Running a business includes more than delivering products and services to customersThere are also financial records to maintain, including income, expenses, payments, invoicing, and more.
Having accurate accounting information is beneficial for a business owner, since it supports an understanding of the income and expenses, and helps prepare reports, filings, and manage tax obligations.
Depending on the type of business, companies and sole proprietorships may have different accounting and reporting requirements in SingaporeAs such, businesses should review the regulations related to their structure.
Accounting Services: What Do They Entail?
A company’s accounting services typically involve day-to-day financial records, bookkeeping processes, and/or more specialised support.
The bookkeeping function generally covers a company’s transactions, including customer payments, supplier invoices, expenses, and more.
Beyond recording processes, accounting support may also assist with financial statements, report preparation, tax documentation, and other related needs.
While some businesses may only require bookkeeping services at month-end or year-end, others may need support with reports, payroll, tax returns, and/or other services.
It is also important to note that general accounting, bookkeeping, and tax-related services differ from public accountant servicesAccording to ACRA, services such as audit, review, and reporting on financial statements require a company to be registered as a Public Accountant.
Why Accurate Accounting Matters for a Business
Financial records provide business owners with an accurate view of their operations.
For instance, high sales may be an attractive number, but if there are outstanding customer payments, increased supplier costs, or other expenses, they could affect a company’s cash flow position.
Consistently updated accounting provides owners with the following:
- Insights into the business’s cash flow
- Information about which customers and suppliers to pay attention to
- The ability to identify trends and patterns within the business
- An overview of the financial position on a report date
- Information needed for tax reporting purposes
With accurate records, preparing tax documents and financial reports is also less error-prone and time-consuming.
Depending on the company structure, businesses may have different regulatory requirementsSome of these responsibilities fall under the IRAS (taxation) and/or ACRA (registrations and reporting).
Common Accounting Functions Businesses May Need
A company’s accounting requirements depend on its size and activityA small consultancy business may only need to process a few transactions, as compared to a retail store with multiple employees and significant stock.
Common accounting functions include bookkeeping, bank reconciliations, accounts payable, accounts receivable, expense tracking, management reports, and tax filings.
As a growing business tracks more transactions and/or processes, some companies may need management reports to help review revenue, expenses, and cash flow on a periodic basis and compare them across periods.
When researching singapore best accounting services, businesses should look at the scope and depth of services, including the target audienceFor instance, a company with a high volume of transactions and frequent reports would benefit from an accountant with relevant expertise.
Accounting and tax needs vary depending on a company’s structure, reporting period, and other factorsBusinesses must ensure they have the most updated information regarding their requirementsSimilarly, companies should also be wary of unregistered accountants.
Common Accounting Errors Businesses Make
Trying to leave bookkeeping for the end of the year often results in errorsAs such, it is best to maintain consistent and updated financial records.
Many businesses also make the mistake of mixing personal and business expensesMaintaining separate records (and finances) helps avoid errors during report generation.
Another error is to record a transaction without sufficient informationA number in an accounting system or Excel sheet is not enoughAccounting records should be informative and track relevant data, such as the invoice, customer, supplier, or purpose of the transaction.
Businesses should also be aware that not all tax and filing requirements apply to every company structureThe requirements depend on the entity type, including companies, partnerships, and sole proprietorships.
How to Choose the Right Accounting Professional
To begin, businesses should evaluate their requirements and research the scope of services.
For instance, a company only looking to maintain bookkeeping records has different requirements from a business looking to prepare tax documents or undergo an audit.
It is important to ask about the accounting professional’s experience with similar services and industry-specific transactionsKnowledge of industry-specific processes and financial records is essential, since there are significant differences between retail, consultancy, construction, and technology company accounting.
Business owners should also consider their communication needs and requirementsIt is important to understand who prepares reports, when they are due, and how questions are addressed.
Before finalising an appointment, businesses must also review the cost structure and payment termsUnderstanding the expenses that factor into the service and what additional costs may entail is necessary for budgeting purposes.
Another important consideration is data protection and cybersecurityAccounting professionals maintain financial information about a business, including banking details, customer and supplier information, payroll, and moreIt is essential to review how data is maintained and secured, particularly in case of hacking, ransomware, or other data theft attempts.
For businesses considering public accountant services, it is a good idea to review which accounting entities are approved by the ACRA.
Keeping Your Accounts Organised: Practical Tips
Set regular intervals for recordkeeping and bookkeeping, as opposed to leaving it for months at a time.
Always file and store physical and electronic invoices and receipts in an accessible (to the designated person) and organised mannerIt is also helpful to label files and ensure that digital copies are in easy-to-find folders.
It is important to reconcile the accounting records and bank accounts at regular intervalsThis helps ensure there are no missing, fraudulent, or incorrect entriesSimilarly, a review of customer statements (invoices due) is important to ensure there are no outstanding payments.
Finally, it is crucial to verify requirements with the latest government guidelines or a qualified accountantRegulations change, and the requirements differ depending on a company’s structure and report submission timing.
Key Takeaways
Maintaining accurate accounting provides business owners with insight into the income and expenses, as well as cash flow and outstanding payments.
Depending on a company’s size and structure, businesses will have different accounting requirementsIt is important to ensure that accounting and reports are consistently updated and not left for year-end or month-end.
Business owners should also ensure that they choose an accounting professional with relevant qualifications, communication channels, and cost structuresIt is also important to ensure that sensitive financial information is secure and that the service provider adheres to cybersecurity and data protection regulations.
Conclusion
Accounting is best maintained as a regular process throughout the year, as opposed to leaving it to the end of the year.
Having clear and updated records helps owners and managers understand the financial position of the business and helps accountants prepare accurate reportsMaintaining such records also helps flag missing supplier payments, unusual expenses, and/or errors.
Since tax and filing requirements may change throughout the year, it is important to double-check the latest requirements from the appropriate government agency.