Accounting is an integral part of a business and so is technology. But how does technology supports accounting? These supports come in the form of Accounting Software.

In modern day’s businesses, most operations work with computer. Various types of software are designed to assist everyday business operation, be it communication, computing, presentation, etc.

One of best software would be Accounting Software. It simplified the double entry recording of transactions by simple key strokes. It is easy and fast to produce financial reports. It plays a role in every financial decision you make. From purchasing vehicles, equipment and supplies, to increasing production, selecting inventory quantity, and determining salary amounts, accounting is a critical component of any successful business.

Accounting software typically composed of various modules, different sections dealing with particular areas of accounting. Among the most common are:

• Accounts receivable—where the company enters money received
• Accounts payable—where the company enters its bills and pays money it owes
• General ledger—the company’s “books”
• Billing—where the company produces invoices to clients/customers
• Stock/Inventory—where the company keeps control of its inventory

There are many different types of accounting software with many different features. It is really important that you choose your accounting software based upon your needs and not just product reviews. This ensures that your needs will be met and you will be comfortable with using the software.

Some factors to consider on choosing the right Accounting Software for your business

• Draw up a list of the features you need.
• Check out what accounting software is on the market
• Compare the features provided by various software
• Read reviews on products and if possible, seek user’s opinion
• Compare prices and support options

Now you can look over your list and eliminate any that do not impress you or programs that cost too much. Keep the top three choices and try to get an evaluation or demo copy of the software to try out. Reviews on product are for reference only. You should test the software to figure out the ease of use and if you like the general layout of the program.

After you have tried and tested the software, you will be in a better position to make a choice on the Accounting Software program that meets your needs.

The latest offender to knock on the door of IRAS is yet again a food stall operator. The business man runs a small stall, Tip Top Curry Puff, selling light refreshment but is famous for it well-guarded recipe of home make curry puffs.

Located in a residence coffeeshop, the stall owner would proudly tell anyone that his stall has people coming from all around the globe to buy his curry puffs. He sells his curry puff for $1 each. Just last year, he told the media in an interview that he sells about 4,000 curry puffs daily. This interview came after his business was mentioned and praised on entrepreneurial spirit for expanding oversea to China.

If the business sells 4,000 curry puffs daily, with only a handful of staffs, it is not difficult to calculate and conclude that the business is highly profitable. However, the stall owner did not declare the rightful profit to the tax authority. When the tax department run a check on the business following a tip-off, it was discovered that he has under-declared his profits. The sum not reported, from 2001 to 2006, amounted to $1.05 million.

The stall owner was prosecuted in court and admitted to the charges brought against him on tax evasion. He was ordered to pay tax penalty of close to $200,000 and a jail term of two weeks.

In his admission, he pleaded for leniency stating that he had followed the wrong advice of his book-keeper. But neither punishment nor anything about the book-keeper was mentioned. It was his own wrong doing that lead to his offence.

Generally the book-keeper would prepare the books based on sale receipts, purchase invoices and other documents to record the transaction of the business. If the owner were to hide information away from the book-keeper or for a matter of fact, there is no book-keeper, the business owner is liable for his own action.

Most book-keepers and accounting professional are well aware of the consequences of tax evasion, business corruption, etc, and will not deliberately doctored the accounts or give wrongful advice to their clients. They will uphold the professional ethics of the accounting profession rather than breaking the law.

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The success of any business depends on a number of critical factors, some of which may be more readily evident to you than others. The first thing that comes to your mind would probably be the sales and marketing of your products or services. Then you would think of operation of the company, meeting the needs and expectation of customers. Does it end here? The answer is NO.

Running a business can be compare to sitting on a three-legged stool – one leg is sale, one is operation and the third is finance. If any of these legs is shorter than the others the stool will wobble and may very easily tip over. So if you think sales and operations are all it matters, think again.

Accounting is such a tough task to handle because you have to tally minutest of details and expenses on a daily basis. Accounting is one such aspect of every business that requires careful concentration, as it directly deals with cash and other transactions.

Small business bookkeeping outsourcing is meant to relieve business owners from those pressures that crop up at the time of overload of work. It is quite popular that small business owners try to handle every department on their own. On other note, keeping a trained staff to handle their bookkeeping work will accompany so many expenses. Just think that how a small business will run if it is paying so much to its staff.

Bookkeeping involves handling of the financial records, business revenue, profits and losses incurred by the company and various other expenses. Outsourcing these services will not only save your time, but also money. In fact, you will be able to handle your small business with much more efficiency.

Keeping a trained staff to handle the bookkeeping work will accompany so many expenses. Just think that how a small business will run if it is paying so much to its staff on high salary, bonus, medical, insurance, etc.

Outsourcing will not only save on the cost that is spent on employee benefits and handsome salaries paid to them. This will help you in concentrating on other profit reaping departments. After all, every company in the business world is doing business to earn profits by spending less amount of money. Small business bookkeeping outsourcing is the best help that gives desired benefits to companies.

Everyday a new business, partnership or company is formed to carry out trading transaction in view to profit from the business activities. By the time any person register the business, partnership or company, documentation is required for every single step. The recording or tracking for these documents is both time and effort consuming. These records are essential and important, so it should not be overlooked.

Many a times, the owner need to plan and action on driving revenue for the business. The last thing the owner wants to bother about is recording every transaction himself. At this stage the owner needs an accounting professional who may keep track of every financial event. Nothing remains same forever thus the business will also expand and demand more efficiency and accuracy. Hiring a full time headcount in the beginning period of the business will burden the business with high manpower cost. A sound option is to outsource the portfolio to a professional on freelance or part time basis, who cost cheaper than an accounting firm.

Freelance accounting professional understands the requirement and importance of accuracy for every business and is committed to offer its clients the best and most cost effective accounting services. Cost of accounting professionals is the biggest thing that may beleaguer any business owner. These highly qualified accounting experts command a high remuneration that often goes out of budget. Excluding this cost you can also avoid expenses like medical fees, insurance, yearend bonus, etc, associate with a full time headcount.

Bookkeeping is that section of any business, which includes the most tedious tasks. Though keeping records of economic events is monotonous job but indispensable for growth of business. A clever financial insight is all about how you make maximum utilization of available resources in a productive direction. Financial records are useful for business growth planning and so as to declaring the correct profit for tax liability.

With the help of a freelance book keeper, business owner get a way to perfectly maintain their important information without banging their head on tallying and correcting the entries. Outsourcing bookkeeping function gives business owner the flexibility to set their own priorities and manage time for what matters the most for the growth of business.

There are 5 factors in which the accounting professional will take into consideration in determining the fee.

The complexity of the business depends on the nature of the business. It will determine the amount of time and effort to record the business transaction. It will layout the guidelines as:-

- how transactions are to be recorded,

- how to calculate cost and the appropriate allocation

Service based and product based business are two common business nature.

Service based business sell services. It is difficult to associate the cost of providing the services. In general, most small service based business would do away with ascertaining the cost of service provided. They would take the revenues generated from the services and less all deductible expenses to attain their net income. This nature type requires lesser time and effort compare to product based business.

Product based business sell products through various channels. It can be single product or multiple products. Stock inventory management is preferred for this business type. Itemized costing will be tedious and time consuming. More setup works and tracking are required. However, it can capture the cost of sale accurately thereby presenting a fair and true view report of the business.

The support from the business operator themselves can lighten the workload of the book keeper. The operators can help the book keeper to prepare some documents / data for the transaction records. This summarized information will cut down the time and effort on the recording.

The frequency of the report very much depends on the business operators. The book keeper will charge a higher fee if the reporting is more frequent. A yearly reporting will cost much lesser to a monthly reporting requirement.

The detail of the report would be a factor only if the business operators require additional information from the book keeper. The book keeper will furnish the business operators with a standard industry set of reports. If an additional report is requested, it may subject to adjustment in fee charge.

The support from the accounting professional would be the extra services other than the book keeping service. It could be filling out a survey requested by statutory board, assistance to obtain credit line from banker, etc.

The best way to save and pay less tax is to pay the correct tax. It is recommended to properly record the business transaction and report the correct earning. Outsourcing the book keeping function is a definite solution to business with limited or no resources to perform the duties.

Early in the year, the Inland Revenue Authority of Singapore (IRAS) laid their hands on the tax evaders. Those got questioned, investigated have to pay the authority the tax shortfall due to under declaring income. To add icing to the cake, they are ordered to pay huge fine as a penalty.

Among those got caught admitted outright that they reported their “estimated” income as they find it difficult to keep proper records. The tax authority checked and agreed that they are not genuine tax evaders but “they had not been keeping proper records.”

The above incidents prove that, with the support from the tax authority, it is important to keep business transaction record. Not doing so may result in substantial repercussion.

Small business setup, particularly those “One man management” and those with a couple of staffs doing sales and logistic duties, are the group in concerned. They are ranked along with the hawkers, taxi drivers, etc, as most likely not reporting their accurate and exact income.

These business operators usually focus on the operation of the business instead of keeping the records. They claim to know the profitability of their business “by the heart” and declined to rely on the books record. “Too busy”, “I do not know how”, “It is difficult to keep proper records” are the common reasons given. However, these reasoning will not be accepted in the court of law and the business operators must bear the consequences at the end of the day.

How can the problem be resolve?

An option is to outsource the recording function to a third party individual. An accounting professional is equipped with the adequate knowledge to maintain the book keeping records for small business as well as for sole proprietors.

An accounting firm would also be engaged to provide the required services. However, the fee charged by the accounting firm is generally higher as to the fee charged by an accounting professional.

Whichever option, the cash they fork out is money well spent given the penalties for tax dodging.

So how does the accounting professional charge their fee? The fee for the book keeping services will base largely on the following 5 factors:-

                   i. The complexity of the business

                  ii. The support from the business operator themselves

                 iii. The frequency of the report

                 iv. The detail of the report

                  v. The support required from the accounting professional

Part II – to be continue

It is every company, business and income earning individuals wish to pay lesser tax on the income earned. However, paying lesser tax and tax evasion is separated by a thin border, which can be costly if not dealt with carefully.

Big organization engaged experienced knowledgeable tax professionals to work out the company tax liability. These professionals take into account all deductable expenses, capital allowances, etc, in a legitimate manner to achieve their objective, pay lesser tax. On top of it, the organization employs accounting professional to maintain the transaction records of the business, detailing every sales, purchases and expenses. These records enable the auditors and tax professionals to accomplish their objective.

The cost of hiring accounting professionals, tax professionals will be offset against the saving in tax liability. The saving can be very substantial so big organization can justify the expenditure.

What about small businesses? Most small businesses can afford accounting personnel to track the business record and is willing to spend the money. They will then outsource the tax computing function to a third party tax agent and pay a nominal fee for their services.

Individuals running businesses can opt for the same method to declare their tax liability. But many did not do so, instead, prefer to “estimate” their earning and report it for tax purposes. Some small business operators also choose to report “estimate income”. This is a dangerous move. Among this group of individuals and small businesses are hawkers, coffee shops and food courts operator, generally from the food industry.

These groups of people from the food industry generally remiss in keeping records of their earnings and expenses. Many only estimate their incomes, and do not submit documents to back these claims. The common mindset was to save the cost of hiring and paying lesser tax than actual.

Early in the year, the Inland Revenue Authority of Singapore (IRAS) hauled up a dozen of hawkers and companies running food stalls for trying to evade taxes.

On conviction of tax evasion, tax evaders and those who abet them have to pay a penalty equaling three times the tax lost by IRAS. In more serious cases, they can be slashed with penalty and jail terms.

Part I – to be continue

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