There are numerous important accounting tasks that come with a growing business, such as maintaining accuracy in recording financial transactions, establishing a concrete system for tracking expenses, and understanding how to properly cycle the company’s capital and revenue. And while most small business owners can perform basic record-keeping, the high demand of properly conducting the above duties would take their focus away from other core areas of the business.
These issues can be minimised with the help of information technology and accounting software. Using these tools, business owners will not only have a faster and more efficient system for monitoring transactions, but will also be able to maintain accurate financial records and get a clearer picture of how the business is performing whenever they need to.
There are different types of accounting software available in the market. It’s important to determine which features are needed by each business to simplify the accounting process. This article details how careful planning and implementation, accounting software can streamline accounting and bookkeeping tasks and improve overall financial management for any business.
If you need help determining which accounting features you need, take a look at what our top accounting software providers have to offer.
While there are a lot of basic freeware available that business owners can use for accounting and bookkeeping, the full use of such programs require extensive training that it makes them practically restrictive. If you’re a business owner with an expanding inventory or customer base, you need to manage your financial data and transactions with an accounting software that is easy to understand and use while still delivery its full capabilities to your business.
Accounting software is not only for big businesses. Owners of start-ups and small companies, where it would be impractical to employ a dedicated bookkeeper or accountant, can also use it to simplify all their accounting tasks, including managing their general ledger and tracking the business’s payables, receivables, revenues and cash flow. When fully integrated, accounting systems reduce operating costs and time.
Notably, many company owners in the region have already realised its importance: in 2018, the Asia Pacific dominated the global accounting software market with a 65.28% share. Unfortunately, many small businesses still rely on manual data entry and simple spreadsheets, or prefer the use of legacy payment and invoicing processes which holds them from integrating newer accounting systems into their business processes. Another common concern is the perceived cost of the software.
However, as more companies understand the value and practicality of using accounting software – especially with the added security of cloud-based systems – the more its demand will rise. In fact, the Inland Revenue Authority of Singapore (IRAS), expecting the wide use of accounting software, has already set requirements and regulations to ensure that businesses in Singapore can safely use accounting systems to meet their tax obligations.
If you’re looking to use the best accounting software for your company, we’ve detailed the important points below to guide you.
Many small- and mid-sized enterprises (SMEs) face challenges in managing their finances because of a lack of expertise and resources. Oftentimes, owners of SMEs do their own record-keeping as the cost of hiring a dedicated employee to handle the business's accounting, bookkeeping and tax filing tasks seems more than the value they bring in to the company.
One survey found that 95% of small business owners believe their records are accurate, while 93% believe they are also filing taxes correctly. This might not pose a problem if there are dedicated employees handling accounting and tax filing. However, many SMEs are unaware that they have issues with foundational accounting and bookkeeping practices. This often leads to irregular cash flow, poor budget control, and problems arising from combining business with personal accounts.
On top of accounting responsibilities, many SME owners also take it upon themselves to handle other demanding tasks such as administrative and human resource management. Lack of knowledge about compliance, payroll process, tax codes, and accrual basis method when tracking finances can all spell trouble for the business.
While, sometimes, start-ups and SMEs can get by without hiring a certified accountant, these minor problems can compound and lead to troubles ahead. Specifically, SMEs will have to deal with the following accounting challenges:
Businesses must comply with Singapore's Goods and Services Tax (GST) policies, which applies to business-to-business and business-to-consumer transactions. Corporate tax compliance is another requirement. Keep in mind that companies without a dedicated or in-house accountant may still have to hire one seasonally to tabulate the taxable and non-taxable elements of the business.
Costs incurred to generate revenue must be tracked regularly, even if there are no overt signs of problems. The more employees and assets a company has, the more challenging it is to manage expenses such as rent, salary, maintenance and taxes.
Many businesses still struggle with integrating new technology despite the demand for it. Automation and analytics make it easier for companies to handle finances and accounting needs, but some may be too complicated or expensive for SMEs.
This is not just adding and subtracting numbers but maintaining a sustainable financial performance. Good attention to detail and clarity in cash flow management are crucial for any growing company, but tend to be overlooked when a company owner's focus is divided by other demanding processes of the business.
Information technology has allowed businesses to stay competitive through networking, new systems, and new processes. Accounting processes have been streamlined, reducing the over-reliance on paper ledgers, handwritten financial statements, and manual spreadsheets. Even businesses with in-house bookkeepers and accountants will find it easier to organise, look for, and analyse documents with an accounting system.
Accounting systems have internal checks that ensure the accuracy of financial information input into it, reducing the chances of mistakes. The technology also enables the creation of timely financial reports and market share reports, as well as better and faster processing of large amounts of data.
Like with other computer systems, accounting software follows the basic process of input, processing, and output. However, it can do so much more than that: it can also be used to collect, store, manage, retrieve and publish financial and textual data. It generates information important in filing income tax, company audit, process regulation, and business analysis.
In today's efficiency-driven market, there is no room for the repetitive and time-consuming tasks that are part of traditional resource management. Modern accounting software also removes the need of storing massive amounts of hardcopy documents that take up a lot of office space. With its use, company owners can focus on making critical decisions that improve the business.
Whether it’s a local start-up or a foreign-owned mega corporation, any business in Singapore must comply with the obligatory statements and meetings required by law. All companies must schedule a financial year-end report. Private limited companies should also have their financial statements audited by a public accountant annually, as stated in the Companies Act.
An annual general meeting should be held within 15 months of the previous session or six months from the chosen financial year-end schedule. During the meeting, shareholders approve the audit reports and declare dividends.
Small companies are exempted from accounts auditing under the Companies Act if their total revenue and total assets are less than $10 million and they have fewer than 50 employees. Holding companies and subsidiaries are also exempt under the small company category.
Lastly, the company should submit the following during their year-end accounting: cash flow statement, balance sheet, profit and loss statement, and equity changes statement.
There are different inexpensive accounting software in the market nowadays, any of which can transform any business significantly in the following ways:
Timely and accurate financial information is needed to make crucial decisions. With an accounting software, creating a report can be as easy as selecting the right forms with a click of a button. Doing the same thing manually will take hours.
Manual, repetitive tasks can require a lot of time and human resources, but with accounting software tools, these can be automated. A user-friendly accounting software allows for easy task automation to finish tasks instantly and efficiently.
One of the popular trends in affordable accounting software for SMEs is using cloud technology. This means that you will be able to access any accounting information anytime, anywhere and on any device as long as you’re connected to your cloud storage via the internet. Even if you’re not in the office, you can retrieve information and generate reports from the application.
Small businesses are worried about the cost of accounting software, but the speed and efficiency will save time and resources in the long run. You can do more for less; there is no need to hire additional staff and train them.
Manual processing can take up a great deal of time and resources. With an accounting software, you can use that time instead for other vital tasks. Data organisation also takes just a few seconds, so you do not have to wait long if you need to look at or print specific information.
Human errors in manual inputting of data and calculation can still happen even with experienced bookkeepers. Any inaccurate information, primarily when it occurs early in the process, can significantly impact the whole system. While simple accounting software is not error-proof (such errors often happen only when manually inputting the numbers), it is almost impossible to make mistakes during the calculation and interpretation of data in tools.
Filing business taxes can be confusing and time-consuming, especially for new entrepreneurs, but you are assured that you have accurate financial details and reports with accounting software. The system leverages on application programming interface (API) to make the process error-free and easy.
Any employee with access to the accounting software can make changes to the data, and those changes will take effect in real-time for other users. This means that your team can work together even when they’re working from different locations, especially if they use cloud accounting software.
If you are concerned about outside parties tampering with your data, rest assured that each accounting system carries a variety of safeguards. Information inside the program is protected by high-end encryption algorithms, which is more secure than keeping physical documents on a storage shelf. Accounting software also have customisable feature that allows access only to permitted users.
Processing paperwork can be time-consuming, plus storing hardcopy files take up a lot of space. Paper documents, unlike digital files, are also subject to damage. Accounting software can resolve most of these issues.
Accounting solution is classified based on the type and size of business they are made for. Not all software includes the same features, therefore make sure to pick one that suits your type of industry and the work processes involved in your business.
The following are the types of popular accounting software today:
You can try a free accounting software if you just want to study how the system works first. This is recommended for entrepreneurs who are still undecided about the value of business software and how it can benefit their companies. Keep in mind, however, that free software has a lot of functional restrictions. You won’t be able to enjoy all the features available in paid packages without a subscription.
This is the accounting system to look for if you have a start-up or micro business. It includes all the essential basic features such as payroll, invoicing, and reporting. Bookkeeping is more manageable, and it can be integrated with other existing processes like payments for retailers. Some providers call this system payroll management or bookkeeping software.
This is useful for any type and size of business because it integrates tracking and financial reporting. It can also include essential functions, such as inventory tracking, supply chain monitoring, purchasing, billing, and customer relationship management. There may still be more advanced features depending on the package you choose.
A subscription-based accounting software has the advantage of being hosted on a remote server over the internet. This is an excellent option for SMEs because it does not require any additional hardware or software setup costs that are normally part of installing an on-site accounting system. Cloud-based accounting software is a great option if you are looking for portability, affordability, and security.
These are the key features to look for when choosing accounting solutions.
Basic bookkeeping should include some of the following: accounts receivable, accounts payable, inventory, purchases, payroll expenses, loans payable, and owner’s equity.
With this feature, you no longer need to outsource payroll services or do it yourself manually. Payroll processing includes calculating taxes, insurance, and employee contributions.
All transactions should have invoices to keep track of the business’s resources. Invoicing should also be integrated with billing and inventory management, especially for retailers.
Accounting programs can automate calculating tax obligations (such as the company GST) and filing of forms (such as Form C-S, C-S Lite or Form C). The IRAS has an official accounting software register (ASR) that lists accounting software programs that have met the IRAS's principles and technical requirements.
This includes direct payments to banks, accessing and tracking information, and reconciling bank accounts.
This feature will process and print checks accurately and with no hassle. Some software will create and send digital checks while also mailing physical ones.
This feature allows you to schedule deposits directly into your chosen bank accounts using an accounting software so that you never miss any payment deadline.
The software can generate both standard and customised reports. Most accounting software also feature a dashboard for real-time view of important details on one page.
Some popular accounting software include special features designed for specific types of business or industry. These include use of foreign currency, stock control, electronic or online payments, and integration of other systems.
To determine what type of accounting system is best for your company, you need to understand the needs and requirements of your business, not just the processes involved. To do this, you have to look at different aspects, such as the following:
These factors will determine which specific software features your business needs and whether you need additional equipment. Keep in mind that the more employees will use the software, the more sophisticated it has to be. You also need to factor in any significant changes in your business operations that you intend to do in the future.
The implementation follows these steps to ensure that the system works properly:
Installation
For a cloud-based software, the provider will explain where it will be hosted (i.e., its servers) and how to register and access the software. Meanwhile, on-site accounting software requires installing the package by the provider in your office. If you're using a cloud ERP system, the accounting software will be installed along with other programs such as those used for inventory and human resource management.
Initial Setup
You will be instructed on what data is needed and how to transfer it to your new system. This may take some time, especially if you’re transferring a huge amount of information. In such cases, make sure that you have a backup of all data from the previous accounting software that you use. You may also conduct a parallel test run to better understand how your new system operates, and how it differs with your old system.
Training
Employees who will use the software need to be instructed on how to use it. This is usually done right after the software is installed. Most packages are user-friendly and easy to learn. Even better, they come with training videos that you can always use as a guide. Users are typically offered to either take a full training course or a simpler top up tutorial.
Support and Maintenance
Once the installation and training are done, the provider ensures that the software runs properly. You can contact your provider if you have any questions or require additional guidance regarding updates and troubleshooting.
When choosing the right software for your company, keep in mind the following questions:
Consider your company’s needs based on your current setup, including legacy systems that might not be ideal for integration. Your chosen accounting software should be able to fit into your current company’s processes smoothly. To make sure that you get the right solution package, talk to your software provider.
Accounting software simplifies several accounting and bookkeeping tasks which are vital for accurate-record keeping and compliance. If you need to learn more about which features you need for your business, check our recommended accounting software providers.
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