7 Most Important Accounting Tips for Startups in Singapore
Accounting can be confusing to startups; however, it is one of the most important business processes. After all, excellent and accurate financial reports give a company a sense of direction, which will help for its growth. We look at some of the most important accounting tips for startups in Singapore:
Understand the Difference Between Accounting and Bookkeeping
Bookkeeping simply means keeping records of the revenue, including the expenses and the profit. During bookkeeping, we enter the financial transactions of a business in a record sheet in case we want to access it later.
Accounting refers to summarizing, studying, and analyzing the data from bookkeeping and using the information for the company’s growth. Data Management, Monetary Analysis, Financial Reports, and Regulatory Compliance fall under accounting.
Know the Law
Companies in Singapore have to adhere to the Singapore Financial Reporting Standards. The standards are the rules for businesses to follow when they are doing accounting. They give you a clear clue of the kind of accounting you need to do.
Depending on the nature of your business activities, you should know answers to these questions:
- When should I do my taxes?
- What kinds of invoices should I save, and how long should I keep them for?
- What pieces of information do I need along with the revenue and expenses? What proof do I need?
- When should I do my audits? What records should I keep during then?
Get a Cloud Hosting Accounting Software
If you ask us, buying a cloud accounting software is one of the first things you should do after launching your company.
You see, a cloud accounting software is a program where every data is stored in the ‘cloud’. For starters, a “cloud” serves as a server computer of the software provider. This basically means you can access your company’s accounts from anywhere in the world, as long as you have a computing device, web browser, and an active internet connection.
Cloud accounting software has many benefits above traditional accounting software. Primarily, you don’t need to set up the software on every computer in your office. Maintenance costs are also low, and you don’t have to buy expensive servers only for accounting. Cloud accounting is secure as well since all the data is encrypted. It will be safe even if there are physical damages to your office space.
Make Different Accounts for Business and Personal Costs
Segregating your business and personal costs is one of the simplest, yet the most effective accounting tips for startups in Singapore.
This tip works especially for Sole Proprietorship and Partnerships where owners tend to make both their personal and business bank accounts the same because the company doesn’t stand as a separate legal entity. It isn’t a good thing, because when running a business, you should be very clear about the financial position your firm is currently standing in. To make it simple to understand, you have to eliminate any expense report that doesn’t concern the firm in any way.
Also, when you are just starting your company, you should be very careful about the expenses. Think twice before spending or making an investment in anything- there can be a better thing to do with the money. Be wary of expenses that aren’t compulsory, which can be picnics, parties, etc.
Don’t Forget Your Taxes
Singapore has one of the lowest tax rates in the world, but the city-state is strict regarding the taxes that need to be paid. You should always keep the tax money in check when you are calculating the revenue and the expenses.
You should consider the taxes of everything you are using or selling, which could be electricity, internet, raw materials, your product itself, etc. Remember, when you don’t consider taxes in every step of the accounting, you get very inaccurate data about your financial health. This, in turn, will negatively impact your coming business decisions.
The best tip would be to allocate the tax money ahead of time and treat it as an expense.
Singapore also has various incentives that decrease the taxes that companies, mostly SMEs and startups have to pay. You have to research them thoroughly.
Automated Bank Payments
Automated bank payments do make the payment process simpler, but it also helps make the accountant’s job easier. You see, a lot of time is spent when you are accumulating invoices- collecting and separating the bills. Bending your neck and manually entering the numbers in your accounting software all day can be a pain too.
However, when you automate your payment services, banks generate digital invoices after every purchase which you can easily access through your computing device. It also means that you won’t lose any invoice, and your accountant will save a lot of time.
Finally, Take Accounting Services
Knocking on the doors of an accounting service provider is among the best accounting tips for startups.
If you didn’t know, some companies let you outsource accountants, meaning that you can contact them, and they will send their Certified Public Accountants (CPAs) and other accounting professionals to work for you. As their accounting professionals are experienced, they will yield better results than when you do the work yourself. Moreover, you take their service and don’t hire your own accountant, so you don’t have to give a job. Thus, you get an excellent accountant working for you at a low cost.
You can contact 3E Accounting Singapore if you have any confusion regarding the above accounting tips for startups. You can also hit us up for award-winning bookkeeping services in Singapore.