Bookkeeping is one of the world’s oldest professions. You can trace its origins to Ancient Egypt and Babylonia, and it has survived for more than 2,000 years for a very simple reason: bookkeepers help businesses understand their results. But do I need a bookkeeper for my small business? Is it really a necessity since I’m not as big as other businesses?
No matter what stage your business is at, having a good bookkeeper can be the difference between failure and success, especially in a market as competitive as Singapore. Here are the reasons why:
Benefits of having a bookkeeper
1. They keep track of revenue and costs.
They can alert you when you’re losing money. This is particularly useful if you are at risk of bankruptcy: a fate that awaits many small businesses.
2. A good bookkeeper keeps you up to speed with Singapore’s financial reporting standards.
Reliable bookkeepers help keep you on the right side of local tax authorities, and on top of tax filing deadlines. Many different tax penalties await individuals and businesses who fail to keep their financial reportings and other tax papers updated.
3. Helps keep track of your business’ health.
Because they constantly keep track of your finances, they can gauge your business’ health quite well. Bookkeeping helps track both your revenues and your costs, highlighting whether your company is profitable or making a loss to help you make well-informed decisions as the business grows.
As they keep score for you, you can rely on them to produce for you—and for Singapore’s eagle-eyed tax inspectors—the following key financial statements:
- Profit & Loss Statement (P&L). Also known as an Income Statement, this keeps track of your business’ revenue and expenses on a monthly, quarterly, or annual basis.
- Balance Sheet (BS). This is a snapshot of your business’ financial health at a particular point in time.
- Cash Flow Statement (CS). Arguably the most important of the three, the cash flow statement is a record of the cash entering and leaving your accounts. This is critical because even if your P&L shows you’re making a profit, your business can still collapse if you run out of cash.
How to choose a bookkeeper as a small business?
For a small business, each hire you make is important, but perhaps no position is more pivotal than the internal or external bookkeeper you hire. So, be sure to choose carefully. Start by checking their credentials and experience. If you are hiring a bookkeeper to work for you in-house, speak to their previous employers. If you are outsourcing your bookkeeping to a corporate services firm (like Lanturn), be sure to speak to 2-3 of their current clients to get a sense of what you can expect.
Skip these steps and hire the wrong person, and you can expect a negative wave to ripple through your business. Your P&L, BS, and CS will be late, inaccurate, or both. You will miss tax filing deadlines, and eventually, you’ll get hit with penalties; leaving your business with a black mark against its name in the eyes of Singapore’s regulators.
That’s why you need a bookkeeper. Hiring a professional bookkeeper ensures that your financial statements are prepared accurately and on time, helping you avoid penalties and maintain a positive reputation with regulatory authorities. With a competent bookkeeper, you can focus on running your business while having peace of mind knowing that your financial records are in order. Don’t risk the consequences of hiring the wrong person. Invest in a reliable bookkeeper to safeguard your business and prevent potential setbacks.
Want to know more about how to get the right bookkeeper for your business? Contact us here if you’d like to know more.