Starting A Small Business: The Go-To Accounting Checklist
Singapore has always been known for being a pretty business-friendly country for setting up your own business. In fact, according to an article published in Business Insider, it found that aside from the nation’s flexible immigration policy and enterprise-friendly laws, a major reason why Singapore has dominated the list for such a long period is due to its straightforward method for filing taxes.
Hence, if you would like to start a business – you can begin the setup process by using a checklist; it can help you do a lot of things in a way that’s easier, more convenient, and less prone to mistakes. This includes taking care of the accounting part of starting a small business in Singapore.
Below, is a detailed checklist that includes everything you need to streamline the tax preparations for your business.
Check how much cash you have
Ideally, you’ll want to make sure that your business is never running on empty. This is why it’s important that you know how much cash you have on hand, how much cash you expect to receive, and how much cash you expect to spend on payments.
Primarily, there are two kinds of expenses that you have to be prepared for. Firstly, the one-time or capital costs incurred to set up your small business – such as signage, materials, or even an e-store. Next, would be the fixed amounts for expenses like utility bills and employee salaries. Likewise, an emergency fund for unanticipated expenses is also crucial.
Ensure proper documentation
It’s important to record every transaction you make into its proper account – be it manually or using Excel sheets. Or better yet, conveniently through intelligent accounting software.
For instance, you should document, file, and organise receipts accordingly whenever any payment is made – such as invoices, cash receipts, and cash payments, which should all have copies of their records kept and sorted alphabetically. This includes all of the vendor files, payroll files (sort them by payroll date), and bank statement files (sort this by month).
Manage unpaid vendor bills and invoices efficiently
In addition to keeping a record of all of your vendors, you should also keep a list of unpaid vendors separate. This way, you are aware of all the billing dates, amount owed, and due date, as well as if the vendor is offering discounts for early payments.
Furthermore, ensure you prepare all invoices and send them accordingly when necessary. However, before sending any invoices, make sure that you note it as “Net 30” at the bottom, which means that it’s due within the next 30 days. This will make it easier for you to forecast potential revenue. In addition to this, make sure that your invoice template contains all the necessary details. This includes agreed payment terms, payment address, and an itemised list of charges.
Check cash flow projections
Reviewing projected cash flow is crucial to running a business. You need to know how much money you have coming in the next few weeks and months so you can prepare your finances better to fulfil all your payables.
A simple statement detailing how much cash you have on hand and the expected amount of cash you’ll receive within the next week and month can go a long way. However, if you ever find yourself encountering difficulties managing your accounting records – you can always engage a firm which offers professional auditing services to help with these matters. This will make the business setup process a lot easier.
Check for any aged receivables
“Aged” receivables are past-due and should be kept separate. This allows you to keep outstanding payments by customers organised so you can send overdue reminder statements to anyone who owes your business money.
You can also use this information at the end of the fiscal year for writing off deductions and sending the receivables to collections.
Compare, measure, and project your profit and loss statement
Your income statement is also known as a profit and loss statement. It lets you know how much money you’ve spent and earned year to date and the current month.
Make it a habit to measure it against your budget for every month, quarter, and/or year. This lets you know if your planned numbers and actual numbers line up together so you can make the necessary changes.
Balance and review your balance sheet
Ensure you remember to balance your business checkbook. Also, double-check your cash business transaction entries to make sure that they are accurate, so you know that your cash position and cash flow are accurate. Doing this makes it easier to discover if there are any errors and gives you time to correct them.
Likewise, review your balance sheet consistently too; especially by comparing a balance sheet from one month to that of another. For example, an update in accounts receivable can be interpreted as an increase in sales or customers are taking longer to pay. This will help you know if you are managing your assets and liabilities effectively.
It’s common practice for small business owners to learn as they go. This includes learning more about accounting as they run their business. However, working together with reliable, experienced audit firms can help minimise any risk of potentially costly financial mistakes.
Get in touch with OneStop Professional Services to plan ahead and prepare for a smooth business setup process – we are able to offer a number of services like corporate financing, financial outsourcing, auditing, and accounting.