Startup Finance and Accounting: Record Keeping

Now that the tax filing deadline is nearing, many companies will be frantically cleaning up their accounts. Record keeping is a key thing all startups must do, but that many neglect. Common complaints include the amount of hassle it entails or that they simply do not know how to keep records. One other pitfall I have seen is that startups keep records…but, do a bad job at doing so. This includes keeping some receipts, and somehow misplacing others.

Here, I have picked out a few key points from IRAS’ great basic guide to record keeping for small businesses (PDF) so that entrepreneurs can have a quick overview. But I recommend you to please download the whole file to use as a reference.

Records That Must be Kept by All Businesses

[From the guide]

1.3.1 Good business records should include: –

(a) A record of receipts and payments, or income and expenditure;
(b) The source documents to substantiate the entries in your records; such as vouchers, bank statements, invoices, receipts and other relevant papers;
(c) A record of the assets and liabilities of your business, including listings of your business debtors, creditors and cash/ bank account balances.

Keeping Electronic Records

Since we are talking about numbers and lots of them, Excel spreadsheets should be your best friend. While you can have all your accounts (including records and even financial statements like Profit and Loss and Balance) in pure Excel spreadsheets, chances are, many of you will also like to try out accounting software.

Check out IRAS’ Accounting Software Register for a list of approved software that you can use and get subsidies for.

Off-the-shelf accounting software makes your life much easier if you do not have someone with accounting training in your team, and you want to keep your operations streamlined by not hiring an accountant.

However, do note that if you are really serious about growing your business, having a proper accounting system is the right way to go. You either pay now, or pay later (to clean up your messy records).

Sales Invoices

[From the guide]

If you issue a sales invoice, the sales invoice should contain the following information: