The podcast features Ishan Bhavsar, an AVP of the accounting department at Unison Globus, discussing the importance of accounting for small, medium, and large businesses.
Bhavsar emphasizes the need for an accountant in any business venture, particularly startups, to maintain financial records, which can help entrepreneurs make projections about their businesses. He lists three prerequisites an accountant should know before starting an accounting service for a business, namely the industry it falls under, the main source of income and related cost components, and the entity type.
Bhavsar also mentions several reports such as profit and loss accounts, balance sheets, and cash flow statements that business owners should understand to analyse the financial situation of their businesses.
Additionally, he explains the importance of choosing the right business structure and tax year, as well as paying payroll, federal, and state taxes. Bhavsar suggests outsourcing accounting and taxation services to Unison Globus to save time and costs and focus more on business expansion.
Read entire transcript below:
Transcript:
Bhumika Shah: Hello and welcome to the new episode of Podcast setup initiated by Unison Globus – The plethora of public accounting. Today is an era of innovation and excellence. One such thing getting popular today in millennial and Gen Z is the startup culture. Or if I have to empower the statement, I’ll say being your own boss.
So today, we have with us Ishan Bhavsar from Unison Globus. He’s an AVP of the accounting department with versatile experience of ten-plus years. He’s here to help us understand the finance and accounting aspects of owning your own business, whether it may be small, medium, or large. Hello and welcome, Ishan. How are you?
Ishan Bhavsar: I’m good, Bhumika. How are you doing?
Bhumika Shah: I’m doing well.
Ishan Bhavsar: Thank you so much, Bhumika, for inviting me to share my thoughts.
Bhumika Shah: So Ishan, as I told the startup is moving forward like it is growing. So what would you like to say about that? And as an accountant with so many years of experience in accounting, how would you like to define accounting for them? Or let me put this way why accounting is very important for startups.
Ishan Bhavsar: A startup; when I hear the word startups, I recall the various episodes of Shark Tank. Each episode has two parties: one entrepreneur and another investor. Every entrepreneur has a vision that their venture will be profitable, and every investor is interested in more return, so here we “ACCOUNTANT” comes into the picture.
Bhumika Shah: Right
Ishan Bhavsar: Financial statements of any organization are the main source through which anyone can analyze where the business is going. Whether it is profit making or loss making or break even?
Bhumika Shah: Right.
Ishan Bhavsar: Financial statements only show a true and fair picture if books are maintained per defined standards and policies. Who can do this? Of course, an “ACCOUNTANT”.
Another main reason is,
Every businessman, whether a new startup or a well-settled business, must keep a close eye on the Cash inflow and outflow because, based on the cash flow situation, businessmen can make various business projections.
So, these are the main reasons why Accounting is important for startups.
Bhumika Shah: Right. Got it. So now that we understand why accounting is very important, whether it is a newly grown business or a well-run large corporation. But if I am a business owner, so what would be the prerequisite?
Ishan Bhavsar: Yeah, good question, Bhumika.
As an Accountant, there are so many things I need to learn about the business before starting its accounting, but these are the three most important prerequisites.
First and foremost, I should know what business am into. In which industry it falls. Whether it is in the service industry, manufacturing industry, or retail industry. Why it is important to know? Because the accounting methods vary from one industry to another.
Bhumika Shah: Right.
Ishan Bhavsar: Second, I should know the main source of their Income and related cost components. Because their knowledge will help Accountants categorize the various income and expense transactions.
Bhumika Shah: Okay.
Ishan Bhavsar: Third, I should be aware of its entity type. Is it an Individual, S Corp, C Corp, Partnership, or Exempt Organization? Taxability is decided based on the entity type, so this knowledge is required. Taxability is decided based on the types of entities. So this knowledge is highly required.
Bhumika Shah: Right. So I suppose we did learn these terminologies in school or college. But now that we are doing our own business, we know how to put it into place. So if I am a small or medium business owner, what are the reports that are very important to help me understand where I’m growing or the state of business right now?
Ishan Bhavsar: Very good question, Bhumika. How businessmen can have an idea about the financial situation of the business?
I can suggest various MIS reports like,
Profit & Loss Account
Balance Sheet
Cash Flow Statement
COGS Analysis
Product / service-wise profitability report
Breakeven Analysis
Industry-specific ratio analysis
We can prepare lots of other reports, but these are the main reports which help management to analyze the business.
Bhumika Shah: Right. This sounds like a tedious task. I suppose.
Ishan Bhavsar: Yeah.
Bhumika Shah: Now that we understand and have listed down the reports we would like to note, could you shed some light on the taxation aspect of the business or how it would play a role?
Ishan Bhavsar: I was waiting for this question!!
New entrepreneurs must keep various IRS regulations in mind while taking the following actions.
1. Choosing a business structure like Sole proprietorship, Partnership, Corporation, S Corporation, Limited Liability Company
2. Choosing a Tax year like Calendar year Or Fiscal year
3. Applying for EIN, i.e., employer identification number
4. Paying various taxes like payroll taxes, federal & state taxes
Till now, we have discussed the prerequisites for the startups, but now I would like to share how Unison Globus can help entrepreneurs to save their time and cost so that they can focus more on their business expansion.
You can handshake with Unison Globus as your outsourcing partner and offer accounting and taxation services.
Unison Globus has various engagement models which fulfill clients’ requirements to know how we can make that possible. Connect with us at 407-807-0100.
Bhumika Shah: That’s spoken like a true AVP.
Thank you so much.
Bhumika Shah: So I think all the small and medium business owners or anybody thinking of having a business of their own, you grow business and increase sales.
Unison Globus is there to take away all your bookkeeping and taxation worries.
Thank you, Ishan, for such an insightful episode. Thank you so much.
Ishan Bhavsar: My pleasure. Bhumika.
Bhumika Shah: For more information, connect with us at www.unisonglobus.com.