Accounting 101: The Basics Behind Good Financial ManagementDownload Now: FREE GST 2023 GuidebookDownload Now: FREE Employment Pass ChecklistDownload Now: Free Incorporation Checklist
Your financial statements play a vital role in the process of making important business decisions in your company. This is why it is crucial that you ensure you understand the grounds for good financial management. In this article we discuss business bank accounts, how to develop a good bookkeeping system and how to set up a payroll.
Do I Need a Business Bank Account?
Once you have registered your business, it is highly recommended that you open a separate bank account for your business finances. When you are in the process of selecting a bank, consider the following factors:
- What types of accounts do you need to open?
- What fees does the bank charge for small business accounts?
- Will you be banking primarily online or at a branch?
- Does the bank have branches and ATMs close to you?
Here’s a bit of insight into the bank accounts you are likely to open:
- Checking Account
This will be used to collect income from your clients and pay off business expenses. Such online checking accounts can be integrated into other small business tools, allowing you to get paid faster, and have access to your revenue in hours which makes managing your finances easier.
- Saving Account
It is recommended to save a portion of your income in a saving account to cover your tax payments or in case of emergency expenses.
How To Develop a Good Bookkeeping System?
Firstly, what is bookkeeping? This involves tracking all your business transactions, including the revenue you earn and the expenses you incur. Bookkeeping can come in the form of preparing financial statements, posting debts and credits, making invoices, maintaining subsidiaries / general ledgers / historical accounts, and completing payroll.
In terms of carrying out your bookkeeping as a business owner, you can opt for one of the three following options:
- DIY Bookkeeping
If your business is quite small and the budget is tight, going the DIY route might be best for your bookkeeping. Simply use an Excel sheet to track all your business transactions, or you can pay a fee for the simplicity of cloud-based bookkeeping software.
- Outsourced Bookkeeping
If you prefer not to handle your own bookkeeping, you can select to outsource these services from a trusted corporate service provider. This ensures that you receive professionally tracked and organised financial accounts, allowing you to be stress-free.
- Hire In-House
If your business grows to the point that your bookkeeping workload is considerable, you can hire a bookkeeper to work in-house. However, this option would come at the highest cost out of these three.
How Do I Set Up a Payroll?
Setting up a payroll is essential to the understanding of a business owner. When setting up, you first have to classify workers correctly. It’s important for tax reasons, to avoid trouble from the Ministry of Manpower (MOM). For example, is a worker an employee or a contractor? Here’s how to distinguish the two:
This is someone who is trained by your company, has set working hours and the work they perform is crucial to the functioning of your company.
This is someone who is usually paid hourly or by project, set their own work hours and typically their work isn’t central to the functioning of the business.
It is important to research not only the type of role the person is fulfilling, but also to carefully calculate their respective Central Provident Fund (CPF) contribution as an employer. You can research this on the CPF website.
When In Doubt, Reach Out!
Sprout Asia wants you to focus on what you do best while we take care of the rest. That’s why we offer budget-friendly accounting services and payroll services so that our experts can manage your finances with ease. Feel free to contact us with any questions regarding our services, we’ll respond within 24 hours.