Top CPA Bookkeeping Tips for Medium-Sized Businesses

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Personal money management requires little effort. You likely have a retirement account, at least one savings account, monthly payments, a few investments, and a file to save tax receipts. When it comes to bookkeeping and accounting for business reasons, however, there are many more factors to consider, and the stakes are much greater since employees and customers depend on you.

Medium-sized business owners may get an abundance of guidance from bookkeeping and accounting service providers like the accounting services in Singapore. Most accounting professionals agree that to be successful, businesses of all sizes must adhere to the following bookkeeping best practices.

Top CPA Bookkeeping Tips For Medium-Sized Businesses

• Separate Your Business and Personal Finances – Ensure that neither you nor your employees are purchasing items for personal use with business funds. Inaccurate allocation of money may swiftly result in cash flow problems, as well as auditing concerns and tax filing.

If you breach the business veil by combining personal and business funds, you may also face legal repercussions in the form of a loss of “limited liability.” If you own a small or medium-sized business, you probably manage all purchases and payments on your own. Even if you are the only one with access to funds, you must always keep your personal and business accounts fully separate.

Establish separate business credit cards and bank accounts. Not only will this be very useful during tax season, but it will also keep you from forgetting that the ream of paper you ordered was for personal use.

• Implement Internal Controls – To limit the risk of fraud, you should establish internal controls in your business’ accounting rules and processes. This includes dual control for all procedures involving the sending or receipt of funds.

For instance, one employee should write the cheque, another should balance the bank account, and a third should sign to approve the payment. Regarding internal controls, the individual responsible for accounting activities should not be the same person who opens the mail.

The person who opens the mail should maintain a physical paper record of what checks were received and when they were received. Along with the list, the cheques should be sent to the bookkeeper. This includes the individual who opened the mail as well as the bookkeeper.

• Identify The Accounting Method You Will Employ – You may choose between two standard accounting methods for your business: accrual accounting and cash accounting.

Cash accounting documents transactions now cash change hands and is often advised solely for organisations that deal only in cash. The accrual approach records income and costs in the time they occur, regardless of when payments are paid or received. The accrual technique might be a little more complex, but it is often the best option for businesses that bill their customers.

Another feasible option is the modified cash basis, which is somewhere between accrual and cash. The modified cash basis is the same as the cash method except that bills are recorded in Accounts payable and customers are invoiced, resulting in Accounts Receivable on the books. Before you make your first transaction, you must determine which system is best for your company.

• Utilize Accounting Software to Track Expenditures – You should maintain a comprehensive record of all business expenses. This requires storing and documenting receipts at least once each week, if not every day.

Without reliable core CPA bookkeeping services and cloud-based expenditure technology, your everyday bookkeeping duties would be a significant time drain. Without the use of technology, this load will simply rise as your business expands. 

When choosing accounting software, you must evaluate more than whether it satisfies your existing bookkeeping demands. You should also consider the scalability of each software system and technology as your firm expands and your back office requirements rise.

• Manage Your AR and AP with Diligence – Maintain your AR and AP in impeccable condition to maximise your cash on hand. Pay the correct amount on time to avoid late penalties and take advantage of incentives for early payment. Send bills promptly and follow up with customers that are past due accounts to reduce sales outstanding.
• Plan Throughout The Year For Taxes – Retain frequent contact with your CPA accounting firm to ensure you are doing all necessary to maintain records and monitor spending, so that when filing time arrives, you have everything you need fully arranged. Maintaining a tax organisation can also assist you in making smart choices throughout the year to decrease your total tax burden and prevent expensive fines.

The Conclusion

Achieving success in bookkeeping involves both knowledge and consistency. You must educate yourself on the foundations of maintaining accurate books, and you need to consistently implement these principles.

Having a detailed strategy for managing your funds is also useful. Integrating your payment processing system with your accounting software ensures that payment data flows smoothly from one platform to another, avoiding the possibility of human error.