The Benefits of Updated Bookkeeping and Accounting Record for Your Small Businesses

As a small business, you may have heard that it’s essential to keep updated with your bookkeeping and accounting records. Business owners have to consider taxes, compliance, and other legal requirements. Neat, well-organized bookkeeping and accounting records can increase your company’s chances of survival.

If good finances are that important, why don’t all businesses take good care of their books? Well: many business owners don’t have the relevant expertise or experience to handle their finances. They often spend more time developing better products and services and building strong customer relationships.

Unfortunately, finance is a part of every business owner’s life. 37% of Singapore finance professionals stated that their clients struggled with cash flows due to the pandemic. Good accounting is so critical that the Singaporean government has prepared grants for businesses who want to outsource their bookkeeping under the Productivity Solutions Grant.

It’s challenging to keep up with policies and procedures in accounting. One of the simplest ways to reduce the burden of finance management is to engage in a virtual accounting service.

Role of Bookkeeping & Accounting Services for All Businesses  

Both Bookkeeping and accounting services are essential for all businesses to manage their finances. Bookkeeping keeps track of your company’s daily operations in ledgers, whereas accounting services analyze financial data to offer insights to help in your business decisions.

Bookkeeping requires excellent organizational skills and time management to perform the job to its full potential. The role of bookkeeping requires that you keep track of daily transactions, conduct daily banking activities, and cope with many more financial tasks necessary for the company.

The Secrets to Good Bookkeeping and Accounting Practices in Singapore

There are so many different bookkeeping best practices on the Internet that it can be difficult to choose which advice to take and which to ignore. Fortunately, there are just a few basic tips to follow that can help your financial journey go more smoothly.

Separate personal and business finances 

As a basic best practice, all business owners should create a business-only bank account. This helps you gain better control of your finances; you can view your personal and company funds individually. Properly allocating funds for personal and company use also helps solve cash flow, tax filing, and auditing problems for your business.

Use accounting software to track expenses 

There will be times when there are too many records to track. An accounting software system such as QuickBooks, Xero, or other cloud-based expense technology can help track these costs for you. As your business scales, automated accounting software saves time and keeps every receipt and transaction organized.

Group bookkeeping practices into daily, monthly, and yearly tasks 

Bookkeeping can be hectic, especially when you have so many other responsibilities to handle. To prevent pile-ups or late filing of taxes, be diligent in organizing your bookkeeping tasks. Balance your bank statements regularly; evaluate your financial data monthly with management reports and Key Performance Indicators (KPIs) to better understand your business’ progress. To make it easier to file your taxes, review documents yearly.

To save time, use an outsourced virtual bookkeeping service

If all these are taking too much of your time, it is wise to outsource a virtual bookkeeping service. One common mistake new businesses make is delegating accounting tasks to their employees to save on the cost of a formal in-house accountant. However, the benefits of a virtual bookkeeper outweigh the costs of hiring an accountant or even training an employee to handle bookkeeping.

Pros of Outsourced, Virtual Bookkeeping

More time to concentrate on essential activities 

98% of Singapore finance and accounting professionals work overtime. During tax season or the end of the company’s financial year, accountants often have to work even later hours to complete their heavy workload. Using your limited cash reserves to make a single accounting hire may not be financially sound in the long run.

Entry-level accountants may not have the knowledge and expertise needed to help a young business navigate a complicated business environment. You’ll have to train up an employee to be an accountant, which takes even more time away from focusing on essential activities such as growing your business.

More cost-efficient

Outsourcing virtual bookkeeping and Accounting services mean that your business can save on data storage and employee costs. Instead of paying for storage costs and office spaces to store documents, hiring a full-time accountant, or forking out training costs for your employees to handle bookkeeping, you get to pay a single flat fee per month for a virtual bookkeeping service. This all-in-one service helps you store documents online, covers all your bookkeeping and accounting services, and provides access to the latest software and technology.

Prevents any errors from occurring 

Doing your own bookkeeping might result in mistakes that require more money to fix or result in costly penalties. For example, you might neglect specific deadlines and file your tax returns late, which results in fines. Outsourcing helps to prevent any such errors from happening.

Provides transparent access to information about your business 

Virtual bookkeeping has higher accessibility as compared to in-house accounting services. Hiring a full-time accountant means you can only gain access to your accountant during office hours. In contrast, virtual bookkeeping allows for access to your financial information anywhere and anytime around the clock.

Besides, virtual bookkeeping has the advantage of easy transfer of knowledge and a fast customer payments process for your business. This enables your business to access customer information fast and efficiently when needed. Sharing of information throughout the organization is also made easier when there is a digital tool to circulate these ideas. This simplifies the process of relaying information.

Cons of Outsourced, Virtual Bookkeeping

Security issues 

Digital external bookkeeping may come with more risks because you’ll have to trust a third party to be responsible for your data. For instance, if a data security breach affects your chosen outsourcing partner, you’ll be at risk as well.