Bookkeeping is an essential function of business operations in Singapore. It ensures that financial transactions are recorded accurately, supporting the company in tracking income, expenses, and overall financial health. Businesses in Singapore must maintain proper records as required by the Inland Revenue Authority of Singapore (IRAS) to comply with tax and statutory regulations.
Below is a comprehensive overview of the key documents needed when doing bookkeeping work in Singapore.
1. Invoices
Invoices are one of the most crucial documents for bookkeeping, and they form the backbone of sales and revenue tracking. These documents detail the goods or services provided by the company to its customers.
Sales Invoices: Generated by the company when it provides goods or services to its clients. It should include the date of the transaction, the amount due, and the payment terms.
Purchase Invoices: Invoices received from suppliers for goods and services purchased by the company.
Key elements to include:
Company and customer details
Description of goods/services
Invoice number
Date of issue
Payment terms
In Singapore, it is essential to retain invoices for a minimum of five years, as required by IRAS.
2. Receipts
Receipts are equally important as they serve as proof of payment. Invoices and receipts work hand in hand to verify financial transactions.
Sales Receipts: Issued when payment is received from a customer, either in cash, credit card, or other payment methods.
Expense Receipts: These document payments made by the company for various operating expenses, such as supplies, utilities, or services.
All receipts should include details such as the date, amount paid, mode of payment, and description of the goods or services.
3. Bank Statements
Bank statements provide a record of all transactions made through the company's bank account. They show details of withdrawals, deposits, and other relevant banking activities.
Bookkeepers use bank statements to reconcile financial records with actual bank transactions. This ensures the accuracy of recorded income and expenses, matching what’s in the books with what’s actually in the bank.
To maintain accurate financial records, businesses should retrieve monthly bank statements and store them securely.
4. Payment Vouchers
Payment vouchers are another important document used to record payments made by the company. These are typically issued when paying employees or suppliers and can be particularly useful for petty cash transactions.
Key components of a payment voucher include:
Date of payment
Amount paid
Purpose of the payment
Signature of the payer and payee
Maintaining proper payment vouchers helps track small transactions that may otherwise go unrecorded.
5. Credit Notes and Debit Notes
Credit and debit notes are supplementary documents used to adjust invoices.
Credit Notes: Issued when a customer returns goods or when a discount needs to be applied to a previously issued invoice.
Debit Notes: Issued when additional charges need to be applied to a previous invoice, such as extra services provided after the initial billing.
These notes are used to amend errors or changes in the amount payable and should be filed with the original invoices for reference.
6. Employee Payroll Records
Payroll records are essential for businesses in Singapore that employ staff. Proper bookkeeping for payroll ensures compliance with Singapore’s Employment Act and Central Provident Fund (CPF) obligations.
Payslips: Issued to employees each time they are paid. These should contain details of the salary, deductions (e.g., CPF contributions), bonuses, and allowances.
CPF Contribution Records: All companies are required to contribute to CPF for Singaporean and permanent resident employees. These contributions should be accurately recorded and filed.
Additionally, businesses must maintain payroll records for at least five years for inspection by authorities.
7. Petty Cash Records
Petty cash is typically used for minor day-to-day expenses such as office supplies or small services. Bookkeepers maintain a petty cash book to track how this money is used.
For every petty cash transaction, a petty cash voucher should be issued. This voucher details:
Amount withdrawn
Purpose of the withdrawal
Signature of the recipient
Date of the transaction
Properly maintained petty cash records help ensure the small yet significant transactions are well-documented.
8. Tax Documents
Singapore businesses are required to file taxes, including Goods and Services Tax (GST), Corporate Income Tax, and sometimes Withholding Tax.
GST Returns (Form F5): For companies that are GST-registered, these forms record the GST collected from sales and the GST paid on purchases. Bookkeepers need to file accurate GST returns to avoid penalties.
Corporate Income Tax Filings (Form C or Form C-S): Singapore businesses must file corporate tax returns with IRAS annually. All tax-related records, including deductions, exemptions, and tax credits, should be properly recorded.
Estimated Chargeable Income (ECI) Form: This must be filed within three months from the end of the financial year. It reports the company’s estimated taxable income for the year.
Tax documents are crucial for ensuring compliance with Singapore’s tax regulations and must be stored securely for future audits.
9. Inventory Records
For businesses that sell physical products, keeping accurate inventory records is essential for monitoring stock levels and cost of goods sold (COGS).
Stock Invoices: Document purchases from suppliers.
Stock Receipts and Delivery Orders: Used to confirm that goods have been received or delivered.
Inventory Valuation Reports: Calculating the cost of goods sold based on beginning inventory, purchases, and ending inventory.
Proper inventory bookkeeping helps manage stock levels, reducing waste, and providing accurate financial reports.
10. Contracts and Agreements
Companies often enter into agreements with clients, suppliers, or service providers. These contracts are binding legal documents and should be referenced in bookkeeping to match relevant financial transactions.
Examples include:
Service Agreements: Detailing the scope of work and payment terms between the company and a client or vendor.
Lease Agreements: For companies that rent office space or equipment, lease agreements will outline payment schedules and obligations.
Loan Agreements: If the company has taken a loan, it’s important to record details of the loan, including payment dates, interest, and balance owed.
11. Financial Statements
While financial statements are not a primary document that bookkeepers handle day-to-day, they are the outcome of accurate bookkeeping. These documents include:
Income Statement (Profit and Loss Statement): Summarizes revenue, expenses, and profits over a specific period.
Balance Sheet: Provides an overview of the company’s financial position, including assets, liabilities, and shareholders' equity.
Cash Flow Statement: Tracks the inflow and outflow of cash in the business.
Financial statements provide a clear picture of the company's financial health and are essential for decision-making and compliance purposes.
Conclusion
Proper bookkeeping in Singapore requires the systematic collection, recording, and organization of various documents. From invoices and receipts to payroll records and financial statements, maintaining accurate records is essential for both statutory compliance and financial planning. Ensuring that all required documents are well-organized will also facilitate smooth audits, tax filing, and better decision-making for the company’s future.
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