Bookkeeping and accounting look similar to many small scale business owners in Singapore. However, these two terms are being used to refer to two completely different things. If you are a small scale business owner, it is important to have a solid understanding about this in your mind. Then you will be able to act accordingly and make sure that you stay away from hassle at all times.
The difference between accounting and bookkeeping is pretty much similar to the difference that you can find in between a doctor and a nurse. Both doctor and nurse are working with the same objective. However, the functions that they do overlap each other. In the meantime, both the doctors as well as the nurses have their own set of responsibilities as well.
While keeping that in mind, let’s take a look at the differences that exist in between bookkeeping and accounting.
Bookkeeping is all about recording financial information of a business. In here, the key objective of an accountant is to analyze the financial transactions and extract sensible information out of them. The roles of an accountant and bookkeeper overlap with each other as well. For example, a bookkeeper is responsible for recording the accounting process. In the meantime, the entire accounting process is carried out by the accountant and he will consider it as one of his responsibilities. You will be able to get both bookkeeping and accounting for SME Singapore by a third party service provider, but when you deep dive and take a look at it, you will be able to see how these services are offered by two parties.
Bookkeeping is all about recording and filing
Now you have a basic understanding of what bookkeeping is all about. Along with that, let’s deep dive and figure out more information about it.
Bookkeeping can be considered as an administrative task. During this administrative task, the primary objective is to focus on recording business transactions. It is important for the transactions to be recorded in a timely manner. In addition to that, the bookkeeper will need to make sure that all the transactions are compiled accordingly to ensure consistency.
It is also important for a bookkeeper to go ahead and create invoices. Other responsibilities that a bookkeeper has in a business include posting the credits and debits, reconciling credit cards and preparing the payroll. It is also important for a bookkeeper to balance the historical accounts of a business and the subsidiaries. Along with that, ledgers that contain recorded information about expenses and sales should be balanced. Supporting documents, such as invoices should be added into this balancing part as well.
The bookkeepers are also responsible for making payments to the suppliers, filing the cash receipts of customers and updating the inventories. Along with that, they work on handling petty cash as well.
If somebody wants to become a bookkeeper, it is important to take an accounting course. Then it will be possible to understand the fundamentals of accounting and figure out how to work as a bookkeeper.
Accounting is all about analyzing and reporting
Before you go ahead and obtain the services offered by SME accounting services, it is important to have a solid understanding about the definition of accounting as well. When it comes to accounting, an accountant will analyze all the information gathered by a bookkeeper with the objective of gaining useful insights about the business. In other words, the accountant can gain insights and see how the business is doing. Along with that, the accountant can come up with appropriate measures that business can take in order to increase profitability in the future.
Accountants are responsible for deferring and accruing expenses and revenue. In addition to that, they are also filing taxes, analyze the operating expenses of a business and work on financial statements and reports. These reports are presented to the business owner, which can help them to understand how the financial decisions taken by them are in a position to create an impact on the bottom line of the business.
You can also find accountants engaged in the process of preparing loan proposals, drawing chart of accounts and planning the business budgets. They will go ahead and set the parameters and standards for the overall financial system of the business. This defines how the financial records should be filed, maintained and destroyed if needed.
In order to become an accountant, you need to have at least a Bachelor’s Degree. In addition to that, you need to pass a board exam, so that you will be able to become a Chartered Accountant or a Certified Public Accountant in Singapore. Then it is possible to join one of the SME accounting services and work. Accountants will also have to work for the comptroller and financial controller positions within a company.
Business growth is ensured with proper accounting and bookkeeping services
In order to ensure the success of a business, both accounting and bookkeeping services should be available. Hence, you need to ensure that both these services are available along with accounting for SME Singapore services.
When it comes to accounting, all the information gathered by bookkeeping will be analyzed to gain important business insights. In addition to that, it will determine the steps that should be taken to ensure the future profitability of businesses.
The service offered by accountants and bookkeepers started overlapping when the things went digital. That’s because most of the bookkeeping software applications available out there are in a position to generate financial reports, which should be done by an accountant. However, due to the availability of software tools, even a bookkeeper will be able to go ahead with it. In the meantime, you can also find accountants who are recording financial transactions for the companies.
Due to the same reason, some people believe that the role of bookkeepers would become obsolete in the future. That’s because there is a high possibility to automate the tasks that are completed by a bookkeeper.
However, we are not too sure whether it will happen or not because the roles played by bookkeepers and accountants have a symbiotic relationship. The bookkeeper is relying on the accountant to understand what financial data should be recorded and how to set up the general ledger. On the other hand, the accountant is depending on the bookkeepers because they provide financial information needed for analysis.
Due to the presence of this kind of a relationship, most of the companies tend to get bookkeepers as well as accountants to the staff. However, small scale businesses will not be able to do it due to the cost factor. That’s where they can take a look at third party accounting for SME Singapore services.
Bookkeeping and accounting services available for SMEs
The small scale businesses are usually hiring bookkeepers to record day to day financial information. Then they go ahead and seek the consultation of an accountant on an ad hoc basis to get the analysis work done. In fact, there is a high demand for the accountants from small businesses, especially during the tax filing season. However, medium scale businesses will still be able to think about getting the assistance of a full time accountant.
Bookkeepers who work for small businesses in Singapore will need to adhere to the tax laws in Singapore. In addition to that, they will need to follow the Financial Reporting Standards in the country as well. Then it is possible for them to record the financial transactions in an efficient manner, without leaving any room for mistakes to happen.
It might be possible for the small scale businesses to skip the auditing needs. However, they will still need to make sure that all the transactions are recorded in accordance to the bank statements. Along with that, they should also have a solid understanding on how to use the latest cloud based accounting systems, so that they can digitally store the records in the cloud.
Outsourcing SME bookkeeping and accounting services
Small businesses in Singapore will not be able to recruit in-house staff for bookkeeping and accounting purposes. In such a situation, they will be able to go ahead and outsource the services. It is the most cost effective method available for them to get the services accordingly.
Even the large scale companies tend to outsource some of the specific accounting requirements that they have, such as payroll, billing and claims to third party service providers. However, small scale businesses can hire a bookkeeper and outsource the accounting services. The SME accounting services will make sure that they only charge for the service offered. This can help small scale businesses in Singapore to save a lot of money.
If you have less than 10 in your total staff, you shouldn’t recruit a bookkeeper or an accountant. Outsourcing is the best option. Likewise, if your staff is less than 75, you can hire a full time bookkeeper, while outsourcing accounting services that you need.