Why is Bookkeeping Important?

Disciplined bookkeeping is critical for three reasons:

Investor Readiness

During due diligence, investors will scrutinise your financial records. Organised books demonstrate professionalism and provide a clear picture of your company's financial health, burn rate, and unit economics.

Strategic Decision-Making

Accurate bookkeeping provides real-time visibility into your cash flow, profitability, and key metrics. It allows you to make data-driven decisions on hiring, marketing, and product strategy instead of operating on gut feel.

Regulatory Compliance

The Accounting and Corporate Regulatory Authority (ACRA) and the Inland Revenue Authority of Singapore (IRAS) require all companies to maintain proper records. Failure to do so can result in penalties.

Cloud-Based Accounting Software is the Way to Go

In today’s modern, technology-driven world, there is no need to utilise manual, unscalable spreadsheets for your bookkeeping needs. Cloud-based software serves as the gold standard for efficient and accurate accounting.

Xero is the platform of choice for most companies due to the following features:

• Automation: Direct bank feeds automatically import transactions, drastically reducing manual data entry.

• Accessibility: As a cloud-based solution, your records are accessible to your team, investors, and outsourced finance provider from anywhere.

• Integration: Xero connects with a vast ecosystem of startup tools for payroll, expense management (like Dext), and payments, creating a single source of truth for your finances.

• Collaboration: You can grant access to your accountant or corporate secretary directly, streamlining reporting and compliance.

Best Practices for Organising Receipts and Invoices

When you properly sort your source documents, you create the proof behind the numbers in your accounts. Here’s what you need to do:

Go Digital Immediately

Use scanning software like Dext or Hubdoc to capture digital copies of every receipt and invoice. These tools integrate directly with Xero and extract key data automatically.

Establish a Dedicated Inbox

Create a specific email address (eg: invoices@yourstartup.com) and direct all suppliers to send their invoices there. This centralises all incoming bills.

Be Consistent

Whether you save files to a cloud drive or manage them within your software, adopt a clear and consistent naming convention (eg: Supplier Name-Invoice Number-YYYY-MM-DD).

Act Regularly

Dedicate a short amount of time each week to process and categorise transactions. A weekly 30-minute routine is far more effective than a multi-day panic at the end of the quarter.

The Direct Link Between Bookkeeping and Tax Filing

Your bookkeeping records directly impact your tax obligations in Singapore. Without accurate books, tax filing becomes a high-risk exercise of guesswork. Below are some tax types that are influenced by bookkeeping:

Corporate Income Tax (Form C-S/C)

Your Profit & Loss (P&L) statement, which is a direct output of your bookkeeping, is used to calculate your company's taxable income. Keeping clean books ensures you claim all eligible business expenses to reduce your tax liability.

Goods & Services Tax (GST)

For GST-registered companies, meticulous records of sales (output tax) and expenses with GST (input tax) are mandatory. IRAS can request these records during an audit, with discrepancies leading to significant penalties.