What Is Corporate Accounting? Everything You Need to Know
If a business is going to be successful, it needs to know how much money is coming in and where it’s going afterward. The accounting processes that track business cash flows and create financial statements are known as corporate accounting.
Understanding corporate accounting can help you decide if you want to hire an accountant for your business or outsource your company’s taxes and budgeting.
Here’s what you need to know about corporate accounting.
Here’s What We’ll Cover:
Types of Accounting
Corporate private accounting is only one type of accounting, and generally uses private accountants hired by businesses. Many companies do their accounting in-house, while others outsource it.
Public accounting is another type of accounting. Public accountants work for firms that sell accounting services, rather than for a corporation built around a different product or service. Accounting organizations hire multiple accountants to serve their clients and may be a full-service accounting firm or a more limited tax accounting firm.
Government accountants work for local, state, or federal governments and provide government accounting services. This might mean reviewing tax submissions, helping a government department create a budget, or managing government resources.
Finally, there is forensic accounting. A forensic accountant does the deep research needed to obtain or reconstruct accounting information when the traditional documents are not available. They can be private accountants or work for the government.
What Does a Corporate Accountant Do?
Corporate accountants generally need a bachelor’s degree in accounting to be hired into the position, along with experience in their accounting careers. An accountant might be in charge of specific financial reports, have specific duties during tax season, or help a business stay in compliance with laws and regulations about financial reporting.
Dealing with the daily operations in terms of revenue and expenses is a core part of corporate accounting, and so is analyzing projects to determine if they are a good use of revenue. This is true in both private and public companies.
A corporate accountant creates a variety of financial statements, such as income statements, balance sheets, and budgets. These documents help a business understand if they are using money appropriately, overspending, or if they have too much cash on hand.
Why Corporate Accounting is Essential
A business cannot function without knowing how much money is coming in. Understanding revenue is the only way to know if there is cash available to pay staff, make new investments, and grow the company.
At the same time, a business has to know how much money is going out. If expenses are too high, a company can run through cash reserves quickly and end up in trouble.
Beyond the day-to-day cash flow, corporate accounting can help business leaders understand if a new project idea is within the budget and whether it’s likely to generate a good return on investment. In other words, corporate finance involves every financial decision a company makes.
More Questions About Accounting?
Here is FreshBooks, we are committed to helping your business manage its accounting more easily and effectively. The tools we have available help you track your invoices, expenses, and more.
If you’d like to learn more about accounting, check out our Resource Hub.