Your chart of accounts summarizes all the accounts for your company. From the details in your chart of accounts, you can run practically any financial record you need. Hence, if you are unsure how to do it, do not hesitate to seek help from professionals in a bookkeeping firm in Singapore.
Below are some vital standards to comply with when modifying your Chart of Accounts:
Develop a logical hierarchy for your sub-accounts: Do not go much more than three levels deep. The first level needs always to be among the five account types (Asset (Also see Guide to Deferred Tax Asset) Account, Liability (Also see Guide to Deferred Tax Liability) Accounts, Equity Accounts, Revenue Accounts and Expense Account).
Do not remove or archive accounts during the year: You may find yourself with errors if you delete accounts during the year. The best method is to add modifications instead of getting rid of accounts.
Use common account numbers: A Chart of Accounts has a specific order. Balance sheet accounts are detailed initially and then comply with the income (Also see How Do Net Income and Gross Income Differ from Each Other?) statement accounts.
Keep it simple: Adding in excessive information can lead to complications.
Constructing the ideal Chart of Accounts for your company can establish you up for success regarding coverage and tax filing. However, it relies on your objectives and the reporting you want and needs.
Advantages of customizing your accounts to your company:
- You can classify financial information which gives you better insight into more specific information.
- More accurate information means more specific financial reporting and is less complicated when filling out tax forms.
- It could make tax compliance less complicated. You can modify your Chart of Accounts classifications to straighten with financial reporting standards.
- It produces an easier working connection with your accountant. They will not require you to explore when it’s all set out thoroughly in your Chart of Accounts.