What success can an Accounting & Tax consultant bring in to an organization and how relevant is its role?

The era has come in which accounting and tax consulting has become one of the key success factor of any organization. In the late 90s, the India industry started to realize the importance to an accountant and tax consultant. The Industry realized that efficient accounting will always help in cost control and tapping the leakages. Accounting is merely not about recording of transaction for reporting to the authorities, but it is more about accountability of each and every person of the organization.

The accounting and tax consulting has been becoming more and more relevant day by day due to various reasons summarized below :-

1.       New Business products and services evolved in which there are numerous complicated transactions.

2.       Enactment of multiple and complex tax policies, such as a small size manufacturer has to deal with many taxes such as Income Tax, Excise, VAT, Customs, Octroi/LBT which makes it virtually impossible to deal with for a general accountant and here comes the role of accounting and tax consultant.

3.       Large scale of transactions.

4.       With evolvement of computers in governance, any misreporting is caught immediately thus the need of the expert is the need of the hour.

I am a finance and tax consultant and I would like to give you a real life example. My client took over a company which was engaged into real estate business and it had one project going on. The old owners were very conservative and hence did not hire an expert consultant and relied on a general accountant, supposed to be graduate, for all its accounting, tax filings etc. When my client took over the company, he called me for review of books of accounts, tax papers & financials which were being handed over. While going through I discovered that the previous accountant has not availed credit of service tax for services used in development of real estate project, which is legally allowed. Thus, that all unavailed credit was lost and became a cost for the client which was actually not. According to my estimate he suffered a loss of not less than 20 lacs due to that error, which cannot be corrected now as the time limits for revision of filings were expired way back. The total cost of the project was around 10 crores, and 20 lacs in this was a very huge amount.

Thus all I wanted to tell you that a small observation of an expert will help you save millions. We all agree that the financial planning, analysis and management is the most important tool for success for any business. And it all starts with accounting.

Let’s take example of World’s largest conglomerate – The Tatas. The group has more than 100 registered companies and they have managed the shareholding so neatly that it would take you months to understand the shareholding network of Tata Companies and after months also you will not be sure that whether you have arrived at correct figures or not. All you can do is rely of the figures given by them. This saves them a lot of cost and get rid of many obstacles. This is what an good consultant will get you.

I simply believe that for earning something, you need to decide the correct selling price and for deciding the correct selling price you need to know your correct costs, which all comes through the accounting process.

Even the taxation policies in India are not so consistent and are very ambiguous. The role of the consultant is also very vital due to a number of tax laws, multiple possible interpretations etc.

Summarizing the all above I would like to say that a good accounting and tax consultant will bring success to any organization by way to proper financial management, tax management, cost reduction, proactive steps for any threats and much more.