Everyone wants their business operations to run smoothly after successful company incorporation. A company has several factors to consider, such as extensive research, maintaining financial records, target market, healthy work environment etc. All the aspects are required for a successful business!
Sound financial management is essential whether it’s a small or big enterprise. You must maintain healthy business finances by implementing a proper bookkeeping process. Do you know many business owners disregard the consequences of bookkeeping? And in the absence of a bookkeeping process, it may lead to low cash flow, audit risks, money issues, and non-compliance to govt. requirements, and missing growth opportunities!
Having these issues while running a business is not worth it. If you want to avoid these risks, you should maintain bookkeeping efficiently with Bookkeeping Services Singapore. But how? Don’t worry; we have compiled a list of some efficient tips for maintaining bookkeeping properly.
9 Tips for Efficient Bookkeeping in Singapore
The first thing you should do is implement a system that will reduce the burden. Always remember the key objective to record keeping. It will aid you in managing the business efficiently and allow government agencies to estimate your business activities. When you choose a system to install, then make sure it will satisfy your goals.
As we know, practice makes a man perfect, so it’s crucial to keep records regularly. It would be best if you spared the block of time committed to bookkeeping. It will assist you in maintaining an accurate record of transactions to be on top of the position. If you make it a habit, it will no longer be a troublesome task.
Maintain All The Records
The origin of bookkeeping is to keep records. In Singapore, it is mandatory to maintain all the accounts properly for incorporated companies. If you are failing in doing so, then they will impose penalties.
You must keep the record of serial number receipts, invoices, purchase and expense records, income records, statements and accounting records. It is necessary to maintain all the records atleast for 5 years.
Prefer Cashless Transactions
While recording the transactions, you must have evidence of every transaction. Many transactions will provide receipts. But it’s difficult to maintain, and you end up losing it. That’s the main reason to avoid cashless transactions.
Instead of cash, use a credit card to make payments. The credit card statement will show you the properly detailed transactions. The same goes for the cheque facility. With these, you can easily track the nature of expenses.
Separate Business and Personal Finances
Every businessperson should keep separate personal and business finances. Consider business a separate person. We are mentioning the best way to keep both finances separately:
- You should pay yourself a salary
- Open and start a bank account for business
Make sure you record every transaction you paid on the behalf of the business. Transfer the money from business to personal account at the end of the week.
Describe the Charts of Accounts
A chart of accounts defines the list of categories of transactions. These transactions categories are divided into 5 groups:
Each category of the transaction has a unique identification, known as an Account code. The other name implied for these transactions is a ledger. It’s beneficial to maintain a chart of accounts. The chart will help you categorize the transactions in bookkeeping.
Better Understanding of Debit and Credit
Every accounting system concept is all about debit and credit. Every transaction we make has debit and credit. Your total debit must be equal to the total credit at the end of the financial period.
Get to know the meaning first!
- Debit- When a transaction increases the asset or expense account. In contrast, decrease the liability, equity, or income account.
- Credit- When a transaction increases the liability, equity, or income account. In contrast, decrease the asset or expense account.
It would be best if you use accounting software to make your work a little more convenient. Otherwise, if you are maintaining records on excel, you must take care of debit or credit yourself.
Safeguard Cash by Locked Cash Register
In Singapore’s business, cash is still the most effective form of payment. If you receive the cash from the client, then keep this cash in a locked cash register. You have to schedule twice or thrice a week to deposit the cash in your business bank account. Always ensure to record each cash transaction in detail.
Link Transaction to Chart of Account
Record transaction of business is not enough. In the end, you have to maintain a financial statement. To do this, you have to link the transaction to the charts of accounts.
The categorization of transactions is known as a chart of accounts. You have to classify each transaction as per its categories. But how?
Let’s understand with examples:
- Receive payment from client: Revenue
- Payment for telephone subscription: Telephone and Internet expenses
We hope that following these tips will help you to maintain effective bookkeeping. Many businesses will hate it. But mostly, big enterprises will keep their transactions recorded because it’s crucial. In order to grow your business, you need to have good accounting records.
Even you can take the help of Incorporation Services Singapore, where professionals will help you. Soho is a leading company that provides the best services to maintain excellent accounting records!