Basics of Bookkeeping and How to Do It Efficiently
Bookkeeping is a methodical way of keeping track of all your company’s financial transactions. It utilizes the process of classifying, recording, and organizing all money movements that go in and out of your business. It handles transactions like supply purchases, product sales, cash deposits, bills payments, money transfers, taxes, and salary, among other things.
Although you can handle bookkeeping responsibilities on your own, most companies prefer to get assistance from experienced accounting firms in Singapore so they can stay on top of their tax payments and annual filing.
Whether you decide to take on the role of a bookkeeper or outsource to someone else, it always pays to be knowledgeable about it.
Getting Started in Bookkeeping
Bookkeeping is a meticulous activity, but it’s essential to keep your business running and thriving. To help you get started, here are some basic steps you need to take:
Open a Corporate Bank Account
One of the common mistakes entrepreneurs make is to merge their business expenses with personal ones. Doing so will lead to a lot of confusion and transaction mistakes. To avoid such inconveniences, you should open a separate bank account and centralize all business transactions there.
Appoint a Bookkeeper or Outsource
Being a business owner is a demanding role. You are expected to divide your attention into different aspects of your business, which means you might not have the time or energy to take care of financial matters. As a solution, you can appoint someone else to take on bookkeeping responsibilities or outsource an accounting services provider Singapore.
Consult an Expert
Accounting and bookkeeping must comply with tax obligations. You need to understand what taxes you need to pay for and when. Talking to a Singapore accounting firm can help you make sense of all the regulations and compliances so you won’t be penalized.
Focus on Important Details
When it comes to bookkeeping, everything is in the details. Pay close attention to all the documents you receive and release, such as invoices and taxes, as these hold vital information to keep your finances balanced. The key information you should be paying attention to include:
- Date and time of transaction
- Transaction category (income or expense)
- Recipient of transaction
- The total amount of transaction
- Type of transaction
More than merely keeping receipts and invoices, you should know how to file and categorize them properly. The best way to do so is to create your own system. Create a spreadsheet that contains your company’s assets, liabilities, expenses, and income. Be as specific as possible to ensure that all details are accounted for.
Do Bookkeeping Efficiently
Getting started in bookkeeping is one thing; doing it efficiently is another. Follow these best practices to help you maintain a structured bookkeeping procedure.
Once you have a system in place, make it a point to do regular checks and updates. Some businesses do it daily, while others prefer to do it weekly. No matter how frequent you do bookkeeping tasks, be sure to keep it consistent, so you don’t miss out on any important transactions.
Don’t Throw Away Any Records
Keeping financial records–such as receipts with serial numbers, invoices, expense records, income logs, and other statements of accounts–is the crux of bookkeeping. Every company incorporation in Singapore is mandated to always save important accounts and records for a minimum of five years. If you fail to comply with the regulation, you might be penalized.
Familiarize Yourself with Compliance and Financial Trends
Keeping up to date with the latest updates on compliance regulations and financial trends is one of the key factors that will affect your financial transactions. Aspects like inflation, tax rates, economic developments, and investment opportunities can influence your company’s revenue and profitability.
Seek Professional Help
Although this article has provided an overview of bookkeeping, there’s still much more to learn and discover. Bookkeeping can be technical, complex, and time-consuming. Entrepreneurs of startup businesses might not have the proper knowledge or skill set to execute bookkeeping. In such cases, the best option is to hire professional help to take care of record keeping and financial matters so you can focus on growing your business.