How Does a Company Structure Influence Accounting?

In a business, the type of organisational structure is important to its accounting. In a flat structure, employees are grouped into similar groups, such as IT departments and accounting departments. This helps facilitate communication and decision-making among departments and is common for small, entrepreneurial start-ups. An expanded or hierarchical structure is common for large companies. In these cases, departments are split into different levels and may also have different teams within a department.

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An example of this type of structure is the divisional organisation of a company. This structure groups people by product or service. For example, a food conglomerate may have separate divisions based on different geographic areas. In this structure, one person is in charge of all tasks in the business. A simple divisional structure can be beneficial for many types of businesses, though it discourages communication and interaction among departments.

In a centralised structure, employees are divided into different departments. Each department is responsible for specific aspects of the company. For example, a food conglomerate may operate in a divisional structure, with a chief commanding executive. While this approach is flexible, it encourages poor communication and discourages interaction between departments. Moreover, the structure of a business can be confusing for an accountant. This is why it is important to learn as much as you can about the different types of structures. For help from Bath Accountants for businesses with no accounting department,, go to

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A simple structure involves a small team, with multiple individuals carrying out all tasks and responsibilities. This structure encourages individualism and creativity, but it also creates confusion among employees. Often, important tasks get missed because there is no one person accountable for them. The lack of clear direction from the top of the company makes it difficult to make decisions and keep track of all employees’ progress. Therefore, owners of these organisations must communicate with their employees often.

A functional structure involves employees grouped into different departments. Each department is responsible for specific activities. In a multidivisional structure, the employees are grouped into different departments based on their functions. For example, the marketing manager is in charge of coordinating activities related to the marketing department. The other functional areas are managed by managers who report to the chief executive officer for their specific department function. This organisational structure is a useful way of understanding who is responsible for what.

Often, small organizations do not have formal structures. The basic organisational structure is a single person or several people, with multiple responsibilities. This type of organisation is the most flexible, but it also stifles direction and clarity. A company’s organisational structure should be based on the type of business it operates. A sole proprietorship is a simple company where one person performs all tasks. It is a common form for small businesses.


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