As an entrepreneur or a small business owner, you have numerous responsibilities that can keep you busy. These responsibilities include hiring employees, customer service, product development, and more. Despite the fact that you have huge and numerous responsibilities, keep in mind that accounting is a crucial process as it can indicate how your business is performing. Here are the best accounting practices to ensure that the accounting function does not take the back seat on your list of priorities.
Make accounting a priority from the start
It’s easy to ignore processes and tasks that you are not interested in when starting a new business in Singapore, but a sound accounting system should be a priority from the start. With that, that the right accounting tools including such as receipt books, ledger books, calculators, computers, and more available.
As the business owner, you are likely to be busy with other management planning roles and this means that you may have no time to record each transaction accurately. Therefore, it is wise to engage a professional accounting service provider as soon as your business reaches a point where its finances require extra attention, and you are comfortable with adding an employee to your payroll.
Generate financial statements
These are official reports of a business’s financial well-being. The most significant financial statements include the balance sheet, income statement, and the cash flow statements. Some accounting firms prepare the statement of owner’s equity, which shows the remaining amount in the ownership you have in the business or each partner has in the case of a partnership.
The income statement gives details regarding all expenses and revenue as well as the profit and loss generated in a particular accounting period (Also see Accounting Period Assumption and Matching Principle: Understand their Relationship). The balance sheet shows the business’s equity, assets, and liabilities on the day the report was prepared, while the cash flow statement shows how cash at hand has varied over time.
Financial statements are indispensable tools for you and other business stakeholders to determine the financial position of your business and the probability of its future success.
Self-audit is sometimes referred to as closing the books. It requires you to adjust any entries in the ledger to account for any mistake or oversight. Also, the self-audit process requires you to close the accounts that feature temporary balances and decide which balances should be carried forward to the next accounting period.
Given the strict accounting standards that all businesses in Singapore should adhere to (Also see Accounting Standards in Singapore), you need to ensure that you adopt the best accounting practices. Contact us and transfer the accounting responsibility to us to free time to perform management and planning roles effectively in your business.