Why is accounting important?

Singapore is one of the fastest-growing economies in Southeast Asia. The possibilities within the country are endless. From healthcare to food and restaurant management to information technology and even education, there are so many sprouting and existing businesses that reside there. 

Singapore is also known to be a melting pot wherein both local and foreign businesses and workers thrive. Despite the COVID-19 pandemic, there is no stopping these companies and businesses from operating as well as managing their accounting and financial operations which serve as the blueprint to determine their profitability despite these difficult times. 

Thus, it is important that each company’s accounting systems are in place to help them weather the storms that hit due to the sudden virus that struck the world.

Why is accounting important for every business?

Accounting is known to be the very foundation of every business. It serves the purpose of why businesses are established, be it a startup or big corporation. It is the process of keeping records and encoding financial transactions that happen within the company. From the recording of cash outflows (also known as expenses) or inflows (known as income) to identifying taxes based on earnings, the financial condition of every company is key to determine whether the company is earning or losing money. 

Without accounting, businesses can die a natural death immediately if there are no organized systems of control in place. Thus, it is crucial that every company hires a good accountant. For business owners and employees handling roles in operations or sales and marketing, it would be close to impossible to carry the weight of daily bookkeeping and tax filing on their shoulders unless they are a start-up or small business. 

It is beneficial for every business to conduct bookkeeping Singapore-style and do their accounting methods in a systematic way, most especially on a daily basis. Identifying the different aspects of accounting and their roles within the businesses will be helpful before hiring an accounting employee.

Keeping detailed bookkeeping records is a must

Accounting is the recording and organization of financial transactions that occur in a business. In other words, it is encoding both inflows and outflows of the business either through written records of the use of Xero or any online accounting software. Accounting also makes use of double entry bookkeeping which allows businesses to check that all financial transactions has been recorded properly and that the balance sheet is properly balanced.

Examples of what bookkeeping entails are recording cash receipts received from customers on a daily basis in a general ledger or computerized software which will be beneficial in determining the monthly income of a business later on.

Taxes are trick

Taxes are known to be a percentage of a business’ income that will be deducted and paid to the government. Taxes are also deducted from products and services that a customer avails of. 

Thus accounting is important because taxes can be a very tedious task to identify for any business. It can reduce the hassle of having to coordinate with the government while balancing business operations. A bookkeeping Singapore service would be key for this.

Audits start with accounting statements

Internal auditing entails identifying errors or corrections within the financial statements of a business entity. 

Examples of financial statements normally prepared for a company are balance sheets, which show the cash, capital and debt positions of a company while income statements show the income and expenses. There is also what you call a statement of cash flows which shows the inflow and outflow of cash transactions that occur on a daily basis.

Looking to learn to use Xero yourself? Sign up now!

Given the benefits of accounting, why choose to find an accounting firm when you can learn to use Xero yourself. At WLP Academy, we provide affordable online Xero courses for all entrepreneurs in Singapore. Sign up now!

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