Set Up a Small Business Accounting System
It is important for any small business to be able to keep clear records of their financial activities. Not only will it make the accounting process due in the financial year much simpler, but it is also required by the law. If you are an entrepreneur who had just completed the process to incorporate a company in Singapore and are wondering what to do next, we suggest that you tend to your business administrative matters first.
In this article, we will go through how to set up a small business accounting system for a newly set up company in Singapore. It includes all the basic accounting and filing systems for your documents and some tips on how to improve the efficiency and accuracy of your accounting system.
Accumulate Financial Documents
- Keep all documents relating to your business including invoices, bills, bank statements, receipts, government documentation, and assessments.
- When in doubt about the relevance of the document to your business, hold on to them and ask your accountant (or someone else who can help) at a later date.
- Invest in a stamp that indicates the received date of the documents.
Create a Filing System for Documents
- Use file folders and labels to organize financial documents
- Maintain bank statements, customer invoices, vendor bills, government assessments etc. in separate files
- Investing in color-coded file folders can greatly facilitate file retrieval
- File regularly to avoid scrambling at the end of the year
- Maintain separate folders for outstanding invoices, bills, and other documents that require follow up.
Determine Accounting Requirements
- Review the volume of transactions and complexity of the business as well as your budget and time constraints.
- Depending on your requirements either hire a bookkeeper (full or part-time), do it yourself or outsource to a third party
- Usually, it is a good idea to have access to a professional accountant to help out with the setup of the accounting system, and ongoing questions as well as financial reporting and analysis and tax preparation.
Select Accounting Software
- Accounting requirements i.e. whether you hire a bookkeeper or DIY will determine if you need software.
- MYOB is good for many small businesses and freelancers. Speak to an accountant if unsure of usage
- Other Free software also available, although functionality is more limited
- If doing it yourself, select software that is user friendly. Many small business software have free trials.
Enter Financial Transactions into Accounting Software
- Important to enter transactions on a timely basis including customer invoices, vendor bills, deposits, and cheques.
- Reconcile bank statements monthly to track balances and reduce potential errors
- Month-end adjustments like depreciation, foreign exchange, accruals etc. help improve the accuracy and reliability of financial statements, but can be done by an accountant at year-end.
Generate and Analyze Reports
- Accounting software will generate reports based on data entered. Review Accounts Receivable and Aging Reports, accounts payable to vendors, inventory balances etc.
- Financial statements can be generated monthly reflecting Profit and loss of the business as well as Balance Sheet.
- Analysis of financial statements can help improve sales, reduce expenses, and ensure that customer balances are being collected and loan covenants are being met.
Paying a firm like WLP to correctly set up an accounting system upfront is a wise investment compared to what it will cost you to fix your accounting problems later on. In addition, maintaining clear employee payroll records is vital in producing accurate accounting records, hence many companies opt for payroll services Singapore to provide payroll processing support.
It is difficult for new companies to immediately understand all the complex guidelines involved in salary calculation, thus payroll outsourcing can greatly improve the efficiency and time management of the company. There are many such payroll services in Singapore, and the WLP group has a dedicated team of experts that can provide professional advice whenever needed.