In Singapore, companies are often referred to as either being a multi-national company (MNC) or small and medium enterprise (SME). Though the terms may seem obvious, they are specifically defined by law, and the definition may be a bit surprising. The Singapore Government redefined an SME in April 2011 as a business with an annual sales turnover that does not exceed more than $100 million and does not employ over 200 workers.
Why does this matter? It matters because the business designation impacts reporting requirements, eligibility for certain tax incentives and accounting compliance standards. By not including fixed assets as a metric, the new definition gives more small businesses access to government support and incentives.
These are reasons enough to outsource small business accounting to ensure all advantages are accrued to the business, but there are many more.
For example, the 2007 Accounting Standards Act is prescribed by the Accounting Standards Council. The main goal of the Act is to ensure consistency in accounting standards and in application to business financial records. One of the many benefits a business accrues by outsourcing small business accounting is assurance that the business filings and financial reporting meets governmental requirements. Like most countries, the laws change frequently, though in Singapore they are almost always designed to improve transparency and promote business development.
Concentrating on Growth
Singapore is so tuned to business development that many companies soon discover they need to concentrate financial resources on trade and expansion. Outsourcing accounting services frees up human resources for other business activities, leaving the financial activities to professionals who concentrate on ensuring business records are accurate and reporting is useful for decision making. However, accounting services can go far beyond just recording and processing. Administrative accounting provides important assistance with evaluating those records to ensure cash flow is maximized, expenses are contained and taxes are minimized.
In fact, a business should ideally outsource small business accounting at the online pokie machine time of incorporation. Professional accountants can ensure the business complies from its initiation with Singapore statutory requirements for incorporation and appointment of auditors, if applicable. There are a number of regulations concerning business registration number disclosure, required permits and licenses, and tax registration.
Of course, the accountants performs a number of normal financial and bookkeeping activities including monthly reporting, payroll processing, accounts payable, financial statement preparation and payments to the compulsory fund scheme called the Singapore Central Provident Fund or Skill Development Fund.
Focus on the Right Issues
Letting professionals manage the critical accounting functions gives business owners the peace of mind that comes with knowing the company is always in compliance with laws, regulations and standards impacting financial recording and reporting. The SME management can focus on issues like taking advantage of Singapore’s generous trade agreements, tax incentives designed to promote growth and workforce development. Outsourcing small business accounting is like adding an efficient, cost effective and professional department that always supports business growth.
