The government of Singapore requires that privately held firms have annual general meetings and submit annual financial reports. If your small business does not have an accounting system or follows accounting rules, you will run at a risk of mistakes in reporting on the revenue, profit, and taxes of the business as the end of the year approaches. Many small businesses overlook the importance of documented accounting and will rather work out the business’s accounting mentally without proper book-keeping. Here are a few accounting tips you can employ for your small business in Singapore.
1. Accurate Records
Paying attention to details will not suffice when handling the accounting of a small business enterprise. It is also important to document these details not to make mistakes when preparing financial statements like income statements, statements of financial position, etc. There have been instances when small business owners overpaid taxes because mistakes were made when recording money deposits into the business.
Another reason to pay attention to accurate records is in the receivables department. Receivables are only a good investment when the money is in the company’s account. It is important to keep track of customers that are yet to pay for services rendered or products purchased. There are many accounting software such as Quickbooks, Sage50, Wave, etc., that can help you keep track of records. Microsoft Excel and other spreadsheets will also be useful, although using comprehensive software will be more beneficial.
2. Forecast Expenses
The graph of accounting periods is never a straight-line graph; businesses tend to experience periods of high revenue and other periods of low revenue while still having existing expenses. A business should be ready for different business cycles through financial projections for expenses, revenue, and profits.
“It takes money to make money” – that is a popular saying in the business world. A business will require some capital injections as investments to expand or upgrade the business to secure relevance in its industry of operation. For example, the banking system went through a phase of technological advancements with the introduction of Fintech, mobile banking, etc. It is very unlikely that a bank that was unable to transition with the new technology for any reason will remain relevant. For these reasons, there is a need for financial records and financial management through efficient accounting systems.
3. Budgeting For Taxes
As in many other countries, Singapore takes tax compliance very seriously, and non-compliance like missing deadlines for tax filings, late submission of financial statements, etc., will result in penalties such as fines and additional interests. No entrepreneur wants to be caught up with the government on taxes. One efficient way to ensure that you’re up to date with taxes and other payments is by setting deadlines to check all necessary books. You must make the proper tax filings, and most importantly, set aside a budget, either monthly or yearly, so that you won’t be caught unawares by the tax costs.
4. Monitor Company’s Expenditure
Little expenditures left unchecked can eventually amount to large sums that can drastically hurt the business. It is important to work out monthly profits to help project and monitor the company’s expenditure. Making use of credit cards will be beneficial as this will serve the role of a bookkeeping system in keeping track of the cash accounts and expenses. Without knowing what the business generates in revenue each month, it will be difficult to keep to project expenditure and keep track of overhead costs.
5. Hire An Accountant
As a business owner, there is a need to always want to be in control of every aspect of your business, but managing the finances of your small but growing business enterprise can quickly get complicated and overwhelming. It is important to delegate so as not to allow other aspects of the business to suffer. Some instances you will like to consider hiring an expert accountant are:
- When dealing with the government: An accountant will organize the submission of accounting statements as the need arises, keep you up to date with tax regulations, ensure tax filings are done at the right time and organize stock allocation.
- When the government organizes an audit, it is best to hire an accountant to organize and arrange the financial books of the company. This is best to avoid expensive mistakes that can cost the company in several ways.
- When you’re trying to get a business loan, the banks will likely check your business and its financial background to assure that the company is capable enough to handle such a financial commitment.
Sometimes, it may seem that hiring an in-house accountant may cost a lot, so you can outsource to financial institutions. In Singapore, there are many reputable services, and a lot of businesses do outsourcing. Outsourcing the accounting activities of your company will significantly reduce fraud in the business.
Accounting is one of the key aspects of a business. Often, small businesses undermine the importance of efficient accounting systems eventually bear the consequences for that. You can use the points outlined above as a checklist to ensure the financial welfare of your business. If found to be lacking in any aspect, you might consider hiring an accountant or outsourcing all accounting activities.