Small and medium-sized businesses meet numerous challenges on a daily basis and accounting is one of them. As an SME business owner, you should wear several hats. You will have to carry out tasks ranging from hiring the right staff, marketing your brand, maintaining good customer relations among others. You will also be required to keep track of all your losses, profits and accounts for your business.
Accounting might not necessarily be one of your passions but keeping your books organised is crucial to maintaining your small business. Accounting is the only business method of ascertaining the growth of business financially. It translates figures into comprehensible statements showing the profitability of the company in accounting services Singapore.
In a nutshell, accounting involves recording, analysing, summarising and recording financial transactions of a business. Accomplishing this might be difficult for you to handle but there are certain obstacles that you must overcome as a small business owner. There are some top accounting challenges you must deal with and overcome them eventually. They include:
Managing the cash flows is a considerable challenge to startups and small businesses. According to recent studies, a lot of companies that fail at the startup level do so because of problems in cash flow. Small business owners face challenges when it comes to earmarking funds to cover recurring costs and keep the business afloat. To stay up to date with cash flow, carefully analyse your bills and be thorough when you’re tracking payments from customers.
If for example, a retail shop earns a certain amount as profit for the business, it is a going concern, until they require a higher amount because of unforeseen expenses, and they do not have any insurance coverage to help them pull through; it might devastate the business. Other smaller expenses like a rise in government tax in or rise in costs of goods and services can cause a lot of changes and may cause the business to hit its bottom line. Optimise on your existing credit so that you can manage your short-term expenses. Also, monitor long-term business profitability to ensure that changes in cost do not threaten your liquidity.
Unpredictable natural disasters may cause devastating effects on businesses and lives, but those usually stricken the worst are small businesses. You might have put in place some plans on strategies to recover from catastrophes but always have cash in hand that will help you to revive the company after any catastrophic occurrence.
Every business in Singapore has to pay taxes, but you can take advantage of deductions which will reduce your bill on the tax day. If your small business is home-based, home office deductions are crucial to run your profits. Hence the saved amount can be reinvested back to your company.
Playing the role of payroll expert or HR can be challenging to the small business owner. If you are not knowledgeable about the current tax schedules, you will not know which tax codes you should attach to new employees. How will you then pay your employees in the long run? All these challenges including more can come your way if you do not have an accounting service in Singapore.
According to a recent survey on small businesses, they all stated that they have a room of improvement in their payroll process. Most problems were attached to organisational inconsistencies, which include the wrong filing of tax, under and overdue payments, the absence of tracking employees, administrative burden, and incompatible software and compliance issues.
Keeping on Top of Expenses
Keeping track of your recurring expenditures and receipts can be hard for small business owners. Maintaining proper records on costs is vital to process your business and stay ahead of your market. Fortunately, it won’t be as hard to keep all your receipts and purchases on track them later because there is many accounting software that allows you to go paperless. All these software are different; it’s best if you carry out your research and use one that suits the needs of your business.