As a new entrepreneur in Singapore, you’re likely wearing many hats, from visionary to salesperson to accountant. At Counto, we understand the challenges you face, especially when it comes to managing your finances. Let’s explore some common accounting mistakes new business owners make and how you can avoid them.
One of the most frequent errors we see is the blending of personal and business finances. This can lead to confusion come tax time and may even put your personal assets at risk.
How to avoid it: Open a separate business bank account as soon as you start your company. Use this account exclusively for business transactions.
Example: If you run a small café, ensure all your coffee bean purchases and equipment rentals are paid from your business account, not your personal credit card.
It’s easy to overlook small expenses, but they can add up quickly and impact your bottom line.
How to avoid it: Implement a system to track all expenses, no matter how small. Consider using accounting software or apps that allow you to easily capture and categorise expenses on the go.
Example: Keep track of the $10 you spend on office supplies. These deductions can add up to significant tax savings.
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Reconciling your accounts isn’t the most exciting task, but it’s crucial for maintaining accurate financial records.
How to avoid it: Set aside time each week or month to reconcile your accounts. This helps catch errors early and ensures your financial statements are always up-to-date.
Poor invoice management can lead to cash flow issues and make it difficult to track income accurately.
How to avoid it: Establish a systematic invoicing process. Send invoices promptly, follow up on overdue payments, and maintain a clear record of all invoices issued and paid.
Singapore’s tax system is relatively straightforward, but overlooking your tax obligations can result in penalties and unnecessary stress.
How to avoid it: Familiarise yourself with Singapore’s tax requirements for businesses. Set aside money for taxes throughout the year, and consider working with a tax professional to ensure compliance.
Example: If your annual revenue exceeds SGD 1 million, you’ll need to register for Goods and Services Tax (GST). Plan for this well in advance to avoid last-minute scrambling.
While it’s admirable to want to handle everything yourself, accounting errors can be costly.
How to avoid it: Invest in basic financial literacy or consider outsourced accounting services to ensure your books are accurately managed and compliant with Singapore regulations. At Counto, we offer tailored accounting services for small businesses, ensuring your finances are in expert hands.
As your business grows, your accounting needs will become more complex.
How to avoid it: Regularly review your accounting processes and systems. Ensure they can scale with your business, and be prepared to upgrade when necessary.
Disorganised or incomplete records can lead to financial misstatements and tax issues.
How to avoid it: Develop a systematic approach to record-keeping. Store all financial documents securely, whether digitally or physically, and ensure they’re easily accessible when needed.
Misclassification can lead to issues with CPF contributions and tax reporting.
How to avoid it: Understand the differences between employees and contractors in Singapore. When in doubt, consult with HR or an accounting firm to ensure proper classification.
Your financial statements provide crucial insights into your business’s health.
How to avoid it: Take time to review your income statement, balance sheet, and cash flow statement regularly. Use these insights to make informed business decisions.
At Counto, we specialise in helping new entrepreneurs navigate the complexities of business accounting. Our services include:
By partnering with us, you can focus on growing your business while we ensure your finances are in order.
Avoiding these business accounting mistakes can save you time, money, and stress as you build your company. Remember, good accounting practices are the foundation of a successful enterprise. Whether you choose to handle your accounting in-house or outsource to an accounting firm like Counto, staying on top of your finances is key to your business’s long-term success.
Counto is the trusted provider of accounting, tax preparation and CFO services for startups and SMEs. Get accounting plans that combine bookkeeping with corporate tax filing to help you stay compliant at an affordable price. To learn more, speak to us directly on our chatbot, email us at [email protected], or contact us using this form.
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