The law necessitates every business to keep its accounts and records accurately. You will need them to corroborate your company transactions and for income tax purposes. You have to take the risk of having your claims disapprove and face difficulties with the authorities if you do not keep the records.
However, as soon as you begin keeping records properly, there are some advantages. You can have a clear image of your capital position and how your company is performing. This can assist you to plan the next actions for your company more precisely and with confidence (Also see Top 4 Benefits of Outsourcing Bookkeeping For Businesses).
Usually, the record keeping requirements for small businesses that are not GST registered are easier than GST registered companies. Here are five fundamental things that you must know about record keeping for your non-GST registered small business.
What kinds of records to keep?
You are required to keep the source files regarding your business transactions. For instance, source documents are agreements, billings, invoices, bank statements and any documents relating to your company as well as documents from your consumers, providers and the government. Another kind of record you need to keep is accounting ledgers and records about your earnings, expenditure, assets, equity and liabilities.
How long do we keep business records?
Starting from Year of Assessment 2008, you are required to keep business records for a duration of five years from the Year of Assessment. For instance, your company records for Year of Assessment 2014 need to be stored until 31 Dec 2018 (this is referred to the record retention duration).
How to keep records?
Records can be stored manually by preserving a ledger book and keeping physical billings and invoices. Alternatively, you can keep records in the electronic system using the computer system and accounting software application (Also see How Cloud-based Accounting Software Helps You).
Keep in manual form or electronic form?
You will be pleased to store the records of source documents in electronic form if you found yourself wasting much time on searching for a receipt of expenditure. You archive the documents immediately when you scan and submit them to your cloud software application. Hence, recovering the documents are a lot easier as you could search using date or description. Besides, the documents you keep digitally is likewise advantageous as they do not discolour gradually compared to paper records.
If you do not use a cloud application that can manage documents automatically, make sure that the documents are protected and backed up.
How about my physical source documents if I use electronic records?
Source documents in electronic type are utilised to validate business deals. Nevertheless, original physical source files must still be stored while some specific official files must be kept in hard copy.
When you need to manage your taxes and accounts, having an excellent system set up will guarantee all things are organised. Speak to any accounting service in Singapore and be effective in keeping records for your organisation.