Accounting for Business

This report discusses the importance of accounting for small businesses and how it allows owners, administrators, customers, and stakeholders to assess the company's financial results. It also explores the various sources of finance for different entities, such as sole traders, partnerships, private limited companies, and public limited companies.

Accounting for Business

Contents
1. INTRODUCTION...................................................................................................................................4
2. MAIN BODY.........................................................................................................................................4
3. CONCLUSION.......................................................................................................................................6
4. REFERENCES........................................................................................................................................7

INTRODUCTION
Accounting is important for small business owners because it allows owners, administrators,
customers, and other stakeholders to assess the company's financial results. Accounting offers
crucial knowledge on costs and revenues, benefit and loss, obligations and reserves for judgment,
forecasting, and management mechanisms within a company (Heald and Hodges, 2020).
Accounting's primary goal is to document financial transactions in accounting records in order to
classify, quantify, and transmit economic data. Furthermore, tax compliance authorities mandate
to maintain basic records that monitor profits and expenses. In this report consist of various
sources of finance of different entities like sole trader, partnership, private limited companies and
public limited companies.
1. MAIN BODY
Equity, leverage, debentures, retained profits, term loans, working capital loans; promissory
note, euro matter, investment capital, and other types of financing are available to businesses.
Such resources have been used in a variety of cases. They are categorized by time frame,
possession and influence, and production root. Different organizations are used different sources
of finance that are mentioned below:
Sole traders: A sole trader is a common market arrangement for small companies in the
United Kingdom. Self-employed refers to a person who works as a sole trader. A sole trader
market arrangement appeals to many people because of its simplicity of configuration and
complete control. By many entrepreneurs, it is an especially common framework.
 Borrowing from relative and friends: Friends and associates are the most probable to
trustable and are valuable sources of capital for sole proprietorships. Mixing business and
individual life, on the other hand, can be risky. If the company fails might be jeopardizing
a valuable friendship. Take the loan positively and handle it as though it were a bank loan
to reduce the risk.
 Grants for sole proprietor: Grants can be a fantastic source of support and will have the
money have without having to pay it back, and don't generally need good credit (or any
financial) to qualify (Korolyuk and et.al, 2020). Individuals may, furthermore, be
competing against hundreds of other companies for a piece of the grant pot, and their

options for using the funding may be extremely constrained. Until taking a grant, make
sure they have noticed of all the conditions and constraints that come with it.
Partnership: It is a type of enterprise in which two or more parties share control of the
company, and also accountability for operating it and the profits or losses it causes. The money is
distributed to partners, which report it on their individual tax forms. The company is not charged
individually on its earnings or expenses, as companies are.
 Bank loans: There are a plethora of financial institutions or banks where the companies
can borrow money and recover it over a 5- to 10-year term. This outlet allows Social
Chain members to reimburse funds at their leisure while still receiving tax benefits.
 Angel investors are individuals who are likely to devote in a commercial enterprise that
seeks to enter a new market. Angel investors often have extra capital and are searching
for businesses that can have a better return on their investment. This source allows Social
Chain's partners to easily allocate investments with no debt, allowing them to obtain the
necessary amount of financial capital for their businesses (Sisaye, 2021).
Private limited company: The most popular type of business formation in the United
Kingdom is a private limited company. It is formed by registration the business with Companies
Registry. Towards its directors, it functions as a separate legal body and the corporation is a
"person" in their own way. This ensures that the corporation owns all of the corporation's
properties, obligations, and earnings, and the owners are not entirely responsible for the
debenture holders.
 Debt capital: Private bank loans are used to secure mortgage finance for businesses.
They will also raise money by selling debt to the general public. The lender (borrower)
issues debt instruments such as government debt or notes payable in debt finance.
Debentures, rentals, and rentals are also examples of debt problems. Corporations who
issue loans are creditors when they swap shares for cash to carry out specific tasks.
Following that, the firms will repay the loan (principal and value) in accordance with the
debt maturity plan and agreements covering the authorized treasury bonds (NGUYEN
and LE, 2020).

Public limited company: A corporation that is run by representatives and operated by
owners is known as a public limited company. A public limited partnership may sell its stock to
the general public. Such responsibilities that a PLC must fulfill as a result of being commercial
involve additional tax administration and keeping accounting records public so that potential
customers have all the facts they need when buying. A public limited corporation, like a big
corporation, is traded on the stock exchange and would be more transparent and public about the
information than a privately owned company.
 Equity share: Standard securities that have privileged treatment to dividends and capital
redemption are referred to as existing shareholders. When a company makes a profit,
stock owners get a high rate of return on their investment. Fr instance, Cadbury does not
have to announce a dividend anytime they make a profit, and they do not have to put a
levy on their organizational resources because of the source.
 Retained profits: They are the earnings that a company has earned over the years and are
considered as the company's capital reserves. Public limited companies with retained
profits have no liabilities and can effectively avoid the crippling impact of demands. It
also doesn't dilute the shares of a company. Its downside is that if reserves are depleted,
they are no longer prepared to resolve potential unexpected problems (Gittings, Taplin
and Kerr, 2020).
2. CONCLUSION
According to the above report it has been concluded that accounting for managers offers
financial reports as well as tools to individuals in management positions, allowing them to make
sound choices for the improvement of the team. Sources of financing are critical for arranging
and acquiring financial capital for operations related to product business growth in existing or
new products. Bank loans, private investors, preferred shares, debt instruments, and other
lengthy external sources of funds are among the most common.

3. REFERENCES
Books and Journal
Heald, D. and Hodges, R., 2020. The accounting, budgeting and fiscal impact of COVID-19 on
the United Kingdom. Journal of Public Budgeting, Accounting & Financial
Management.
Korolyuk, E. V. and et.al, 2020. Methodical approaches to the formation of accounting and
analytical providing of economic safety of business entities. Test Engineering and
Management. 82(1-2). pp.2219-2225.
Sisaye, S., 2021. The influence of non-governmental organizations (NGOs) on the development
of voluntary sustainability accounting reporting rules. Journal of Business and Socio-
economic Development.
NGUYEN, H. Q. and LE, O. T. T., 2020. Factors Affecting the Intention to Apply Management
Accounting in Enterprises in Vietnam. The Journal of Asian Finance, Economics, and
Business. 7(6). pp.95-107.
Gittings, L., Taplin, R. and Kerr, R., 2020. Experiential learning activities in university
accounting education: A systematic literature review. Journal of Accounting
Education. 52. p.100680.