Category: Accounting

In financial accounting, an impairment of a fixed asset occurs when an asset’s fair value falls below its recorded value all of a sudden. If you want to calculate impairment of fixed asset, you have to work out the difference between the value of the recorded asset and its fair value. Keep in mind that some impairment of the asset may be so huge that they might cause a substantial drop in the reported asset base and the profitability of your business (Also see Differences Between Investment and Custodial Accounting).

The impairment will happen only when the amount is not recoverable or receivable. This might occur when the book value is greater than the total of undiscounted cash flows which your company predicts to get from the asset over its useful life as well as the predicted profit when you dispose of the asset.

As an entrepreneur, you should regularly evaluate the assets that your company possesses to identify if some of your company assets have to be impaired in the Balance Sheet (Also see What is Balance Sheet and Statement of Affairs?). If the following happens, the impairment of assets of your business will occur.

• There is a significant change in the asset’s physical state
• There is a variation in the economics and legal aspects
• There is a substantial drop in the market price of the asset
• There is an expected and prior operating and cash flow loss related to the asset
• The asset is most likely to be disposed of before its expected useful life ends

If you want to know more about the impairment of fixed asset, you need to understand the terms below.

Fair value less costs to sell (FVLCS): You get to know this value by calculating the difference between the present market value and the expenditures that are going to be incurred when you sell the asset.

Recoverable amount: The recoverable amount is the value of the financial benefits your company will get when you utilize or sell the fixed asset. It is equal to the increase of the ‘fair value less cost to sell’ or the value in use of the asset. Keep in mind that the value in use of the asset is the current value of all anticipated cash flows related to the asset in the future.

After you evaluate your assets, you should acknowledge the impairment loss only when the recoverable amount is lower than the carrying amount of the asset. Usually, the Financial Reporting Standards requires you to identify the impairment loss as an expenditure (Also see Employ Accounting Service To Prepare Financial Statements). Nevertheless, you must identify its impairment loss as a revaluation decrease if you had carried out a revaluation of the asset. Keep in mind to complete depreciation adjustments in the future.

Accounting for impairment of fixed assets may be a challenging procedure. Hence, we suggest you get assistance by employing an accounting service Singapore if you are unfamiliar with such tasks.

You can’t escape from paying for taxes. As liable residents, it is our responsibility to pay them. They are an essential aspect of the system, and somehow, the money will be returned to you in some ways. It has been years since people have managed their taxes no matter they are operating a small company or otherwise. Some people even utilize a tax preparation program. As attractive as managing your taxes may be, the procedure is too much hassle. Also, it can be risky as you may make mistakes in your accounting that is probably avoidable. In such a situation, working with an accounting professional is your best option. You can look for excellent accounting services in Singapore which may not be that costly as well.

Below are signs which indicates that you have to employ a tax accountant without hesitation:

New Company

When you are still a newbie in the business world, you have to make a few crucial decisions. Keep in mind that the choices that you made when you first started your business is going to leave a significant long-term impact on your company (Also see Pros and Cons of Setting up a Corporation). The financial structure of your company will be the determining factor of how you file and pay your taxes.

At this moment, employing an accountant will enable you to select the most effective structure for your company. Their professional suggestions can assist you with the financial choices, and at the same time, ensures that you comply with the rules and regulations set by the authorities (Also see Benefits of Engaging Bookkeeping Services).

Expanding Your Company

Accounting professionals can assist you throughout your adventure from a new company to a reputable one. When your company is developing, it indicates that both your profits and expenses are growing. Throughout the process of developing, the best you can do is to have a professional beside you since he or she can alert you about the disadvantages of specific financial investments or a piece of information regarding the advantages so that you may receive your profits. By doing so, you can avoid yourself from making undesirable choices about your financial investments.

The Complicated Documentation

As your company continue to develop, dealing with the taxes and paperwork turn out to be complicated. As there are various types of business, you have different tax returns forms to fill in. Dealing with piles of paperwork needs extra time and energy, which would inevitably make you feel anxious. Employing an accountant is a must as he has a good understanding of his job and hew can complete the tasks efficiently. Thus, it saves you a great deal of time as well as gets the job completed on time without making any mistake.

High Accuracy

Taxes may not be something that you can be very familiar with, so the smallest errors can set you back a lot. The fines set by IRAS can be substantial, particularly if you are running a small business (Also see Tax Avoidance and Tax Evasion). An accounting professional can assist you with filing and depositing taxes to ensure that you are paying the exact amount that you should pay to the government.

Handling the taxes on your own or by using a program, may seem to be simple, yet the process is rather stressful, especially when you own a company. Occasionally, some consumers overlook the rebates, and they will find themselves spending a lot more on taxes. Hence, look for an accounting services (Also see Are Accounting and Bookkeeping the Same?) that assist your business and ease the process of preparing for taxes.

A corporation (Also see Benefits Of Accounting Services For The Corporate World) is the most common way of doing business by most of the world’s largest firms. It is different from a partnership or a sole proprietorship as a corporation is a business which has received legal recognition as a separate legal entity along with its responsibilities, powers as well as liabilities.

Before the business owners make up their mind whether to set up an incorporation or not, there is a few advantages and disadvantages that they should take into consideration.

Advantages

Owners can sell their ownership interest easily

If the stock is traded in public, it will only take a couple of minutes for the investors to sell the ownership interest they have in a corporation directly by giving orders to their stockbroker. By signing a transfer statement, the owner can transfer the stock certificate to another person if the stock is not traded in public.

Limited liability

Typically, people who own a corporation will not lose more than the amount of funds they have put into it. Conversely, an owner of a partnership or a sole proprietorship proprietor can lose not only his or her investment but also various other private assets. That is to say, doing business in the corporate form protects the owners from the majority of creditors. This takes place as corporations are considered as legal institutions, and due to this status, a corporation has the right to sue others, and they may be sued too (Also see Accounting Principles – Going Concern). Besides, a corporation needs to pay for the income taxes on its taxable revenue.

Corporations may potentially pay lesser taxes

Some say that a typical corporation’s net earnings are first taxed on the corporation’s tax return. The corporation may give out part of its net earnings to the shareholders in the form of a tax-free dividend.

If the company is very profitable (Also see Ways to Increase Your Business Revenue), it may be required to pay tax lower than it would be otherwise when the business is run using sole proprietorship or partnership.

To acquire more understanding right into this issue prevent or reduce the impact of this potential concern, you must discuss with legal and tax experts about various patterns of business structures. Engage an accounting service in Singapore if you have any queries.

Funds can be raised quickly

Because of limited liability as well as the convenience of purchasing or selling shares, it is understandable why investing in corporations is a more attractive choice for most investors, compared to investing in partnerships or sole proprietorships. The corporations’ ability to allure investors enables them to be able to collect the funds required to handle and develop their operation.

Disadvantages

Legal complexity

To establish incorporation, one has to submit the application and get the approval of one of the states. As soon as the request is approved, the corporation has to abide by that state’s policies (Also see Questions You Should Answer Before You Start Your Business). On the other hand, it may only take you a few minutes to establish a sole proprietorship. Sometimes you will need a tax identification number from the state, and nothing more than that is required. Sole proprietorships do not have to comply with a lot of the lawful demands imposed on a corporation.

Higher Maintenance Costs

All corporations required to hold AGM and prepare a set of audited (Also see Ways to Ensure a Smooth Audit Process in Your Company) or unaudited financial statement once per annum. These additional mandatory requirements no doubt increase the maintenance cost of running a business using a corporation.

Generating revenue is undoubtedly one of the main reasons for you to begin your business. Any honest entrepreneurs would tell you the same thing. Even if you spend a lot of money in socially responsible business practices, donating business money to the impoverished people or support your workers to contribute to the community, the profits are still vital for the survival of your business (Also see Characteristics of Successful Business Owners).

Besides engaging an accounting service in Singapore to ensure the financial health of your company, the basics of generating healthy business revenue are always maximising earnings and minimising expenditures

To assist you in gaining your profits (Also see Investor Ratios in Financial Statement) , we have listed down some tips which will lend you a helping hand in achieving your targets.

1. Reduce Expenses on Client Acquisition

Maybe you did not realise this; however, the advertising and marketing you invest money in is the cost of obtaining your clients. If you need to spend S$20 on each client, that is a great deal of money, particularly for a small company. You will have to figure out ways you can organise better advertising and marketing campaigns that cost you less while obtaining more clients. This can be done if you are paying more attention to value, rather than on making an effort to become fancy.

2. Increase Profit Margin per Sale

If you wish to grow your profit margin, there are two ways (Also see How To Determine Profit Margins On Services) – either by increasing your prices or reducing your expenditures. If you can do both simultaneously, it is going to bring a substantial increase in the revenue generated. However, in a real situation, you will only be able to accomplish one of them.

The trouble with rising prices is that you may lose the clients you have now. Hence, most of the entrepreneurs have a higher tendency to concentrate on cutting down their costs so that their revenue will increase. There may be numerous stuff that you are investing money in which will not bring any value to your company. You will have to determine what these expenditures are because this enables you to eliminate them right away. When you finish doing so, more money will be leftover in your business after expenditures have been settled.

3. Remove Expensive Activities and Services

If providing the service after selling the product cost more than the product itself, you have to stop giving the service immediately. Losing money on a sale does not make sense at all. When this occurs, you have to boost your sales in other regions to cover up for the loss when offering that high-priced service. You have to stop offering the service if the cost of offering it cannot be lowered. If your other cost-effective services give a lot more value, your clients will not detect the loss for sure.

4. Improve Customer Consultation

Producing and sustaining satisfied consumers indicates that more people are discussing your business, raising brand awareness as well as creating leads. When your existing customers are delighted about the service you offered to them, they are going to spread information about your business among their family and friends and tell them why they have to be a consumer of your company (Also see Pros and Cons of Setting up a Corporation). Word-of mouth advertising and marketing is one of the most effective types of advertising. It is the greatest proof that your services or products are at the price that is worthy for them to promote. New customers are going to feel that the services or products you offer to them worth the money they have put in as have a lot of past customers who are still keen on purchasing from you.

When you thought of becoming a business owner, you aim to the achievements of celebrity or expert business owners, and you wish to know what leads their ways to their success. Besides engaging an accounting service in Singapore to help you with the accounting-related tasks, there are various other factors you have to take into consideration to achieve success.

If you wish to be like them, the following characteristics can give you some guidance towards your goal.

Wake Up Early

Productive business owners get out of their beds early to get their day started earlier than other people. Being an early riser will bring you a lot of advantages when it comes to your success as a business owner (Also see Accounting Tips for Restaurant Operators). The longer time of productivity indicates that you can accomplish a tremendous amount of work, enabling you to get closer to your short-term and long-term targets. If you wake up early, you boost your effectiveness and productivity, both of which are vital in the success achieved by the business owners.

Possess the Capability to Find Opportunities

What differs an ordinary person from an outstanding business owner is that the former will only think from the perspective of being a business owner. In contrast, the latter think about ways they can become a producer. Successful business owners are consistently trying to find a chance to utilise and benefit from. No matter it is a current market that possesses services or products that are insufficient, or the opportunities to innovate a brand-new thing, they want to utilise any condition that may lead them to a new entry (Also see Ways to Increase Your Business Revenue).

Prioritise Execution

There are talented and brilliant people who squander their lives away since they put in more effort into conveying their aspirations, instead of pursuing them. Hope will only give rise to depression as well as irritation. This is because you want something that you cannot obtain as you do not want to put in the effort to chase after it.

As a business owner, excessive consideration and planning will slow down the profit growth of your business (Also see What is an Income Statement?). If you have planned for something, you have to act for it so that you can execute your plan. As a business owner, creating plans that are never executed can be the worst thing to happen. For all your dreams and big talk, they have to be followed up with effort which is assisted by an efficient tactic.

Don’t be Scared of Problems

As an entrepreneur, you cannot be daunted easily. You are going deal with numerous problems that will drive you to either to surrender or become the best competitor (Also see Do You Need a Tax Accountant?). Success needs you to take the most outstanding of your capabilities out of you. It will not be enough if you do not do your very best. Steve Jobs and many others sail through the turbulence and what makes them persist in their entrepreneurial goals to establish successful firms. You must have the capability to act like them when you deal with hardships along your business adventure, some times by outsourcing (Also see Should You Outsource Accounting Function?).