Do I Need to Outsource my Accounting Monthly?

Here at Accountant SG, we define Bookkeeping and Accounting separately.

Bookkeeping is the recording of financial transactions (i.e. sales and purchase invoices, receipts, payments, etc)

Accounting involves bookkeeping, plus reconciling the financial transactions to the bank statements. This important step ensures that transactions are accounted for with no missing or duplicate transactions. Accounting also includes making adjustments for accrual accounting purposes, and generating financial reports for the business to use.

One of the common questions I get from new clients looking to 'outsource' their accounting is usually:

"Do I have to do my accounting monthly?"

The quick and cliche answer is "it depends!"

Here is a simple flowchart for you to easily figure out whether you really need a monthly accounting service! Read on to understand more about how this works!

What's the minimum compliance required?

In Singapore, the bare minimum compliance that businesses (Sole proprietorships and partnerships) and private limited companies (Pte Ltd) have to deal with are:

• • • ACRA (also known as the Registrar, because they administer the register of business entities started, and companies incorporated in Singapore) and
      • Submit an annual return of the company (or renewal of business registration in the case of business entities)

• • • IRAS (the tax authority)
      • Compute and flie the annual tax return (by 15 Apr for businesses, by 15 Dec for companies)
      • (only for GST registered companies) Submit a quarterly GST return

Now here's where bookkeeping and accounting becomes needed.

Both the annual return and tax return require the accounts of the company to have been done before submitting the return. The return requires the business owner or director of the company to make confirmations on the financial status and solvency of the business. The accounts are required to act as supporting documentation on the financials.

In addition, businesses and companies are sometimes required to upload their accounts during the filing as well.

So, now you know the first answer to the question:

"You will need Bookkeeping AND Accounting done at least once a year to comply with ACRA annual return and IRAS tax return"

What if my business is GST registered?

GST returns have to be filed quarterly. What happens with GST filing is that quarter's sales and purchases have to be submitted in the GST form.

For regular service and retail businesses operating only in Singapore, this should be an easy task.

For exporters and importers of goods and services, the challenge of GST submission is to know the value of goods and services supplied for each GST category (i.e. 7% or 0% output, 7% or 0% input).

Hence, if your business is GST registered:

"Quarterly bookkeeping is a must, because you need to know the transactions made"

"Quarterly accounting is not necessary but only if you are confident of your transactions being correct, and also knowing how to file GST properly!"

So Why do Businesses Still go for Monthly Outsourced Accounting?

From experience, our clients who prefer to outsource their monthly accounting to us are usually businesses with higher volume of transactions.

Most businesses intend to do well, and without having frequent and accurate accounting reports it becomes difficult for business owners to make decisions!

Transactions aside, the most important reason for doing monthly bookkeeping and accounting is to have access to updated business numbers!

Generally, having access to regularly updated accounts is highly advisable for businesses who want to focus more on their cashflow, as well as tracking customer late payments so that they can be sent reminders.

We use Quickbooks and Xero for most of our monthly bookkeeping clients. Speak to us to find out more!

"Quickbooks and Xero are our preferred cloud accounting apps due to their relatively low cost as well as allowing business owners 24/7 access to their financials!"