Accounting Services Singapore: How it is different from Bookkeeping ?

accounting services Singapore

                                                 Accounting Services Singapore

In a nation like Singapore where a set of rigorous laws have been laid down by the governing authority such as ACRA (Accounting and Corporate Regulatory Authority), companies are obliged to follow the regulations. Given the importance of compliance requirements, companies are turning to third-party firms specialized in accounting services Singapore.

Even if companies are using the services of accounting firms in Singapore, a common question swirling around their owner’s mind is whether there is any difference between bookkeeping and accounting. This blog excerpt will make an attempt to distinguish these two crucial aspects of business and throw light on Singapore accounting services.

What is Accounting Services?

Accounting is a method which helps the businesses to record the financial transactions in a systematic and comprehensive manner. Precisely, it is the process of classifying, interpreting, analyzing, reporting and summarizing the financial transactions of a business. It is essential for a company to keep its accounting data in order right from the day one of its business operation. If left unorganized, someday it may lead to disaster. An organized accounting record can give an idea of the present and future financial health of a business.

Accounting is a broader concept and encompasses a range of financial activities. A few of them are listed below:

  • Preparation of chart of accounts

  • Setting up the general ledger

  • Compilation of financial statements

  • Cash flow management

  • Account Receivable and Account Payable

  • Bank account reconciliation

  • XBRL filing

What is Bookkeeping?

Bookkeeping is a subset of the process of accounting. It is an activity of keeping records of basic accounting transactions in the chronological order on a daily basis. It includes issuing and recording invoices, recording cash receipts, paying suppliers, processing payroll, tax return, and inventory management. Bookkeeping can also be termed as record-keeping. Essentially, it is considered to be the financial information base of a business, which should be precise, comprehensive and timely.

How is Accounting different from Bookkeeping?

As mentioned above, accounting is a broad concept and bookkeeping is a part of it. Accounting is the measurement of financial state of a business whereas bookkeeping is a process of keeping its accounting records. It has been noticed that bookkeeping and accounting may appear to be same for a novice as both functions deal with the financial aspect of an entity. However, if you take a closer look at both of the services, they are way different. On the other hand, it is worth mentioning that first step to accounting is bookkeeping.

Leaf through the below-illustrated table to understand the difference between accounting and bookkeeping.

Basis

Accounting

Bookkeeping

Definition

Accounting is a process to analyze and verify the recorded information of bookkeeping.

Bookkeeping is a process of organizing, storing, collecting financial transaction of an entity.

Nature

A language of business

A subset of Accounting

Scope

Broad and wide

Narrow and limited

Activities

Balance sheet, Financial statement, Director’s report, Account management, Bank account reconciliation

General Ledger and journal

Methods/ Types

Financial Accounting, Corporate Accounting, Forensic Accounting, Cost Accounting,

Single Entry and Double Entry of Bookkeeping

Sound Decision Making

Yes

No

Determination of Financial Position

Yes

No

Despite the differences, both of the aspects are interlinked with each other. Basically, bookkeeping serves as a base to the accounting processes of a business entity. For instance, if bookkeeping is organized and timely, then it is expected that accounting of the business will be in perfect shape and vice versa. The job of a bookkeeper is more clerical in nature and requires less accounting knowledge whereas accounting job is an analytical one and needs sound knowledge on the specific area.

Why is Accounting Services Singapore essential for Businesses?

In Singapore, to stay compliant with the laws of ACRA is of utmost importance for every company. A set of accounting compliance has been put in forth by ACRA which must be followed to avoid any legal penalty. Following are the compliance requirements related to accounting services Singapore for companies.

  • Keeping Accounting Record: Each Singapore company must keep accounting records for 5 years after the completion of the transactions.

  • Filing Annual Return : Each Singapore company must file annual returns with ACRA within one month of its AGM.

  • Preparation of Financial Account: At the end of the financial year, a Singapore company must prepare its annual financial accounts in compliance with the Financial Reporting Standards of Singapore.

  • Annual General Meeting (AGM): Company must hold an Annual General Meeting (AGM) once every financial year. The first AGM must be held within 18 months of the company incorporation.

  • Filing Annual Tax Return with IRAS: A Singapore incorporated company must file the annual tax returns with IRAS by 30 November (paper filing) or 15 December (e-filing).

The purpose of hiring accounting services Singapore is to streamline the accounting of your business. When you engage an accounting firm in Singapore, you can rest assured that your accounting tasks have been carried out in an effective manner while adhering to the statutory obligations of ACRA.

Lastly, after browsing through the blog, you are well versed with the difference between bookkeeping and accounting. Now, you know why accounting is as important as other key aspects of business for long-term survival of your company. Avail professional accounting services from a reliable firm, keep growing and stay ahead of the competition.

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