Efficient organisation of documents such as invoices, purchase orders, receipts and payment vouchers are just the tip of the iceberg when it comes to accounting. Being able to manage a business’s finances is a significant task for any business owners regardless the size of your entity as there are many aspects to consider such as which accounting software to use, procedures, forms, and reports.
What are Some Accounting Tips I Should Know?
Here are 13 important accounting tips that will help you be on your toes for your business’s finance:
1. Choose an Accounting Structure
First and foremost, you would have to choose an accounting structure. The primary difference lies in when revenue and expenses are recognised.
Cash-based Accounting
Cash-based accounting records revenue and expenses only when the transaction is completed (i.e. when the cash is received or disbursed). The cash-based accounting method is typically used by small businesses and proprietorships as it is simple, given that it only tracks cash paid and received. As a result, less resources will be expended on staffing.
Accrual-based Accounting
On the other hand, accrual-based accounting records revenue and expenses the instance a transaction occurs, before the cash is received or disbursed. Generally, the accrual method is used by larger companies as it allows companies to smooth out earnings, while providing a more accurate picture of a company’s health.
2. Maintain financial records in an efficient manner
Business owners should keep track of all expenses, profits, earnings, losses, and other transactions and documents that occur throughout operations. By doing so, it will help save time in the future when generating financial reports, preparing for audit, and revising data that is updated on a regular basis.
3. Investing in a quality accounting software
Working with an accountant or an accounting service provider will require you to acquire various basic accounting software that are easy to use and affordable.
These software will hence assist you in tracking and organising certain financial tasks within the business.
Some of the tasks an accounting software can provide for you include:
4. Minimising paper usage
Corporate Social Responsibilities encourages the minimal usage of papers in business to ‘Go Green’. Not only will this reflect a positive image on your company, you are also able to reduce clutter to improve record keeping practice, minimising confusion.
By reusing used papers to print important information and reviewing processes with high paper volume will help complete the process more efficiently in a timely manner!
5. Using a time clock system
While working with a group of people, it makes managing time a much simpler and effective task. This will hence allow individual to be more wary of the deadlines and submissions, boosting the overall efficiency of the company.
This is also something to consider when employees work overtime – having a more accurate record will help save money and time in the future.
6. Seeking advice from experienced business advisor
Running a business has multiple aspects that are review on a regular basis. For example, having good financial operations is a top priority for each company to achieve and maintain its success.
Talking to another business owners or those in the field of your industry will also allow constructive feedbacks and advice on how to improve the business’s operations.
7. Keep accounting methods and forms up to date
In order to ensure procedures and operations to continue meeting the company’s standard, this is an extremely important step. This is independent to how your business operates, and you may need to make several changes or updates to how the cash flows are managed, accessed, and distributed.
9. Forecast for Major Investments
By keeping track of finances and forecasting future expenditure and income, your company would be able to allocate additional funding for large investments. These fundings can come in the form of credit, or from reserves due to profitable quarters. In the case of funding from credit, establishing a credit history may help to lower future costs of borrowing.
10.Have a Separate Business and Personal Accounts
Upon starting a business, one of the first actions should be to get a business account. With a business account, business cashflows are readily seen, as there is a clear distinction between business and personal transactions. This will ease tax-related documentation, as well as avoiding legal responsibility for business debts.
11. Be Familiar with the Law
While business owners may be adept at building a business, they may not be aware of the nitty gritty details that comes with it. Take for example accounting and bookkeeping. There are laws which you may not be aware of, such as that your company must maintain records of business transactions for at least 5 years!
12. Optimise AP Terms and Invoicing
In the business world, cash is king. In order to hold onto your cash for longer, utilise favourable credit terms from suppliers and pay bills early for vendors that offer discounts for doing so. On the other end, encourage your customers to pay on time as well, by similarly offering incentives for doing so and running background checks on potential customers.
13. Build good relations with your accountant
By working closely with your business’s accountant, you are able to stay on top of all financial issues as they arise. You will also be able to stay current with technology, financial processes and other important details relate to business finances.
Accounting Services in Singapore
There are many accounting service providers in Singapore, including Paul Hype Page & Co. Some of the accounting services that are commonly sought for are cash flows and working analysis, account consolidations, management reports and accounts, and the financial planning and budgeting.
FAQs
It is very important for corporations to know about their financial and operational health. Investors are more interested in knowing financial health and the management in operational efficiency of the company.
Management account reports gives information on operational efficiency of the company.
Financial accounting report conveys financial health of the company to the investors, creditors, and government regulators.
Under the corporate accounting, statements about company’s final accounts and cash flow are considered. The reports present analysis and interpretation of financial results. Such reports are taken as stepping-stones for company’s plans.
Incorporation experts can register a Singapore company in a day. However, you must supply all the necessary documents to the relevant authorities.
You are required to make a declaration in your income tax returns by giving the nature and amount of the foreign-sourced income that was remitted to Singapore. You are also required to complete the Declaration Form for Foreign-Sourced Income Received in Singapore from 22 Jan 2009 to 21 Jan 2010 (60KB) for submission to IRAS. Although you have to state the use of the foreign income in the declaration form, the usage of such foreign income will not affect the claim for tax exemption.
Income is assessed on a preceding year basis. This means that the basis period for any Year of Assessment (YA) generally refers to the financial year ending in the year preceding the YA.
You are required to make a declaration in your income tax returns by giving the nature and amount of the foreign-sourced income that was remitted to Singapore. You are also required to complete the Declaration Form for Foreign-Sourced Income Received in Singapore From 22 Jan 2009 to 21 Jan 2010 (60KB) for submission to IRAS. Although you have to state the use of the foreign income in the declaration form, the usage of such foreign income will not affect the claim for tax exemption.
Income is assessed on a preceding year basis. This means that the basis period for any Year of Assessment (YA) generally refers to the financial year ending in the year preceding the YA.
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