A Comprehensive Guide to Bookkeeping in Singapore -When You Have No Idea How To Do It
As per the Accounting and Corporate Regulatory Authority (ACRA), you must regularly update your business books. And a business’ accounting starts with bookkeeping. You choose to do it in-house or hire a provider of accounting and bookkeeping services in Singapore.
What is Bookkeeping?
Doing bookkeeping for your business means classifying, arranging, and recording all its day-to-day financial transactions. You must bookkeep from Day One till you close your business.
You need to take into focus on:
Products or services sale
Transfer of money
Salary, incentive, and bonus paid
A bookkeeping services provider can help you digitize your financial transactions, which you can process to understand:
Business incomes and expenditures
How to forecast and plan to grow your business
Number of employees you can employ
Supplies you can keep in stock
Products you can make and deliver over a certain period
Report your financial transactions
Calculate and pay accurate taxes
Bookkeeping Vs Accounting
Though some people use ‘bookkeeping’ and ‘accounting’ interchangeably, the terms are not the same. Bookkeeping comes first, and then you can use the digitized data to do the accounting of your business.
An accountant collects information on a business’s financial transactions during bookkeeping and separates and records it into ‘debit’ or ‘credit’ columns of your accounting journal, cash book, or general ledger.
During accounting, an expert from your bookkeeping services in Singapore can study this info to understand the business’ finances. They then use it to prepare financial statements and management reports for you.
Master Bookkeeping Details
Mastering your bookkeeping means mastering the details of your business’ receipts and invoices. You need to pay attention to:
Date and time of financial transaction
Classify it as income or expense
An experienced bookkeeping services provider can help you set up a reliable accounting system for your business. It will allow you to create transaction categories and types of transactions and subsequently segregate your earnings and expenditures accordingly.
This gives you specific info about how much your Product A, Product B, and Product C earn. It also gives you insight into the nature and frequency of your different types of expenses. Insight into your business financial data gives you a better understanding of your:
Sources and destinations of cash flowing into and out of your business
When and where to divert your resources
The expenses you should curtail, postpone or eliminate
How to Start Bookkeeping?
You can hire an in-house part-time, full-time, or freelance bookkeeper to take care of the task. Such a professional will update the business’ general ledger for you. They will document business’ expenses and receipts. However, this is a costly option.
It means spending on the latest accounting software, computer, office space, and other infrastructure. Most importantly, the task will stay on your office premises, creating disturbances whenever there is a due date to meet.
You also need to remember that bookkeeping is your business’s non-core, administrative task. And you should not get too deep into it. As it is not going to make you any money or generate revenue in any form, however, well you do it. It is why you may prefer a reliable bookkeeping services provider.
Know Financial Health
Bookkeeping enables you to understand the financial health of your business and, if necessary, take corrective actions to improve it by optimizing your resources.
Start Early, Track & Record Business Transactions
The experts advise you to track and record your business transactions as early as possible. You can even record the cost of your company incorporation as a capital expense of the business.
ACRA expects you to record each financial transaction of your business, however tiny or big it is. Do it before it moves to the back of your mind and out of memory.
Open Corporate Bank Account
As a business owner, especially if you are a sole owner, you must separate company and personal finances. The best way of doing it is to open a corporate bank account in your company’s name. And use this account to receive your business’ earnings and pay expenses.
This way, you will not deposit your earnings into your business’ bank account or use them to pay for personal expenditures. Doing so will get you into trouble with your shareholders and regulating authorities.
Moreover, when the personal and business finances are mixed, they are difficult to sort. And it can affect the calculation of a business’ tax amount accurately.
Key Bookkeeping Tips
Appoint one of your employees to do business bookkeeping. You can also outsource it to a provider of bookkeeping services in Singapore
If you are going to do it yourself, include it in your to-do list and reserve time for it. You will need to be consistent with it
You will also need to be aware of your tax obligations and due dates. If you know the tax amount and when to pay it, you will be able to plan for it
If your business has a small number of transactions, you can use spreadsheets to map your business’s accounting journal, cash book, and general ledger. However, most businesses, including the small ones, use an accounting software
Decide whether to use a cash or accrual accounting system
Decide on whether to use single-entry or double-entry bookkeeping
Ask an accountant to set up your business’ chart of accounts so that it is easy to list assets, liabilities, income, and expenses
Decide which categories to track, KPIs to follow, and how to structure your business
File all your receipts and invoices in chronological order for future references
Use all the tips listed above for bookkeeping your transactions from the source documents into your spreadsheet or accounting software.
Record, transaction date, paid or received amount, and whether it is an income or expense. Use it to update the general ledger weekly or monthly.
Bookkeeping for Your E-commerce Business
You will need to bookkeep and reconcile daily receipts of your e-commerce business. Doing it every day to maintain your books in order will become easy.
If you are selling products on an e-commerce platform, you will need to pay them a fee. Bookkeep regularly so that these payments, however small or big, are reflected in your books.
Your bookkeeping becomes challenging if you work with foreign currencies and use PayPal and such payment processors. You also need to know whether the platform or payment processors track the refunds and returns and enter them in your spreadsheet.
Outsourcing to Bookkeeping Services
Bookkeeping is a time-consuming, manual and repetitive task. Moreover, it is not a core activity of your business and generates any revenue for your business. Doing it in-house is costly and adds to your administrative woes. You may want to outsource it to a reliable bookkeeping services provider.
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