Accounting for small businesses in Singapore in 7 easy steps

Dr Biz • November 24, 2020

Running a small business is challenging, not least when it comes to accounting. Bookkeeping and keeping track of expenses can be intimidating, especially for those not used to dealing with numbers, which is most of us! It need not be such a frightening task, though. While hiring a professional is always recommended for those small businesses that can, the basic principles of accounting are fairly easy to grasp and are important to understand, even when you do use a trusted accountant. Below we have broken down what you need to know in seven easy steps.

1. Open a business account

The logical first step for company accounting is to open a business account as, without one, you will not be able to legally receive income and pay bills. You’ll need to register your business first, and then it’s often useful to seek out recommendations from friends and colleagues. Look for providers that match your way of doing business. If your company does everything digitally, for example, you will likely need a bank account that can accommodate that. Company credit cards are often essential for purchases, too, so it might be useful if your banking provider offers one.

2. Keep track of your expenses

While it often gets forgotten in the melee of day to day business, accurate record keeping really is the cornerstone of running an organized, efficient business, and this includes expenses. Rather than allowing receipts to pile up in a dusty corner, these days you can use online software to track expenses in real time. Dr Biz is an approved partner of Xero, for example, a popular application that allows small businesses to instantly track their expenses, as well as monitor bank transactions and issue and pay invoices instantly from their mobile device.

3. Organise your bookkeeping system

While the two terms are often used interchangeably, bookkeeping and accounting are in-fact two different things. Accounting is the higher level process of annual reporting that includes preparing and paying annual taxes to the authorities, including calculating profits and losses. Bookkeeping, on the other hand, refers to the day-to-day running of your business finances: recording transactions, keeping a track of inflows and outflows, reconciling bank statements and the above mentioned expenses. Accounting can’t be done without bookkeeping, so make sure you get a good system in place!

4. Set up a payroll system

Payroll is very, very important: paying your staff on time and correctly is the recipe for a happy, successful business. The first thing is to decide how often you will pay your employees, which can be weekly, fortnightly or monthly, but no periods longer than one month (in Singapore). You will also need to make sure you have all of your staff’s details, including any deductions or contributions that should be applied to their paychecks. You can find out more in our blog post all about payroll, here.

5. Payment processes

While opening a bank account is the first step to getting your income, deciding how you will get paid by your customers is the second. If you are not selling products, this might simply involve issuing invoices that ask your client to remit into your business bank account. If you do sell products, however, you may need to look into payment services that will allow you to accept card payments. For physical premises, you will likely need to find a Visa or Mastercard service provider, while for online payments you could look at PayPal or other applications that allow your customers to pay you online.

6. Figure out your import taxes

Taxes on profits are not the only taxes a business needs to pay. If you are importing products, for example, you may need to consider import tax such as Singapore’s Goods and Services Tax (GST). There are a few exemptions, including investment precious metals, the provision of most financial services and the sale and lease of residential properties. However, most imports incur some form of duty unless they qualify for import relief. You may also need to register your business to pay GST. It is compulsory to register GST if the revenue is more than 1 million. Your customers will pay GST on your products and services, too, which means at the end of the filing quarter you can claim some back. Find answers to all of the above by visiting the IRAS website.

7. Regular reviews of your methods

As your business grows and changes, your accounting needs will also likely change, too. That’s why it is very important to make sure you are keeping a close eye on your methods to make sure they continue to do the job. Ideally, you will be working with an experienced partner like Dr Biz that understands the administrative needs of small businesses in Singapore. Alongside solid bookkeeping, expenses and payroll methods, this is the best way to ensure you are always paying the right amount of tax and running your business as efficiently as possible.

At Dr Biz, we provide tailored and comprehensive solutions for our client's business needs. From incorporation to accountancy, tax and payroll, to professional advisory services, we help businesses in Singapore assess potential risks and become more cost effective and efficient.

To find out more, please feel free to contact us.

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