What is the Difference Between Tax Accounting, Bookkeeping, and Payroll Services?
Business owners use terms bookkeeping, accounting, and payroll interchangeably. Though these terms are related, they are not the same. Read on if you, too, are struggling with “What is bookkeeping? What is payroll? Or What is tax accounting?”
Used properly, bookkeeping, accounting, tax accounting, and payroll identify different activities. They are parts of your business’ statutory compliance. Generally, companies hire accounting and bookkeeping services Singapore for these tasks.
Let us differentiate and define these terms properly. It will clear the mist of confusion surrounding them. Afterwards, you won’t be outsourcing tasks haphazardly.
Instead, you will be able to pick the right firm for the task in mind; be it bookkeeping, accounting, or payroll services. Doing so will save you money, time and effort.
What is Payroll?
Payroll can, rightfully, be described as the list of employees in your company. However, most often, it makes us visualise an action:
- Involving staff from the HR, Finance, or Payroll department updating an employee’s financial information
- Handling employees’ info like salaries, wages, incentives, paid or unpaid leaves, public holidays
- Calculating withheld taxes, statutory deductions, levies and accurate salary amount
- Printing and depositing salary checks into an employee’s registered bank account
For accurate and timely payroll processing, you need access to employee information like;
- Hourly rates
- Timesheet giving the hours they worked
- Salary or wages
- Overtime pay rate
- Employee benefits
You can process your payroll in many ways.
1#. You can rely on the traditional manual way using the paper and pencil method. It will work only if you have only a handful of employees.
2#. You can also use the latest payroll software to execute your payroll. It will automate certain aspects of payroll processing and promote data reuse.
3#. For a multi-tasking owner, it is far better to outsource the task to payroll services Singapore. They are experts and easily take care of your compliance.
These experts truly set you free of the task. You can use the saved time to grow your business.
Manual payroll is time-consuming and prone to fatigue-related human errors. It also requires a bookkeeper or accountant who can process and update the payroll and employee-related data.
What is Bookkeeping?
Bookkeeping is the process of recording, maintaining, and retrieving data about a company’s financial transactions.
Companies use the latest bookkeeping software to automate tasks and digitise a company’s financial data. Generally, bookkeepers take care of it.
Modern companies, as the trend goes, hire accounting or bookkeeping services providers to record their daily financial transactions. These firms have bookkeepers who take care of the following tasks for your company:
- Suppliers’ payment
- Billing a client for services/goods provided
- Recording receipts/invoices
- Filing bills and invoices
- Payroll processing
- Preparing financial statements and reports
- Tracking accounts receivable/payable
- Recording depreciation
Can a bookkeeper also take care of your accounting?
No. As a bookkeeper, they need only a passing familiarity with accounting principles and concepts. So, while they can take care of bookkeeping, they are not equipped to take care of a company’s accounting.
For your company’s accounting, you need a qualified and experienced accountant. These professionals can also bookkeep for you.
What is Accounting?
Accounting is the process where an accountant maintains financial records of your company. They can also analyse and verify this data.
They also prepare informative financial statements. They prepare general-purpose financial statements like a trial balance sheet, income statement, or cash flow statement.
Generally, companies outsource the complete task to an accounting and bookkeeping services firm. They also prepare management reports to enhance your business decisions. The accounts receivable/payable ageing report is an example of such a valuable report.
Their accountants analyse your business’ financials and provide insights to help you select your company’s future course. They can point out new opportunities and ways of eliminating the wastage of resources or suggest rerouteing more resources to one of your existing projects to maximise ROI.
Your accounting and bookkeeping services firm prepares financial reports as per the SRFS. These reports are useful in understanding the financial state of your company.
- It is why investors, creditors, and lenders often use them for making decisions.
- If the need arises, you and your managerial staff can also take corrective decisions and bring them back to normal.
Running a company without access to accurate financial reports is like groping in the dark. Regular accounting helps you collect and analyse your business’ financials. It gives you the true financial picture of your company. It adds bite to your business decisions and can help you grow it.
What is Tax Accounting?
Accounting and bookkeeping services also assist companies with their tax accounting. It relies on accounting methods that are exclusively focused on calculating taxes rather than preparing reports.
They try to minimise your tax amounts by claiming appropriate tax exemptions and benefits. They have the latest knowledge of tax rules and regulations. It helps them calculate and file accurate payroll taxes and corporate income tax returns for your company.
ACRA advise you to update your books of accounts regularly. The process starts with bookkeeping. The next step is accounting. Depending on your pay cycle, you must also regularly process the company’s payroll. It is your liability.
Taken together, these activities need lots of effort and time. They also require deep knowledge of accounting and payroll-related rules. It is why companies use providers of accounting and bookkeeping services and payroll services to ensure their compliance. Call us at +65-6536 0036 or email us at firstname.lastname@example.org for more information.