Accountants Play a Crucial Role for Indian Startups

Accountants Play a Crucial Role for Indian Startups 1

Accounting and business goes hand in hand. And with the booming startup scenario in India, the scope and role of accounting has been redefined with the growing number of employment opportunities and emergence of new, sustainable goals for business collaborations.

Today’s expanding community of crowd-funded startups in India is largely dependent on the technological and accounting framework for long term success. Besides, they are also under great pressure to push the millennial, Indian businesses at the global front row. This strong start-up culture has amplified the need to hand over the reins of complex business and financial operations to young and dynamic accounting professionals.

So, What Led to the Growth of Startups in India?

Post the economic downswing and financial slump during 2007-09, India grappled to overcome the strong jolts from the falling rupee value, food inflation and financial unsoundness to conduct businesses.

In retrospect to the unfathomably ‘bleak’ situation, the number of startups with ingenious, global vision grew steadily in the country. Later in 2014, a new chapter was written for the small and medium businesses that had about 220 active investors to support the funding initiatives. This number swiftly increased to 490 in the following year, suggests the 2015-16 Economic Survey report.

The research report was tabled by the earlier Finance Minister, Arun Jaitley also revealed, “Indian startups raised about $3.5 billion in funding in the first half of 2015. As of December 2015, eight Indian startups were ventures valued at $1 billion and upwards,” reports the Economic Times. This was followed by a significant rise in patent or trademark registrations and Ecommerce infrastructure growth and increased scope for legal and technological support as well as HR, financial, accounting and other ancillary services.

Another noteworthy change brought in by the startups and demand for accountants is the onslaught of courses and certifications such as CFA, CA, CMA and much more from leading training and professional institutes. (To know more about certified accounting courses and corporate financial accountant course, visit our site,Munimji.)

The attention is also well received in academia. Business schools and universities are proactively catering to this demand by offering professional courses including Chartered Accountancy and professional graduate courses in accountancy and commerce.

Why Do Startups Need Accountants?

On the flipside of the development of small businesses rests a community of naïve entrepreneurs that are ‘clueless’ about managing funds and finances, recording and measuring profitability and other financial nitty-gritties of running a business. The lack of appropriate accounting know-how alongside stiff competition also led to the failure of a number of startups.

This further accelerated the need to engage a repertoire of back-end support in functional areas like accounting, taxation, financial reporting, legal and advisory services. This trend is deemed to have replaced the earlier mind set of the common man about chasing employment dreams with the leading corporates, IT firm, FinTechs and MNCs.

Incidentally, another interesting finding by the Chairman of Southern India Regional Council of the Institute of Cost Accountants of India, P. Raju Iyer during 2014 suggested that India was in short of nearly 30 cost accountants. Prime Minister, Narendra Modi too expressed interest in at least two lakh companies in the next two years, reports the Hindu.

Later in 2017, the Prime Minister once again stressed on the need to create India’s own ‘big four’ accounting firms that can be ranked among the top, global players. “People talk of the big four accounting firms. Sadly, there is no Indian firm there. By 2022, let us have a big eight, where 4 firms are Indian,” Modi said, reports the Livemint.

Accountants are the Financial Gatekeepers of the Economy

Today, accountants are sought to perform a gamut of tasks from basic procedures like opening bank accounts, managing expenses and recording transactions to handling complex processes like tax planning, payroll management, GST compliance, fraud auditing, monitoring investments, profit and liability management. Further, technology platform and enterprise software to facilitate the accounting operations are extensively deployed by startups and medium sized businesses to derive clarity on their financial operations.

Chartered accountants (CAs), auditors, investment experts, billing, audition, accounting and bookkeeping clerks are some of the sufficiently employable and top paying professionals across industries and sectors in the country. Besides, the recent 2017 event organized by the Institute of Chartered Accountants of India, Prime Minister Narendra Modi’s addressed CAs as the ‘big pillar of the India economy’. He further added, “CAs take care of the economic health of the country and are famous world over for the knowledge and financial skills,” reports am English daily. His speech gave another confidence boost to the overall accounting community in our nation to provide a pragmatic and objective view on financial challenges and growth.

How Do Accountants add Value to Startups?

To sum it up, accountant is as indispensable to a firm as finance would be for a business. Accountants add immense value for a startup by:

· Keeping accurate tab of expenses, cash flow, assets and monetary resources while the management focuses on building and expanding business.
· Managing day-to-day operations in payroll, manage monthly salary, generating receipts, financial statements, profit and loss reports, handle payments, recover credits, manage debits and billings.
· Accountants hired at the early stage of business or during the formation can boost strap businesses by conduct risk analysis, handling registration processes, budget creation, and tax planning, audit of capital, financial resources and revenue sharing calculations.
· Accounting professionals help startups have access to accurate and real-time financial reports with necessary information that would help in their expansion decision, obtaining debts, making additional investments and raising equity funds.
· Accountants help simplify complex compliance and regulatory procedures by ensuring the business adheres to laws and policies outlined by the regulatory, tax and advisory systems.
· Accountants offer advisory and consultation support on businesses reinvestment goals, ways to curb expenses and tax, optimize on investments and savings and disburse finance across various investment transactions.

Accountants are the Game Changers for Indian Economy

When our Prime Minister referred CAs as the ‘big pillars of the economy’, it was based on the projected contribution the accounting community on the nation’s overall financial state. Accountants don multiple thinking hats by being more than mere tax auditors.

In fact, upcoming businesses can leverage the skills and expertise of an accountant by involving them as ‘first layer of vigil mechanism’ by auditing reports before making it public. Accountants can help strike the perfect balance between the start-up ambitions and government policies by ensuring beforehand that all relevant laws are adhered throughout the operation of the company. This would involve tax compliance, ensuring correct payment of taxes, running timely income tax, service tax and CAG audits.

Accountants in all domains serve as the gate keepers to upcoming small and medium sized businesses’ financial and accounting related activities by being consultants in legal aspects of their revenue contribution towards the state and central government. This contributes to the growth of gross domestic product or GDP of the economy.

On the other hand, cost accountants empower startups and SMEs to have visibility over reasons for their firm’s expenditure to increase profitability and competitiveness. Cost accountants enable decision making by providing analysis resource spending, cost mapping and distribution analysis.

Since the rollout of GST, there has been revolutionary turn in registration practices of small companies. CAs found a huge role to play post the GST implementation in the context of new laws on insolvency and bankruptcy. CAs, CWAs and tax consultants are engaging in GST registrations, uploading online the sales and purchase data, filing GST returns, maintaining E-tax ledger and ensuring documentation and records in compliance with the current GST practices. This helped speed up all digital filing and transactions for small and growing businesses.

Would AI and Automation Replace Accountants?
India doesn’t seem to be deterred by the confounding research on how modern tools like AI can replace accountants. In fact, startups and businesses have a long way to reach the state where they have the bandwidth to employ AI tools over accountants to perform rigorous accounting tasks. Fiscal responsibilities of economy and nascent startup community are shouldered on India’s reliable accounting ecosystem that is sure to deliver profound views on trade expansions and profit maximisation.

What are your opinions? Let us know.

To know more, browse through Munimji’s offerings that can help your business or start-up with GST filing, compliance and tax filing and return or other auditing services.

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