Entrepreneur’s Guide to Mastering Small Business Finance
Large companies are operating with huge capital. Small businesses in Singapore, yet, thrive with a limited amount of funds. Proper management of finances at times of economic downturn is vital to surviving.
Business finance mastery allows small businesses in the allocation and use of funds. This also leads to better financial decision-making and meet economic solidity. It also yields higher viability.
It is, thus, necessary to have an entrepreneur’s guide to mastering small business finance. One must consider key factors to master this skill. It starts from the bank selection to contracting out bookkeeping functions to Singapore’s most reliable annual compilation services providers.
Here are five (5) vital skills for finance mastery for every small business in Singapore:
1. Keeping Personal Finances Separate from Business Finances
It is a fundamental technique to keep personal finances separate from business finances.
In small business finance, it provides many advantages for a business owner, such as:
- Assists in simplifying the process of accounting. Particularly about the calculation of tax reduction and preparation of tax
- Hassle-free distinction and categorizing of expenses
- Guarantees separation of necessary receipts
- Better security of company’s property and assets. This is true as the business expands, and the company is considering incorporation
2. Choosing the Best Bank
Banks in Singapore offer varying services. Some banks provide standardized approaches.
Others offer tailored services based on the customers’ company.
It’s a must to choose the best bank where the corporate bank account will be set up as a business owner.
In the process, ask these questions:
- Which bank is offering online or mobile banking?
- How much is the bank fee for each business transaction?
- How flexible are the bank interest rates when it comes to business loans?
- Do these banks allow you to add people and grant permission to these accounts upon expansion?
Business owners must also consider other factors like:
- the initial capital deposit required
- the monthly minimum balance to maintain (service fee applies if the balance falls below the minimum balances)
- if you can waive the least balance of your business account on the first few months
UOB, OCBC, Maybank, and DBS are some of Singapore’s popular corporate banks. Setting up a business account the right way is an easy feat for business owners.
They only need to hire a reliable company that provides an accounting service.
3. Building a Simple Budget Plan
A simple budget plan enables business owners to check their monetary flow better. It also maintains a healthy business.
This provides a general outlook of the business operation on the initial months and year.
After some time, business owners improve on forecasting the earnings and expenses. Also, creating a yearly budget becomes easier.
Business owners must include essential elements in drafting their initial budget. These include office essentials, one-time, big-ticket expenses like laptops.
Variable expenses are also included like product developments, business travels. Fixed expenses also include office rent and other costs at a specific period.
4. Understanding Bookkeeping & Accounting
The financial health of any company relies on two key areas integral to its operation.
One is routine bookkeeping, and the second is regulatory compliance. Bookkeeping results in proper monitoring and recording of the earnings and expenditures.
It allows business owners to realize their business financial standing. Thus, an in-depth understanding of this area helps business owners of the cash flow and value. This, too, helps identify the profit generators and those that are not.
Additionally, Singapore businesses comply with the annual regulatory reporting to ACRA. You can source for company secretarial services to assist in getting the AGM paper and to submit Annual Returns on time.
Good accounting, like bookkeeping, plays a critical role in any business operation. It helps business owners to understand the company’s financial status better.
Also, the accountant should prepare the annual financial statements to adhere to the Singapore Financial Reporting Standards (SFRS).
5. Contracting Out Accounting & Bookkeeping
Startups may find bookkeeping, accounting and payroll processing a daunting task. Good thing.
They can outsource to do accurate and efficient bookkeeping & process payroll and SFRS financial statements preparation.
This is through accounting firms in Singapore.
The following are some advantages of outsourcing these services:
- granted access to industry experts and professional accounting resources
- reduced overhead expenses
- lower internal fraud risk
- Improved operational efficiency
- minimal to no paper trail
- adhering to the accounting rules and regulations in Singapore
Conclusion
Every small business owner must master the business finance aspect of the business. This is after all the most critical business operation area. It’s significant to manage the funds and build business stability.
Business owners need essentials skills to achieve small business finance mastery. These skills include separating personal finances from business finances, selecting the right corporate bank, and designing a simple yet concrete budget plan.
The skill of understanding bookkeeping as well as accounting, and the ability to outsource them to a competent annual compilation services agency in Singapore.