Basic Accounting

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Early in the year, the Inland Revenue Authority of Singapore (IRAS) laid their hands on the tax evaders. Those got questioned, investigated have to pay the authority the tax shortfall due to under declaring income. To add icing to the cake, they are ordered to pay huge fine as a penalty.

Among those got caught admitted outright that they reported their estimated income as they find it difficult to keep proper records. The tax authority checked and agreed that they are not genuine tax evaders but they had not been keeping proper records.

The above incidents prove that, with the support from the tax authority, it is important to keep business transaction record. Not doing so may result in substantial repercussion.

Small business setup, particularly those One man management and those with a couple of staffs doing sales and logistic duties, are the group in concerned. They are ranked along with the hawkers, taxi drivers, etc, as most likely not reporting their accurate and exact income.

These business operators usually focus on the operation of the business instead of keeping the records. They claim to know the profitability of their business by the heart and declined to rely on the books record. Too busy, I do not know how, It is difficult to keep proper records are the common reasons given. However, these reasoning will not be accepted in the court of law and the business operators must bear the consequences at the end of the day.

How can the problem be resolve?

An option is to outsource the recording function to a third party individual. An accounting professional is equipped with the adequate knowledge to maintain the book keeping records for small business as well as for sole proprietors.

An accounting firm would also be engaged to provide the required services. However, the fee charged by the accounting firm is generally higher as to the fee charged by an accounting professional.

Whichever option, the cash they fork out is money well spent given the penalties for tax dodging.

So how does the accounting professional charge their fee? The fee for the book keeping services will base largely on the following 5 factors:-

i. The complexity of the business
ii. The support from the business operator themselves
iii. The frequency of the report
iv. The detail of the report
v. The support required from the accounting professional

Part II to be continued

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