Starting a new company in Singapore can be an exciting process with pitch presentations, company registration and marketing campaigns. In the hustle and bustle of the first few months accounting matters of a business might be kept on the back-burner. But failing to have good accounting practices can run the company into serious problems such as conviction of tax evasion, reputation damage, or even funding rejection.
As the company grows and scales up, it is crucial to have proper accounting management put in place.Here are some key accounting tips you should keep in mind for the smooth operation of your startup, regardless of whether you decide to use an accounting software or ask for the help of one of the many accounting services Singapore houses.
Tip #1: Start bookkeeping early
It can be tempting to put aside bookkeeping for later. But it is highly recommended to start recording all the financial transactions, such as purchases, sales, revenues, expenses and salaries, as early as possible. The later the startup does it, the more difficult it is going to be to sort through the paperwork and manage the numbers. Recording the amount of money coming in and out of the company on a regular basis will give a clear picture of the current financial situation. There are several methods of bookkeeping ranging from Excel spreadsheets to accounting softwares, such as QuickBooks.
Tip #2: Understand cash flow
Once a bookkeeping system is put into place, the startup owner should then get a better idea of the company's cash flow. As the saying goes, “cash is king”, and good cash management is essential for any startup. Rather than thinking that the company is doing well as revenues are streaming in, any business owner should also consider the types of expenses required to run the company and what remains as the profit. For instance, the startup should look at its sales cycle to see which are the months bringing in more profits, and which are the months where sales are slower. Getting an understanding of the cash flow will help the startup owner be ready for the leaner months.
Tip #3: Plan for forecasting
Apart from the management of cash flow, the forecasting exercise is equally important. This is because it makes the startup owner take a holistic and long-term view of his business, looking at all aspects ranging from marketing, human resources, personnel, business development or IT. In so doing, the startup owner will then need to assess and apportion cash to be funnelled to specific activities or expenses, and also whether this will align with the overall objectives of the company.
Tip #4: Ensure tax obligations are met
A proper accounting system in place will be useful when the tax season comes. This will help check the amount of taxes due and any tax incentives that the startup can enjoy. The startup can then prepare the necessary funds to pay the required tax amount. If the business is unable to gather all the relevant financial figures, not meeting tax obligations will have consequences. These include penalties and additional interest from the Inland Revenue of Singapore for missing the tax deadline for filing taxes and failing to comply with the prevailing tax laws.
Tip #5: Focus on your core strengths
It is understandable that an entrepreneur would like to focus on his core strengths, be it writing the next best-selling app or selling his startup idea. Using extra resources for accounting matters will help the startup owner save time to focus on his main tasks. One simple way would be to use an accounting software such as QuickBooks or Wave, a cloud-based option. Another way would be to engage one of the professional accounting services Singapore hosts and get help from an accountant who will ensure that the financials of the company are kept in order. Going beyond mere accounting, a professional accountant will also be able to provide business advice.
Becoming more efficient often means investing time and resources in technologies and professional services. But being an alert entrepreneur and paying attention to important details is the first step to success.