Unlike huge enterprises with massive capitals, small businesses in Singapore tend to have a limited budget and thus, need to manage their finance properly, especially during an economic downturn.
Mastering business finance allows small businesses to allocate and utilise funds effectively, make better financial decisions, achieve economic stability, and get higher profitability.
From choosing the right bank to outsourcing accounting function to competent accounting services in Singapore, here are five essential skills Singapore small businesses need to learn to master their finance.
Separating Business From Personal Finances
The basic technique for small business finance is to know the essence of separating personal from business finances. Mastering this skill benefits the business owners in many ways, including:
- Help simplify the accounting process, especially when it comes to tax deduction calculation and overall tax preparation
- Better protection for personal assets and property, particularly as the business grows and intend to incorporate
- Ensure important receipts do not get mixed up
- Easily differentiate one set of expenses from the other
Selecting The Right Banks
Not all banks in Singapore offer similar services. Some banks can tailor their services around their clients’ company, while others tend to have a more standardised approach. When choosing the right bank to set up a corporate bank account, business owners should consider the following questions:
- Does the bank offer online banking?
- How much does the bank charge for every business transaction?
- What types of interest rates do the bank offer for business loans?
- Does the bank allow business owners to add other people and permissions to their account as their business expand?
Other factors business owners need to consider are the bank’s required initial capital deposit, an option to waive account minimum balance during the starting months and the required minimum balance per month.
Examples of popular corporate banks in Singapore include Development Bank of Singapore, Maybank, OCBC, and UOB. Small business owners can hire an accounting services provider in Singapore to help them set up a business bank account the right way.
Creating a Sample Budget Plan
Building a solid budget allows business owners to keep track of their money and keep their business healthy. It gives them the general idea of what to expect during the first few months or years of their operations. Over time, they can create budgets easily as they get better at forecasting their company’s earnings and expenses all through the year.
Essential elements that business owners should include in their initial budget are for every necessary item needed in the office, one-time expenses spent on a high-ticket item like laptops, fixed expenses paid on every set period like office rent, and variable expenses paid at irregular intervals like business travel and product development cost.
Understanding Accounting And Bookkeeping
Accounting and bookkeeping are two vital areas integral to maintaining a company’s financial health. Bookkeeping tracks the company’s earnings and expenses and allows business owners to keep tabs of their business financial footing. Hence, understanding bookkeeping allows the business owners to understand their cash flow and business value, as well as identify which area of their business is profitable and which part is not.
Similarly, good accounting is critical to every business as it allows business owners to understand their financial status. Moreover, annual financial accounts or financial statements preparation is mandatory for every business in Singapore. The preparation must be done according to Singapore’s Financial Reporting Standards.
Outsourcing Accounting And Bookkeeping
Bookkeeping and financial statements preparation can be intimidating for startups. Fortunately, they can engage with professional accounting firms in Singapore for more efficient and accurate accounting and bookkeeping preparation. Here are some benefits of outsourcing accounting and bookkeeping:
- Gain access to expert accounting resources and industry experts
- Reduce overhead expenses
- Minimal or no paper trail
- Boost operational efficiency
- Lower risk of internal fraud
- Stay compliant with Singapore’s accounting rules and regulations
Conclusion
Business finance is a critical area that every small business owner need to master to manage their company’s funds and gain business stability effectively. The essential skills needed for small business finance mastery include the ability to separate personal from business finances, choose the right business bank, develop a simple budget plan, understand bookkeeping and accounting and outsource them to competent Singapore accounting services agency.
