Singapore is one of the best places to start a small business. The process of registering a business is straightforward and easy, so you can get started in only a few weeks. Once you've dealt with the paperwork and got the needed licenses, you will need a bookkeeper to ensure that everything is done according to local laws.
You could do it yourself, but that takes a lot of time, and you will probably miss some important factors that could end up costing you a lot at the end of the year. Keep reading, and we'll tell you everything you need to know about bookkeeping in Singapore.
What is Bookkeeping?
In short, bookkeeping is the process of keeping all records about your business organized. Bookkeepers are responsible for making sure that your company or organization pays all the taxes on time. They keep track of all records, including income and expenses, using printed books and software designed for this specific use.
Why Do You Need Proper Bookkeeping?
Bookkeeping can be broken down into a few different services. Here's a quick overview of each one.
Record financial transactions
Bookkeepers identify and organize all transactions you make into the right categories. For example, every time you make a sale, the amount you made is recorded into your income accounts. The same is done for expenses and other business activities.
Communicate financial results
After all of your financial transactions are recorded, bookkeepers can provide you with reports on your company’s current state. These reports are critical as they will tell you exactly what's going on with your business. They are usually presented as balance sheets and income statements.
What's The Difference Between Accounting And Bookkeeping?
Many people make the mistake of mixing account services with bookkeeping. While these two practices may seem like they are the same, there are some major differences between them. Bookkeeping is a practice that keeps a detailed track of all records daily, while accounting is the process of organizing bookkeeping reports into annual financial statements. In other words, accounting is a practice above bookkeeping that can't be done without the correct records.
Types of Bookkeeping
There are a few different types of bookkeeping services you can find across Singapore. We won't go over all of them, but we will tell you everything about the top 5 bookkeeping services that will provide you with information you can use to grow your business steadily.
1. Single-entry System
If you run a business with minimal transactions, you need a single-entry bookkeeper. This system is the simplest, and it only records your total income and expenses you have to pay.
It's suitable only for small businesses, and it's designed to keep a detailed record of cash sales and cash disbursements, as well as your bank statements. Whenever you receive cash, an entry is made to the disbursement journal, along with the expenses you have to pay. The result should reconcile with your bank transactions.
2. Double-entry System
Running a business with complex transactions requires the use of the double-entry bookkeeping system. In other words, if your company collects income through multiple accounts, and if you sell products on credit, this method will work best. The system creates a second entry for every transaction and traces the money to corresponding accounts.
Let's say that a customer gives you money. The revenue made is posted as income, and then it's traced back to the customer's account. That leaves a paper trail allowing bookkeepers to find the information very quickly.
3. Bookkeeping Software
Some small business owners prefer using one of the different available bookkeeping software to track their finances. This software can complete both single and double-entry bookkeeping systems, even if you're not an expert.
They are designed to be user-friendly, and they prompt you with all the vital information you need to complete transactions. Some software solutions can even cover advanced needs, so consider that before hiring a bookkeeper.
4. Virtual Bookkeeping
If standard bookkeeping services seem too complicated for you, a virtual bookkeeping service could be the best choice. It is one of the most practical and cost-efficient methods of running books as it eliminates expensive CPA fees you'll have to pay when working with a real bookkeeper. The system keeps a detailed track of all income and expenses and sends reports directly to your email address.
5. Tax Preparation Services
Paying taxes is perhaps the most critical part of any bookkeeping service. It's a very complicated process that doesn't allow any mistakes. Professional bookkeepers know what information and documents you need to prepare an accurate tax return.
The practice is always done according to Singapore laws that are updated almost every year. It's a service you need if you want to stay on top of the game.
The Bottom Line
Bookkeeping is one of the most critical aspects of every business. As a business owner in Singapore, you will have your hands full with running your business, organizing ad campaigns, and spreading the word about your company. That's why the best thing to do is to hire a professional bookkeeper who will make sure that the financial stuff is always in order.