Every business in the world is dependent on the global market. Whether you’re petite or micro-enterprise, you are directly affected by various issues and problems in the world economy.
Some of these recurring business problems in the world are money laundering. Almost all strategies to mitigate this problem are futile. The business of money laundering is still going strong up to this date. Consequently, so are the illegal transactions and crimes that go along with it.
This is one of the significant reasons why various states worldwide push for the declaration of Profit & Loss (P&L) statements. Once it’s approved, it can cause substantial changes to businesses worldwide–including yours.
What is a Profit & Loss (P&L) statement?
A Profit and Loss (P&L) statement is a financial report that summarizes the income, cost, and expenditures under a specific period. It’s usually filed per quarter of the fiscal year.
P&L statements cover both cash and accrual assets. The said report is essential in determining the overall valuation and future of a company, as it contains the ability and inability of a business to increase their income and, at the same time, decrease their organizational cost.
What’s the problem with the P&L statements of the businesses today?
As of the moment, there is a problem in transparency regarding P&L statements of businesses. Evidence shows that companies, especially micro ones, don’t give sufficient information about the company’s financial situation. New companies aren’t even required to declare their board of directors. People are clueless about the people behind certain companies.
These problems give leeways for fraud as anyone can do dummy accounts and employees that they can use to manipulate the revenue and costs of a business.
The worst part is this–should discrepancies like these occur, it’s challenging to make the companies liable as these files are considered confidential. To put it simply–as long as companies file their P&L statements, they are safe, regardless of the process and authenticity of their data.
Because of this issue, various states are pushing for laws that will require companies to publicize their P&L statements. This one, almost anyone can check their statements and reports to ensure that they’re not associated with any illegal activities such as money laundering.
A government registration committee will have the power to allow various government members to have access to anything that has something to do with your business’s financial position. This includes answering queries, sharing data, sending documents, and more.
This move will be significant in fighting economic crimes such as money laundering.
How does the publicization of P&L statements affect your business?
If you don’t have any illegal activities within your business, you don’t have anything to be afraid of with the publicization of P&L statements. You have to declare all your income, costing, the composition of your directors, and pretty much all organizational matters of your business.
However, this doesn’t mean that it won’t affect your business.
The publicization of P&L statements will require every business to go digital—even the small and micro-enterprises.
If you’re one of the businesses that have already gone digital before, you’re lucky. However, if you’re one of those who have resisted technology, you have to brace yourself. You will need to get decent capital to go digital.
How can you manage the effect of P&L statements in your business?
One of the best ways to manage or mitigate the effect of the publicization of P&L statements of your business is through partnering with an accounting firm.
An accounting firm can help you identify the documents and files essential for filing P&L statements. This will help you avoid the unnecessary publication of data about your business that might affect your overall business flow. They can also ensure the validity of all data.
On top of this, an accounting firm will also make sure that your P&L statements are accurate. This will avoid any legal problems that may root in the inaccuracy of your financial documents.
Lastly, some accounting firms also offer their accounting software which will help you go digital. Because of this, you don’t need to spend time scouting software and people who will help you digitize your business. You get your accountants and digital accounting software in just one deal.
In conclusion, while the publication of P&L statements can cause significant changes in your business, it’s not something that you can’t resolve. As long as you partner with an excellent accounting firm, you don’t have to worry about anything.