A Survival Guide to Bookkeeping When You Have No Idea How To Do It?
Bookkeeping is regularly recording the financial transactions of a company. It involves classifying and organising all of its financial transactions. Even you, as a small business owner, should keep at it from day ONE. However, most businesses prefer to outsource the task to experienced bookkeeping services in Singapore to be on top of their annual filing and tax payments.
Generally, bookkeepers are responsible for recording the company’s financial data. This info is highly useful as it shows the movements of money within the company. You can backtrack through this info to revisit your investment, operation, and finance-related decisions. Most importantly, a reliable bookkeeping services provider can use it to give you the current financial position of your business.
With this data in hand, a reliable provider of bookkeeping services can help you with the budgeting and forecasting for the business. You can plan and allocate your funds judiciously. It gives you an opportunity to carefully expand or contract your workforce, make optimum use of your inventory, plan productions and deliveries to maximise the returns on your investment.
Bookkeeping VS Accounting
If you are a newbie business owner, you may confuse bookkeeping with accounting. However, they are not the same. Bookkeeping comes first, and it is then followed by accounting, taxation, and auditing. Bookkeeping has a narrow focus when it comes to the statutory compliance of the business. It takes care of the daily transactions of your business.
Your bookkeeper is responsible for maintaining all the transaction-related documents like invoices, bills, cash memos, Etc. during the bookkeeping, these documents are classified as ‘Debit, or ‘Credit’ and entered into the books accordingly. The term ‘books’ refers to cash book, general ledger, or accounting journals.
Your bookkeeping services provider, during monthly, quarterly, half-yearly, or yearly accounting, analyses this data. They go through a lot of data to give you the overall picture of your business’s financial position. It ultimately comes to whether you are losing or making money.
Things to Zero-on During Bookkeeping
Bookkeeping is a slow and time-consuming process. First of all, your bookkeeper needs to be factual and detail-oriented. They need to take info only from the source documents like receipts and invoices and record:
- Transaction date and time
- Classify it as income or expense
- Names of customer/ vendor
- Amount of transaction
- Type of transaction
Segregating transactions depending on their type is important in knowing how business’ processes are doing. It reveals small business’ expenditure and earnings. It helps in drawing vital conclusions regarding its performance.
Listen to Experts, Start Bookkeeping from Day ONE
It will pay if you start your bookkeeping activities right from the day you register your company. It is what an experienced provider of bookkeeping services Singapore would advise you. Take it literally and follow it. It means starting with recording all the expenses incurred on registering your Singapore company. It would cost you to outsource the task, but, in the long run, it would be money well spent.
It is easy to set bookkeeping processes:
1. Start with the basic steps to track your company’s finances. Because, before you get your first payment, most of your transactions would be related to expenses on numerous things. It would help if you recorded each of them. Otherwise, the chances are that you will forget them. So don’t delay it till your first paycheck.
2. Keep your business and personal finances separate. As soon as it is possible for you, open a corporate bank account in the name of your company. Getting these mixed up can cause problems for you. It may also affect your personal and company’s income tax amount.
3. Appoint a person or a provider of bookkeeping services in Singapore.
4. If you are bookkeeping for your business, schedule a time for it. Do not let it pile up.
5. If someone else is doing it for you, be clear about what instructions you give to them.
6. If you are new to Singapore jurisdiction, know your tax liability and due dates. Or, you can ask your provider, if they are up to it, to take care of it.
7. Take your provider’s advice on the accounting system to use: cash or accrual, single-entry or double-entry bookkeeping.
8. You can also discuss and implement a bookkeeping format for an accounting journal, cash book, and general ledger.
9. Setting up a chart of accounts will help in streamlining the process. Doing so will help in classifying your assets and liabilities, income, and expenses into appropriate subcategories. It will assist you in keeping all your business’s financial transactions in one place.
10. Collect and file all your receipts and invoices.
11. Pay attention to the structure of your business and give a thought to your business’ Key Performing Indicators that you would like to track.
12. Select and document categories to track for the purpose.
13. Now, every time you sit down to bookkeeping for your business, follow the steps mentioned above to record every financial transaction.
14. It would help if you started your bookkeeping by going through the source documents and transferring them to your accounting journal or cash book. Record date of transaction, the goods or services delivered or received, the transaction amount, and finally, note whether it was an income or expense transaction.
15. At the end of a predefined period, open the business’ general ledger and transfer the main points. Repeat these steps and get everything ship-shaped.
16. Bookkeeping is a tedious and time-consuming task but, it is not complex. So, be patient and detail-oriented.
If you are taking care of bookkeeping for your business, you will find that a growing business generates numerous financial transactions. When they start going out of your hand, you need to make a decision. You must either hire an in-house bookkeeper or accountant or a reliable bookkeeping services provider. The former decision comes with its own problems related to human resource management and expense. If you take the latter one, you need to trust a 3rd party with business sensitive financial data.
The field of outsourcing bookkeeping services in Singapore is a highly streamlined one. They are professionals. Still, you need to research and find the right one who will meet your business needs. SBS Consulting is one of the reputed providers of accounting and bookkeeping services. If you have any queries, contact us on +65-6536 0036 or email us at firstname.lastname@example.org for answers.