax amount to him, when the company brought in new accountants, they pointed out that the service tax was never paid. In fact, the company had to pay off a huge penalty, along with an interest amount. It turned out that Rohan had not paid the service taxes, in spite of collecting the amount from the owners, annually. buy a company
  • Another Private Limited company that we were working with, told us that their CA Kunal had prepared the wrong financials for their company because he was not aware that the paid-up capital for a Pvt. Ltd. Company cannot be less than Rs. 1,00,000/-. When they questioned him about it, they learnt that he had never performed audits for Pvt Ltd. Companies and had showed their paid-up capital as only Rs.10,000/-. As someone who does not understand the nitty-gritties of finance, they would not even know this. Companies for sale
  • I also recollect another incident wherein a CA had misguided a food and beverage company, causing a loss of about 35 lacs. The amount involved was so high that the company had to bring their shutters down. Unfortunately, here it was not only the CA who was responsible, but also the business owner’s neglect towards the accounting and finances. buy business in india 

While there are a few professionals who knowingly or unknowingly cause losses and launder money away from your business, there are a handful of CAs who are one of the main reasons behind a company’s success. To give you an example, we had a client who was dealing in trading and distribution of machinery, their CA was actively involved in helping their company grow and was instrumental in helping them achieve the valuation that the company deserved when it was sold. sell business in india 

Here are some tips that will help small business owners and startups in handling their finances:

  1. Bring in a professional who understands your business, as well as your accounts. Such professionals are always more helpful because they evaluate and analyze your business financial decisions with a  clear perspective. They would also be more equipped with knowledge to question financial decisions that they believe will cause problems to your business. It is always a good idea to get deeper insights into your company’s finances.
  2. Avoid outsourcing or hiring a freelance accountant; instead try to hire an accountant on a retainer basis. This will help a great deal in preventing any mistakes or frivolous financial laundering. businesses to buy in india 
  3. Make sure that you perform a thorough review of your compliances before giving it a go-ahead. I cannot emphasize more on the importance of reading through your financial sheets and documents before signing them, it might sound daunting at first, but once you understand these documents, it only gets easier. buy existing business in india
  4. Appoint someone referred by their client Many of us hire employees who are referred to us by friends. However, in the case of an accountant or another position that deals with sensitive information, you must hire only those professionals who are referred to you by their own client, that is, by someone who has worked with them directly. buy a business in mumbai
  5. Avoid someone either too big or too inexperienced Avoid bringing a very big fish on board. Meaning to say, avoid involving someone who is already established in their own career, simply because these professionals might not pay as much attention to a small-scale business or startup. buy a business in delhi
  6. Cutting costs can cost you your company Don’t try to save meagre amounts and hire a CA who you would not be able to trust completely. Always remember that your CA deals with one of the main aspects of your business- the money. Cost cutting here can cost you your entire company! buy a business in bangalore

Healthy finances are very closely linked to healthy businesses. The best idea for small businesses and startups is to be abreast with new developments, laws and policies that are announced, especially those that are related to their industry. businesses to buy in mumbai

*Names have been changed for maintaining confidentiality of affairs. businesses for sale in mumbai

These are some of my experiences, Hope you enjoyed reading the article. Feel free to connect with me for Queries or just a healthy discussion on sonakshi@kapso.in 

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About the author:  business opportunities in india

Sonakshi Pratap is the Founding Director at Kapso Business Services, India’s Leading Business Brokerage firm. buy business india