Setup of Accounting System Services
So you’re ready to start using a computerized accounting program! Before you can begin creating invoices and writing checks, you need to create a company file with accurate vendor and customer balances, a complete list of products and services sold, and all the necessary financial account balances. Sound challenging? Well, that’s because it is. Yet, once you set up your accounting system, you can then realize all the benefits of accounting software: increased efficiency, ability to track, analyze and improve your financial health, and the opportunity to add services such as payroll and credit card processing.
How to Set Up a Small Business Accounting System
Accumulate Financial Documents
- Keep all documents relating to your business including invoices, bills, bank statements, receipts, government documentation and assessments.
- When in doubt about the relevance of document to your business, hold on to them and ask your accountant (or someone else who can help) at a later date.
- Invest in a stamp that indicates the received date of the documents.
Create Filing System for Documents
- Use file folders and labels to organize financial documents
- Maintain bank statements, customer invoices, vendor bills, government assessments etc. in separate files
- Investing in colour coded file folders can greatly facilitate file retrieval
- File regularly to avoid scrambling at the end of the year
- Maintain separate folders for outstanding invoices, bills and other documents which require follow up.
Determine Accounting Requirements
- Review volume of transactions and complexity of business as well as your budget and time constraints.
- Depending on your requirements either hire a bookkeeper (full or part time), do it yourself or outsource to a third party
- Usually a good idea to have access to a professional accountant to help out with setup of accounting system, and ongoing questions as well as financial reporting and analysis and tax preparation.
Select Accounting Software
- Accounting requirements i.e. whether you hire a bookkeeper or DIY will determine if you need software.
- We recommends softwares which are good for many small businesses and freelancers. Speak to an accountant if unsure.
- Free software also available , although functionality is limited
- If doing it yourself, select software that is user friendly. Many small business software have free trials.
Enter Financial Transactions into Accounting Software
- Important to enter transactions on a timely basis including customer invoices, vendor bills, deposits and cheques.
- Reconcile bank statements monthly to track balances and reduce potential errors
- Month end adjustments like depreciation, foreign exchange, accruals etc. help improve accuracy and reliability of financial statements, but can be done by accountant at year end.
Generate and Analyze Reports
- Accounting software will generate reports based on data entered. Review Accounts Receivable and Aging Reports, accounts payable to vendors, inventory balances etc.
- Financial statements can be generated monthly reflecting Profit and loss of the business as well as Balance Sheet.
- Analysis of financial statements can help improve sales, reduce expenses and ensure that customer balances are being collected and loan covenants are being met.
Compilation of Unaudited Financial Statements in Malaysia
Some private limited companies in Malaysia might qualify to be exempted to have their accounts audited, subject to the guideline soon released by SSM (Suruhanjaya Syarikat Malaysia).
Fintel provides full account services, drafting of unaudited financial reports for exempt companies and offering audit service through our associated audit firms. Our audit services include all financial statements designed specifically to comply with SSM’s and IRB’s statutory requirements.
Director’s Report and StatementYou will receive all the following, when we prepare you unaudited financial statements:
- Detailed Profit and Loss Statement for the Year End
- Detailed Balance Sheet as at a certain date
- Company Compliance Notes to Financial Statement
Profit and Loss Statement (also known as the statement of financial performance) provides you information about your sales, expenses and profit. In addition, it will give you a clearer picture of your company status for a period of time. For instance, One (1) year.
Balance Sheet (also known as the statement of financial position) provides you information about Assets, Liabilities and Equity. It tells you the position of your company as at a particular point of time.
For a small and medium enterprise which qualifies for audit exemption, with the Director’s Report and Statement, Profit and Loss, Balance Sheet, Compliance Notes, it will be sufficient to be compliant with Malaysia laws and regulations. You will be able to file your company’s annual return to SSM (Suruhanjaya Syarikat Malaysia) as well as the lodgement and filing for yearly tax returns to IRB (Inland Revenue Board of Malaysia).