Discover The 3 Most Common Accounting Challenges That All Business Owners In Singapore Face And How To Overcome Them
Have you submitted your financial documents to IRAS yet?
Whether you’re currently handling your accounting yourself or outsourcing your accounting, inaccuracies in data entry and the late submission of crucial documents are relatively small issues that can cause huge problems. And however neatly they are entered into your ledgers, the numbers won’t tell you, of their own accord, what they mean for your business.
Accounting isn’t just about entering numbers into a ledger, or even about figuring out where the money comes from or where it’s going. It’s about breaking down the revenue, categorising revenue streams—in short, it’s about providing insight into what the numbers mean.
For business owners who are not accounting-trained, that’s where a professional accounting services provider can help streamline processes, make sure you stick to the requirements and save yourself a ton of headache (and even unnecessary fines) in the future.
Here are some of the most common accounting responsibilities—and difficulties—that business owners have to take on, and how a reliable accounting services firm can help.
All companies in Singapore are required keep accounting records that explain their financial standing and every transaction that is carried out. These records need to be backed up by documents such as receipts, invoices, vouchers, bank statements, the cash register tape and your daily sales record book. Note that the IRAS does not accept estimates or improper records.
Businesses also need to prepare a profit and loss statement as well as a balance sheet, and they must keep these records for at least five years after the date of operations on the statements.
If you don’t have a process to track, process and retrieve your records systematically, you’re setting yourself for a mad rush and panic come reporting time.
Singapore companies also need to pay taxes five times during the year, the preparation and payment of which takes more than 80 working hours. They need to file an Annual Return with ACRA, as well as an Annual Tax Return with the IRAS. Missing these filing deadlines could mean heavy fines or even prosecution.
If you own a private limited company in Singapore, you’ll have to file the following every year:
- Statement of Comprehensive Income
- Statement of Financial Position
- Cash Flow Statement
- Statement of Changes in Equity
All these statements must be prepared according to the Singapore Financial Reporting Standards or SFRS. There are different accounting standards based on the size of your business—smaller businesses, for example, have to adhere to SFRS for Small Entities. You also have to make sure you use the correct formats.
Professional accountants will be able to help you because they would be familiar with these formats and standards. They will also be able to advise you on which SFRS to follow, in the event of you being unsure as to the size or classification of your business.
You will also have to file your Estimated Chargeable Income at the IRAS within three months of your company’s Financial Year End. On top of corporate income tax, there are also the GST (if you are a GST-registered business) and social security contributions to take care of.
A reliable accounting services provider can help make sure you don’t miss any filing deadlines, and that any additional requirements are met.
3. Having an accounting process that actually adds value to the business.
Even if a business owner (or his bookkeeper) keeps tabs on their bank balance and monitors their accounts receivables, expenses and so on, most small businesses only see accounting as a painful and tedious administrative function that adds little or no value to the business.
A good accounting process will give you deep financial and business insights, besides providing you data on expenses and revenue. A good accountant must be able to tell you how your business is performing and the real meaning behind every single number in your books, not just entering data and crunching numbers. You can also rest easy knowing that the chances of errors in calculation or data entry are minimised, and that your hard-earned profit won’t be spent on fines or penalties.
Regrettably, there are tax-related traps such as the recent email scam that an experienced accountant would be able to help identify so you can steer clear of them.
Let us help you get ready for the future.
Earlier this year, most Singapore companies were reported to have difficulties in adopting the new Financial Reporting Standard 115 or FRS 115. More than half of the surveyed companies said they had problems choosing the best approach (full retrospective versus modified retrospective) for their business.
Many of the companies working to implement FRS 115 discovered that they had to change certain aspects of their operations and even their business processes and IT systems. The reporting portion of FRS 115 is likewise a challenge in itself. Implementation not only involves a company’s finance team but also its IT, sales and marketing units, as well as internal and external auditors.
Other challenges presented by FRS 115 include insufficient data, IT capabilities, and resources for implementation. Deadline for the implementation of this new standard is January 1st 2018, making the guidance of a fully-fledged accounting services firm more indispensable than ever.
Leaving your accounting in the hands of reliable accounting professionals enables you to focus your energies on actually running your business and pursuing opportunities for expansion. Reputable accounting firms are up to date with the latest software, systems and techniques, as well as any new regulations or requirements issued by the IRAS and other related authorities.
U Ventures specialises in accounting, secretarial and tax services such as bookkeeping, business incorporation and financial planning. Our clients rely on us for their accounting practices and tax matters, to help streamline their business operations, and to offer them peace of mind.
Looking for someone who can help you do the same? Contact us today for an obligation-free chat. We’d love to help.