As a business, you will obviously want to keep track of what’s coming in and out and how it is being spent.
You need to pay your bills and in turn, know what money is due to you. Cashflow is also a very important consideration: Even though you may be profitable on paper, if customers haven’t paid you, you will have difficulty paying your suppliers.
You also need to satisfy various other interested parties (also called “stakeholders”) such as your shareholders, business partners, banks, employees, suppliers, companies house and the tax man.
Also, a sad fact of life is you might also have certain accounting controls in place to avoid fraud.
Depending on the nature of the business and who needs to see your accounts, your accounts can be as involved or as simple as you see fit.