Many business owners will tell you that managing a business is hard, and accounting for it is even harder. What they don’t realize is that accounting actually eases the burden of operating a business. Things look hard if you don’t understand them. Learning accounting will take some time. If you don’t want to go for the extra mile, then you can just hire some accounting firm providing accounting services Singapore. But tell you what, you will be paying for some duties you can (and must) do on your own.
Accounting may be cash or accrual basis. Cash basis accounting records income as cash is received and expenses as they are paid. Small businesses usually opt for this one. On the other hand, accrual basis of accounting records income as they are earned and expense as they are incurred.
For example, an owner uses a leased building for his store. On December 31, 2014 he paid the full rent for January 2015. Under the cash basis, the rent will be recorded as expense in the year it was paid. Under accrual basis, it will be recorded as expense in 2015, the year it was incurred.
As you can see in the previous illustration, cash basis does not allocate income and expense in the period they are earned and incurred. Nevertheless, it is still advisable for small businesses to use cash basis because of its simplicity. Besides, due to the small number of transactions, matching of income and expenses wouldn’t be of much issue.
Businesses use the concepts of management accounting and financial accounting. Financial accounting is focused on bookkeeping services of the organization’s transactions and subsequently generating financial statements out of these records. Meanwhile, management accounting provides decision-making tools for the management. Management accounting process reports such as forecasts, budgets and financial statement analysis.
You might be into deciding which to use, accounting software or maybe just the manual system. Before you pick one, take into account the costs and benefits involved. Costs include money and the efforts to bring the chosen system into place. The benefits you reap should always be greater than the total costs you will incur.
You will be finding it difficult to do the accounting work alone. You may seek for help from some professionals who have extensive experience in providing accounting services in Singapore. Although they will be of much help, never just give in to the price they will be billing. Always consider how much time and expertise they can bring you in determining the best price for the deal.